Credit card companies take a hit in first quarter

Credit card companies’ net profit plunged by more than 40 percent year-on-year in the first quarter mainly due to the government’s new policy on fee rate, the country’s financial regulator reported yesterday.

Data from the Financial Supervisory Service showed that from January through March, net profit of seven local card firms was 462.2 billion won ($409.9), down 45.2 percent from the previous year’s 843.1 billion won.

“Compared to the same period last year, card companies’ profit from stock investment dropped significantly,” said an FSS official. “Also, the new policy on fee rates charged by card companies that started late last year also had an effect on the drop in earnings.”

Compared to last year, card firms’ profit from stock investments dropped by 406.9 billion won in the first quarter this year and profit from card business including commissions also dropped by 28.7 billion won.

Late last year, the country’s financial regulator introduced a new fee policy that lowers the average fee on purchases by 0.24 percentage point.

At the time, the card companies were criticized for charging too much in fees to stores that receive payments from customers using credit cards.

“The drop in profit wasn’t as high as it might have been because card firms voluntarily reduced spending on marketing,” the official said.

The net profit of KB Kookmin, BC and Hana SK Card increased in the first quarter year-on-year while net profit of Shinhan, Samsung, Hyundai and Lotte declined.

Seven local card firms’ delinquency ratio, meanwhile, was 2.11 percent on average in the first quarter, up 0.26 percentage point compared to the fourth quarter of last year.

By Lee Eun-joo [angie@joongang.co.kr]