1. HYUNDAI CARD CO., LTD. AND ITS SUBSIDIARIES
CONSOLIDATED FINANCIAL STATEMENTS
AS OF MARCH 31, 2012
AND FOR THE THREE MONTHS ENDED
MARCH 31, 2012 AND 2011
AND INDEPENDENT ACCOUNTANTS’ REVIEW REPORT
2. Independent Accountants’ Review Report
English Translation of a Report Originally Issued in Korean
To the Shareholders and Board of Directors of
Hyundai Card Co., Ltd. and its subsidiaries:
We have reviewed the accompanying consolidated financial statements of Hyundai Card Co., Ltd. and its
subsidiaries (collectively the “Company”). The financial statements consist of the consolidated statements of
financial position as of March 31, 2012 and the related consolidated statements of comprehensive income, changes
in shareholders’ equity and cash flows for the three months ended March 31, 2012 and 2011, respectively, and a
summary of significant accounting policies and other explanatory information.
Management’s responsibility for the consolidated financial statements
The Company’s management is responsible for the preparation and fair presentation of the accompanying
consolidated financial statements and for such internal control as management determines is necessary to enable the
preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or
error.
Independent accountants’ responsibility
Our responsibility is to express a conclusion on the accompanying consolidated financial statements based on our
review.
We conducted our reviews in accordance with standards for review of interim financial statements in the Republic
of Korea. A review is limited primarily to inquiries of company personnel and analytical procedures applied to
financial data, and this provides less assurance than an audit. We have not performed an audit and, accordingly, we
do not express an audit opinion.
Review conclusion
Based on our reviews, nothing has come to our attention that causes us to believe that the accompanying
consolidated financial statements of the Company are not presented fairly, in all material respects, in accordance
with Korean International Financial Standards 1034 Interim Financial Reporting.
Others
We have also audited the consolidated statements of financial position as of December 31, 2011, and the related
consolidated statements of comprehensive income, changes in shareholders’ equity and cash flows, all expressed in
Korean won, for the year ended December 31, 2011, in accordance with auditing standards generally accepted in the
Republic of Korea. On those consolidated financial statements we expressed an unqualified opinion in our
independent auditors’ report dated as of February 27, 2012. In addition, the consolidated financial statement of
position as of December 31, 2011, does not differ, in all material respects, with the comparative consolidated
statements of financial position as of December 31, 2011 included in the accompanying consolidated financial
statements.
May 30, 2012
Notice to Readers
This report is effective as of May 30, 2012, the review report date. Certain subsequent events or circumstances
may have occurred between the review date and the time the review report is read. Such events or circumstances
could significantly affect the accompanying consolidated financial statements and may result in modifications to
the review report.
3. HYUNDAI CARD CO., LTD. AND ITS SUBSIDIARIES
(the “Company”)
CONSOLIDATED FINANCIAL STATEMENTS
AS OF MARCH 31, 2012
AND FOR THE THREE MONTHS ENDED
MARCH 31, 2012 AND 2011
The accompanying financial statements including all footnote disclosures were prepared by and
are the responsibility of the Company.
Chung, Tae Young
CEO
4. HYUNDAI CARD CO., LTD. AND ITS SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
AS OF MARCH 31, 2012 AND DECEMBER 31, 2011
March 31, 2012 December 31, 2011
(Korean won in millions)
ASSETS
CASH AND BANK DEPOSITS (Notes 5, 31, 32 and 33):
Cash and cash equivalents ₩ 885,472 ₩ 830,023
Bank deposits 33,031 33,031
Total cash and bank deposits 918,503 863,054
INVESTMENT FINANCIAL ASSETS (Notes 6, 32 and 33):
Financial assets available-for-sale (AFS) 1,767 1,767
Total investment financial assets 1,767 1,767
CARD ASSETS (Notes 7, 8, 29, 32 and 33):
Card receivables, net of present value discounts, deferred
origination fees and allowance for doubtful accounts 6,227,359 6,432,350
Cash advances, net of allowance for doubtful accounts 916,002 978,118
Card loans, net of present value discounts, deferred loan
origination fees and allowance for doubtful accounts 2,107,729 1,963,798
Total card assets 9,251,090 9,374,266
LOANS (Notes 7, 8, 32 and 33)
Other loans, net of allowance for doubtful accounts 470 470
PROPERTY AND EQUIPMENT (Notes 9, 11, 14 and 29):
Land 118,161 83,995
Buildings, net of accumulated depreciation 64,256 42,187
Vehicles, net of accumulated depreciation 310 270
Fixtures and equipment, net of accumulated depreciation 59,123 57,974
Finance lease assets 2,222 2,500
Construction in progress 7,371 472
Total property and equipment 251,443 187,398
OTHER FINANCIAL ASSETS (Notes 8, 18, 29, 32 and 33):
Other accounts receivable, net of allowance for doubtful
accounts 59,791 44,940
Accrued revenue, net of allowance for doubtful accounts 42,301 43,753
Guarantee deposits 43,656 52,759
Derivative assets 6,561 2,555
Total other financial assets 152,309 144,007
OTHER NON-FINANCIAL ASSETS
(Notes 5, 8, 10, 25 and 29):
Advanced payments, net of allowance for doubtful
accounts 24,724 25,224
Prepaid expenses 51,336 48,549
Intangible assets 68,972 72,976
Deferred income tax assets 130,110 112,403
Others 22,035 21,820
Total other non-financial assets 297,177 280,972
Total Assets ₩ 10,872,759 ₩ 10,851,934
(Continued)
5. HYUNDAI CARD CO., LTD. AND ITS SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION (CONTINUED)
AS OF MARCH 31, 2012 AND DECEMBER 31, 2011
March 31, 2012 December 31, 2011
LIABILITIES AND SHAREHOLDERS’ EQUITY (Korean won in millions)
BORROWINGS :
Borrowings (Notes 12, 32 and 33) ( ₩ 330,000 ₩ 590,000
Bonds payable, net of discounts on debentures
(Notes 13, 28, 32 and 33) 6,756,635 6,481,760
Total borrowings 7,086,635 7,071,760
RETIREMENT BENEFIT (Note 15)
Retirement benefit obligation 19,493 17,775
Total retirement benefit 19,493 17,775
OTHER FINANCIAL LIABILITIES
(Notes 14, 18, 27, 29, 32 and 33):
Accounts payable 990,988 1,066,706
Withholdings 82,936 64,313
Accrued expenses 101,495 140,922
Finance lease liabilities 2,280 2,548
Derivative liabilities 6,519 5,326
Import deposits 12,762 11,684
Total other financial liabilities 1,196,980 1,291,499
OTHER NON-FINANCIAL LIABILITIES :
Withholdings 6,551 5,650
Unearned revenue 359,820 347,865
Provisions (Notes 17 and 27) 80,257 80,233
Current tax liability 46,345 40,469
Total other non-financial liabilities 492,973 474,217
SHAREHOLDERS’ EQUITY :
Share capital (Note 19) 802,326 802,326
Capital surplus (Note 20) 57,704 57,704
Retained earnings (Notes 21 and 23) 1,223,394 1,148,397
Reserves (Notes 18, 22 and 30) (6,776) (11,764)
Non-controlling interest 30 20
Total shareholders’ equity 2,076,678 1,996,683
Total Liabilities and Shareholders’ Equity ₩ 10,872,759 ₩ 10,851,934
See accompanying notes to consolidated financial statements.
6. HYUNDAI CARD CO., LTD. AND ITS SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
FOR THE THREE MONTHS ENDED MARCH 31, 2012 AND 2011
Three months ended March 31,
2012 2011
(Korean won in millions,
except for per share amount)
OPERATING REVENUE:
Card income (Notes 29 and 35) ₩ 586,824 ₩ 578,424
Interest income (Note 34) 5,296 4,884
Reversal of impairment loss on financial assets available-for-sale
(Note 36) 67 67
Dividends income 233 294
Other operating revenue (Notes 29 and 37) 23,002 26,856
Total operating revenue 615,422 610,525
OPERATING EXPENSES:
Card expenses (Notes 29 and 35) 251,048 227,534
Interest expenses (Note 34) 86,663 90,361
General and administrative expenses (Notes 15, 16, 24 and 29) 131,911 113,693
Securitization expenses 110 108
Bad debt expense and loss on disposal of loans 42,315 52,827
Transfer to provision for unused credit limits (Note 17) 1,727 2,621
Impairment loss on financial assets available-for-sale (Note 36) - 8
Other operating expenses (Notes 29 and 37) 22,797 28,270
Total operating expenses 536,571 515,422
OPERATING INCOME 78,851 95,103
INCOME BEFORE INCOME TAX 78,851 95,103
INCOME TAX EXPENSE (Note 25) 3,854 21,053
INCOME FOR THE PERIOD 74,997 74,050
OTHER COMPREHENSIVE INCOME FOR THE PERIOD
(Note 30)
Effective portion of changes in fair value of cash flow hedges 4,988 (435)
TOTAL COMPREHENSIVE INCOME FOR THE PERIOD ₩ 79,985 ₩ 73,615
Net income attributable to:
Owners of the Company 74,997 74,050
Non-controlling interests - -
Total comprehensive income attributable to:
Owners of the Company 79,985 73,615
Non-controlling interests - -
Earnings per share (In won per share) (Note 26)
Basic earnings per share ₩ 467 ₩ 461
Diluted earnings per share ₩ 467 ₩ 461
See accompanying notes to consolidated financial statements.
7. HYUNDAI CARD CO., LTD. AND ITS SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY
FOR THE THREE MONTHS ENDED MARCH 31, 2012 AND 2011
Capital surplus Reserves
Other Net change in fair Cash flow Attributable to Non-
Share Share capital Treasury Retained value of financial hedging owners of the controlling
capital premium surplus shares earnings assets AFS reserve Company interests Total
(Korean won in millions)
Balance at January 1, 2011 ₩ 802,326 ₩ 45,399 ₩ 12,305 - ₩ 909,749 ₩ - ₩ (3,150) ₩ 1,766,629 ₩ 20 ₩ 1,766,649
Comprehensive income -
Net income - - - - 74,050 - - 74,050 - 74,050
Other comprehensive
income - - - - - - (435) (435) - (435)
Non-controlling interests - - - - - - - - 10 10
Balance at March 31, 2011 802,326 45,399 12,305 - 983,799 - (3,585) 1,840,244 30 1,840,274
Balance at January 1, 2012 802,326 45,399 12,305 - 1,148,397 - (11,764) 1,996,663 20 1,996,683
Comprehensive income - - - - - - - - - -
Net income - - - - 74,997 - - 74,997 - 74,997
Other comprehensive
income - - - - - - 4,988 4,988 - 4,988
Non-controlling interests - - - - - - - - 10 10
Balance at March 31, 2012 ₩ 802,326 ₩ 45,399 ₩ 12,305 ₩ - ₩ 1,223,394 - ₩ (6,776) ₩ 2,076,648 ₩ 30 ₩ 2,076,678
See accompanying notes to consolidated financial statements.
8. HYUNDAI CARD CO., LTD. AND ITS SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 2012 AND 2011
Three months ended March 31,
2012 2011
(Korean won in millions)
CASH FLOWS FROM OPERATING ACTIVITIES:
Income for the period ₩ 74,997 ₩ 74,050
Income tax expense 3,854 21,053
Interest income (5,296) (4,884)
Interest expense 86,663 90,361
Dividend received (233) (294)
Bad debt expense and loss on disposal of receivables 42,315 52,827
Retirement benefits 2,216 1,906
Depreciation 6,510 4,573
Amortization 3,440 2,403
Loss on foreign currency translation 5,251 10,013
Loss on valuation and transaction of derivatives 7,828 12,119
Increase in provision for unused credit limit 1,727 2,620
Increase in provision for mileage point 539 336
Loss from disposal of property and equipment 72 -
Impairment loss of financial assets AFS - 8
Other operating losses - 129
Reversal of other provision (2,242) -
Gain on foreign currency translation (7,057) (12,265)
Gain on valuation and transaction of derivatives (5,160) (9,976)
Amortization of present value discounts on card asset (11,308) (5,565)
Amortization of deferred origination fees (5,040) (4,604)
Reversal of impairment loss for investment financial
assets (67) (67)
Changes in working capital:
Decrease in card assets 96,551 43,835
Decrease (increase) in other financial assets (15,145) 20,358
Decrease (increase) in other non-financial assets (8,391) 14,001
Decrease in derivative assets 1,091 20,358
Decrease in provisions - (33,268)
Increase (decrease) in retirement benefit obligations (1,210) 89
Decrease (increase) in plan asset 712 (1,550)
Decrease in derivative liabilities - (14,198)
Decrease in finance lease liabilities (269) -
Decrease in other financial liabilities (96,954) (108,529)
Increase in other non-financial liabilities 11,955 9,289
Cash generated from operating activities
Interest received 7,121 4,242
Interest paid (82,257) (90,189)
Dividend received 233 294
Income tax paid (17,268) (23,010)
Net cash provided by operating activities 95,178 76,465
(Continued)
9. HYUNDAI CARD CO., LTD. AND ITS SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
FOR THE THREE MONTHS ENDED MARCH 31, 2012 AND 2011
Three months ended March 31,
2012 2011
(Korean won in millions)
CASH FLOWS FROM INVESTING ACTIVITIES:
Disposal of investment financial assets 67 67
Disposal of intangible assets 1,250 -
Net decrease (increase) in guarantee deposit 9,683 (2,260)
Net increase in bank deposit - (9,900)
Acquisition of property and equipment (64,887) (10,788)
Acquisition of intangible assets (1,489) (2,874)
Net cash used in investing activities (55,376) (25,755)
CASH FLOWS FROM FINANCING ACTIVITIES:
Increase in borrowings 2,180,000 -
Proceeds from issue of bonds payable 943,302 1,330,027
Increase in non-controlling interest 10 10
Repayment of borrowings (2,440,000) (781,191)
Repayment of bonds payable (667,665) (517,631)
Net cash provided by financing activities 15,647 31,215
NET INCREASE IN CASH AND CASH EQUIVALENTS 55,449 81,925
CASH AND CASH EQUIVALENTS, BEGINNING OF
THE PERIOD 830,023 797,048
CASH AND CASH EQUIVALENTS, END OF THE
PERIOD (Note 32) ₩ 885,472 ₩ 878,973
See accompanying notes to consolidated financial statements.
10. - 3 -
HYUNDAI CARD CO., LTD. AND ITS SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED MARCH 31, 2012 AND 2011
1. GENERAL:
Hyundai Card Co., LTD (the “Parent”) is engaged in the credit card business under the Specialized Credit
Financial Business Law of Korea. On June 15, 1995, the Parent acquired the credit card business of Korea
Credit Circulation Co., Ltd. and on June 16, 1995, the Korean government granted permission to the Parent to
engage in the credit card business.
As of March 31, 2012, the Parent has approximately 9.27 million card members, 1.97 million registered
merchants, and 177 marketing centers, branches and posts. Its head office is located in Yeoido, Seoul.
As of March 31, 2012, the total common stock of the Parent is ₩802,326 million. The shareholders of the
Parent and their respective ownerships as of March 31, 2012 and December 31, 2011 are as follows:
March 31, 2012 December 31, 2011
Shareholder Number of shares % of ownership Number of shares % of ownership
Hyundai Motor Co., Ltd. 50,572,187 31.52 50,572,187 31.52
Kia Motors Co., Ltd. 18,422,142 11.48 18,422,142 11.48
Hyundai Steel Co., Ltd. 8,729,750 5.44 8,729,750 5.44
GE Capital Int'l Holdings 69,000,073 43.00 69,000,073 43.00
Hyundai Commercial Inc. 8,889,622 5.54 8,889,622 5.54
Others 4,851,512 3.02 4,851,512 3.02
Totals 160,465,286 100.00 160,465,286 100.00
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
The Parent and its subsidiaries (the “Company”) maintains its official accounting records in Republic of
Korean won (“Won”) and prepares consolidated financial statements in conformity with Korean statutory
requirements and Korean International Reporting Standards (“K-IFRS”), in the Korean language (Hangul).
Accordingly, these consolidated financial statements are intended for use by those who are informed about K-
IFRS and Korean practices.
(1) Basis of Preparation
The Company’s interim consolidated financial statements for the three months ended March 31, 2012 are
prepared in accordance with K-IFRS 1034 Interim Financial Reporting.
The Company’s accounting policies applied for the accompanying interim consolidated financial statements are
the same as the policies applied for the preparation of consolidated financial statements for the year ended
December 31, 2011, except for the effects from the introduction of new and revised accounting standards or
interpretations below.
1) Accounting standards and interpretations that were newly applied during the three months ended March 31,
2012, and changes in the Company’s accounting policies are as follows:
11. - 4 -
K-IFRS 1107 Financial Instruments: Disclosures – Transfers of Financial Assets
The amendments to K-IFRS 1107 increase the disclosure requirements for transactions involving transfers of
financial assets. These amendments are intended to provide greater transparency around risk exposures when a
financial asset is transferred but the transferor retains some level of continuing involvement in the asset. The
amendments also require disclosures where transfers of financial assets are not evenly distributed throughout
the period. K-IFRS 1107 requires additional disclosures regarding the continuous involvement of the Company
related to transferred asset. The Company additionally disclosed the fair value of transferred asset, for financial
assets that are transferred but not removed. (Note 28)
Amendments to K-FIRS 1012 Deferred Tax – Recovery of Underlying Assets
The amendments to K-IFRS 1012 provide an exception to the general principles in K-IFRS 1012 that the
measurement of deferred tax assets and deferred tax liabilities should reflect the tax consequences that would
follow from the manner in which the entity expect to recover the carrying amount of an asset. Investment
property measured using the revaluation model under K-IFRS 1040 Investment Property or a non-depreciable
asset measured using the revaluation model in K-IFRS 1016 Property, Plant, and Equipment, are presumed to
be recovered through sale for the purposes of measuring deferred taxes, unless the presumption is rebutted in
certain circumstances. The amendments do not have a significant effect on the Company’s consolidated
financial statements and disclosures.
Amendments to K-IFRIC Interpretation 2114 – Prepayments of a Minimum Funding Requirements
The amendments to K-IFRIC Interpretation 2114 requires the surplus from to prepayments of a minimum
funding requirements be recognized as an asset while it was not before adopting the interpretation. The
amendments do not have a significant effect on the Company’s consolidated financial statements and
disclosures.
2) Currently, enactments and amendments of the K-IFRSs are in progress, and the financial information
presented in the consolidated financial statements may change accordingly in the future. The Company has
not applied the following new and revised K-IFRSs that have been issued but are not yet effective:
K-IFRS 1019 (as revised in 2011) Employee Benefits
The amendments to K-IFRS 1019 change the accounting for defined benefit plans and termination benefits.
The most significant change relates to the accounting for changes in defined benefit obligations and plan assets.
The amendments require the recognition of changes in defined benefit obligations and in fair value of plan
assets when they occur, and hence eliminate the ‘corridor approach’ permitted under the previous version of K-
IFRS 1019 and accelerate the recognition of past service costs. The amendments to K-IFRS 1019 are effective
for annual periods beginning on or after January 1, 2013 and require retrospective application with certain
exceptions.
K-IFRS 1113 Fair Value Measurement
K-IFRS 1113 establishes a single source of guidance for fair value measurements and disclosures about fair
value measurements. The standard defines fair value, establishes a framework for measuring fair value, and
requires disclosures about fair value measurements. K-IFRS 1113 is effective for annual periods beginning on
or after January 1, 2013, with earlier application permitted.
The Company does not anticipate that these amendments referred above will have a significant effect on the
Company’s consolidated financial statements and disclosures.
12. - 5 -
3. CRITICAL ACCOUNTING JUDGEMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY
In the application of the Company’s accounting policies, management is required to make judgments, estimates
and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other
sources. Actual results may differ from these estimates.
The application of the Company’s accounting policies and the judgments by management on sources of
estimation uncertainty are the same as those of the consolidated financial statements as of December 31, 2011
13. - 6 -
4. SUBSIDIARY:
(1) Details of the Company’s subsidiaries as of March 31, 2012 and December 31, 2011 are as follows.
Place of Voting share (%)
incorporation and
Companies Major operation operations March 31, 2012 December 31, 2011
PRIVIA 1st SPC Asset securitization Korea 0.9 0.9
PRIVIA 2nd SPC Asset securitization Korea 0.9 0.9
PRIVIA 3rd SPC Asset securitization Korea 0.9 -
(2) Summarized financial information of the Company’s subsidiaries as of March 31, 2012 and December 31,
2011 are as follows (Unit: Won in millions):
March 31, 2012
Companies Asset Liability Sales Net income
PRIVIA 1st SPC ₩ 47 ₩ - ₩ 62 ₩ 37
PRIVIA 2nd SPC 448,091 458,258 10,637 -
PRIVIA 3rd SPC 455,730 3,717 - 3,279
December 31, 2011
Companies Asset Liability Sales Net income
PRIVIA 1st SPC ₩ 10 ₩ - ₩ 17,854 ₩ 391
PRIVIA 2nd SPC 448,139 463,317 29,895 -
(3) Changes in the Company’s subsidiaries for the three month ended March, 31 2012 are as follows.
Companies Asset
PRIVIA 3rd SPC Newly established due to ABS issuance
5. CASH AND DEPOSITS:
(1) Details of cash and cash equivalents as of March 31, 2012 and December 31, 2011are as follows (Unit: Won
in millions):
March 31, 2012 December 31, 2011
Annual Annual
interest rate(%) Amount interest rate(%) Amount
Cash on hand - ₩ 4 - ₩ 4
Current deposits - 14,748 - 8,749
Pass-book deposits - 55,220 - 72,770
Other cash equivalents 3.30~3.45 160,000 3.20~3.60 300,000
Time deposits 2.90~3.73 25,500 2.90~3.70 25,500
Restricted cash & deposits 3.22~3.60 630,000 3.00~4.25 423,000
₩ 885,472 ₩ 830,023
14. - 7 -
(2) Restricted financial assets as of March 31, 2012 and December 31, 2011 are as follows (Unit: Won in
millions):
Type Entity March 31, 2012 December 31, 2011 Restriction
Due from financial Financial KB and others Guarantee deposits
institutions instruments ₩ 18 ₩ 18 for overdraft
Financial Shinhan Bank
Secured deposits
instruments and others 33,000 33,000
Financial Mirae Asset Social enterprise
instruments Securities 13 13 fund
Others Other dues Korea Asset
Management Escrow account
Corporation 18,610 18,610
₩ 51,641 ₩ 51,641
6. INVESTMENT FINANCIAL ASSETS:
Investment financial assets as of March 31, 2012 and December 31, 2011 are as follows (Unit: Won in millions):
March 31, 2012 December 31, 2011
Financial assets AFS
Unlisted shares investments ₩ 1,767 ₩ 1,767
7. CARD ASSETS AND LOANS
Card assets and loans by customer as of March 31, 2012 and December 31, 2011 are as follows (Unit: Won in
millions):
March 31, 2012 December 31, 2011
Households Corporates Total Households Corporates Total
CARD ASSETS :
Card receivables (*) ₩ 5,785,623 ₩ 508,466 ₩6,294,089 ₩ 6,039,571 ₩ 461,552 ₩ 6,501,123
Cash advances 951,626 - 951,626 1,016,028 - 1,016,028
Card loans (*) 2,176,852 - 2,176,852 2,030,869 - 2,030,869
Sub total 8,914,101 508,466 9,422,567 9,086,468 461,552 9,548,020
LOANS
Loans to corporate - 500 500 - 500 500
Total 8,914,101 508,966 9,423,067 9,086,468 462,052 9,548,520
Allowance for doubtful
accounts (164,166) (7,341) (171,507) (165,480) (8,304) (173,784)
Book value ₩ 8,749,935 ₩ 501,625 ₩ 9,251,560 ₩ 8,920,988 ₩ 453,748 ₩9,374,736
Composition rate 94.58% 5.42% 100.00% 95.16% 4.84% 100.00%
(*) Adjusted for deferred origination fees and present value discounts
15. - 8 -
8. ALLOWANCE FOR DOUBTFUL ACCOUNTS:
Changes in the allowance for doubtful accounts for the three months ended March 31, 2012 and 2011 are as
follows (Unit: Won in millions):
Three months ended March 31, 2012
Card Cash
receivables advances Card loans Loans Other assets Total
Balance at January 1,
2012 ₩ 68,773 ₩ 37,910 ₩ 67,071 ₩ 30 ₩ 2,306 ₩ 176,090
Bad debt expenses (151) (108) (75) - - (334)
Bad debt recovered 184 275 101 - - 560
Disposition &
repurchase (4,896) (2,988) (3,130) - - (11,014)
Provision of
(Reversal of)
allowance for
doubtful accounts 2,820 535 5,156 - (76) 8,435
Balance at March 31,
2012 ₩ 66,730 ₩ 35,624 ₩ 69,123 ₩ 30 ₩ 2,230 ₩ 173,737
Three months ended March 31, 2011
Card Cash
receivables advances Card loans Loans Other assets Total
Balance at January 1,
2011 ₩ 59,315 ₩ 43,132 ₩ 63,527 ₩ 8 ₩ 4,059 ₩ 170,041
Bad debt expenses (1,157) (1,207) (784) - - (3,148)
Bad debt recovered 74 102 26 - - 202
Disposition &
repurchase (7,074) (5,685) (7,113) - - (19,872)
Provision of
(Reversal of)
allowance for
doubtful accounts 17,148 11,491 11,932 48 (1,388) 39,231
Balance at March 31,
2011 ₩ 68,306 ₩ 47,833 ₩ 67,588 ₩ 56 ₩ 2,671 ₩ 186,454
9. PROPERTY AND EQUIPMENT:
(1) Property and equipment as of March 31, 2012 and December 31, 2011 are as follows (Unit: Won in
millions):
March 31, 2012 December 31, 2011
Acquisition Accumulated Acquisition Accumulated
cost depreciation Book value cost depreciation Book value
Land ₩ 118,161 ₩ - ₩ 118,161 ₩ 83,995 ₩ - ₩ 83,995
Buildings 67,836 (3,580) 64,256 45,436 (3,249) 42,187
Vehicles 579 (269) 310 502 (232) 270
Fixtures and equipment 134,337 (75,214) 59,123 127,465 (69,491) 57,974
Finance lease assets 3,334 (1,112) 2,222 3,334 (834) 2,500
Assets under construction 7,371 - 7,371 472 - 472
Total ₩ 331,618 ₩ (80,175) ₩ 251,443 ₩ 261,204 ₩ (73,806) ₩ 187,398
16. - 9 -
The appraised value of the land and the statutory standard market price of land and buildings as of March 31, 2012
are as follows (Unit: Won in millions):
Lot March 31, 2012
Yeoido 2nd land ₩ 14,601
Yeoido 3rd land 9,130
Hannamdong site 4,702
Youngdeungpo building site 5,962
Land
Ulsan building site 807
Suwon building site 1,440
Gwangju building site 960
Busan building site 3,095
40,697
Yeoido 2nd building 10,028
Yeoido 3rd building 9,018
Building Ulsan building 1,416
Suwon building 2,709
Gwangju building 1,920
25,091
₩ 65,788
(2) Changes in the book value of property and equipment for the three months ended March 31, 2012 and 2011
are as follows (Unit: Won in millions):
Three months ended March 31, 2012
Beginning Ending
balance Acquisition Reclassification(*) Disposal Depreciation balance
Land ₩ 83,995 ₩ 34,166 ₩ - ₩ - ₩ - ₩ 118,161
Buildings 42,187 22,053 347 - (331) 64,256
Vehicles 270 76 - - (36) 310
Fixtures and equipment 57,974 6,961 125 (72) (5,865) 59,123
Finance lease assets 2,500 - - - (278) 2,222
Construction in
progress 472 1,631 5,268 - - 7,371
Total ₩ 187,398 ₩ 64,887 ₩ 5,740 ₩ (72) ₩ (6,510) ₩ 251,443
(*) ₩5,740 million of construction in progress is reclassified from advanced payments.
Three months ended March 31, 2011
Beginning Ending
balance Acquisition Reclassification Disposal Depreciation balance
Land ₩ 80,414 ₩ 1,853 ₩ - ₩ - ₩ - ₩ 82,267
Buildings 34,494 4,812 - - (254) 39,052
Vehicles 293 233 - - (37) 489
Fixtures and equipment 36,617 3,890 31 - (4,282) 36,256
Construction in
progress 698 - (31) - - 667
Total ₩ 152,516 ₩ 10,788 ₩ - ₩ - ₩ (4,573) ₩ 158,731
17. - 10 -
10. INTANGIBLE ASSETS:
(1) Intangible assets as of March 31, 2012 and December 31, 2011 are as follows (Unit: Won in millions):
March 31, 2012
Accumulated
Acquisition cost amortization Book value
Development cost ₩ 51,590 ₩ (16,384) ₩ 35,206
Industrial property rights 195 (89) 106
Others 16,868 (6,388) 10,480
Construction in progress 1,696 - 1,696
Membership 21,484 - 21,484
Total ₩ 91,833 ₩ (22,861) ₩ 68,972
December 31, 2011
Accumulated
Acquisition cost amortization Book value
Development cost ₩ 50,499 ₩ (13,843) ₩ 36,656
Industrial property rights 195 (79) 116
Others 16,869 (5,500) 11,369
Construction in progress 2,101 - 2,101
Membership 22,734 - 22,734
Total ₩ 92,398 ₩ (19,422) ₩ 72,976
(2) Changes in intangible assets for the three months ended March 31, 2012 and 2011 are as follows (Unit: Won
in millions):
Three months ended March 31, 2012
Beginning Ending
balance Acquisition Reclassification(*) Disposal Amortization balance
Development cost ₩ 36,656 ₩ 718 ₩ 373 ₩ - ₩ (2,541) ₩ 35,206
Industrial property
rights 116 - - - (10) 106
Others 11,369 - - - (889) 10,480
Construction in
progress 2,101 771 (1,176) - - 1,696
Membership 22,734 - - (1,250) - 21,484
Total ₩ 72,976 ₩ 1,489 ₩ (803) ₩ (1,250) ₩ (3,440) ₩ 68,972
(*) ₩803 million of construction in progress is reclassified to advanced payments.
Three months ended March 31, 2011
Beginning Ending
balance Acquisition Reclassification Disposal Amortization balance
Development cost ₩ 21,801 ₩ 1,444 ₩ 7,196 ₩ - ₩ (1,734) ₩ 28,707
Industrial property
rights 155 - - - (10) 145
Others 9,757 79 - - (659) 9,177
Construction in
progress 17,253 1,351 (7,196) - - 11,408
Membership 21,484 - - - - 21,484
Total ₩ 70,450 ₩ 2,874 ₩ - ₩ - ₩ (2,403) ₩ 70,921
18. - 11 -
11. ASSETS PLEDGED AS COLLATERAL:
Land and buildings amounting to ₩1,711 million are provided as collateral for leasehold deposits received as of
March 31, 2012.
12. BORROWINGS:
Borrowings as of March 31, 2012 and December 31, 2011 are as follows (Unit: Won in millions):
Annual interest
Borrowed from rates (%) Maturity March 31, 2012 December 31, 2011
Commercial papers SK Securities 2012.4.9
and others 3.56 ~ 3.61 ~ 2012.7.9 ₩ 210,000 ₩ 490,000
Borrowings Jeonbuk Bank 2012.11.2
and others 4.69 ~ 5.55 ~ 2014.7.19 120,000 100,000
₩ 330,000 ₩ 590,000
13. BONDS PAYABLE:
(1) Bonds payable issued by the Company and outstanding as of March 31, 2012 and December 31, 2011 are as
follows (Unit: Won in millions):
Annual March 31, 2012 December 31, 2011
interest rates (%) Maturity Par value Issue price Par value Issue price
Short-term 2012.6.20 ~
3.65 ~ 4.95
debentures 2013.2.8 ₩ 140,000 ₩ 140,000 ₩ 130,000 ₩ 130,000
Current portion of 2012.4.7 ~
3.47 ~ 6.19
debentures 2013.3.24 1,305,512 1,305,512 1,333,797 1,333,797
Long-term 3.75 ~ 6.94
debentures 1M USD Libor
2013.4.2 ~
+ 0.724%,
2019.3.19
1M USD Libor
+ 1.5% 5,323,007 5,323,007 5,027,320 5,027,320
Discounts on
debentures (11,884) (9,357)
Total ₩6,756,635 ₩ 6,481,760
The outstanding bonds payable are non-guaranteed corporate bonds, with their principals to be redeemed at
maturity. Bond issuance costs are recorded as discounts on bonds payable and amortized using the effective
interest rate method.
(2) The redemption schedule for the bonds payable is as follows (Unit: Won in millions):
Amount to be redeemed
Period as of March 31, 2012
2012.4.1 ~ 2013.3.31 ₩ 1,445,512
2013.4.1 ~ 2014.3.31 1,435,767
2014.4.1 ~ 2015.3.31 1,872,120
2015.4.1 ~ 2016.3.31 1,455,120
2016.4.1 ~ 560,000
₩ 6,768,519
19. - 12 -
Amount to be redeemed
Period as of December 31, 2011
2012.1.1 ~ 2012.12.31 ₩ 1,463,797
2013.1.1 ~ 2013.12.31 1,537,300
2014.1.1 ~ 2014.12.31 1,791,320
2015.1.1 ~ 2015.12.31 870,000
2016.1.1 ~ 828,700
₩ 6,491,117
14. FINANCE LEASE LIABILITIES:
(1) Lease contract
The Company uses electronic equipment under a finance lease for 3 years. The Company may exercise a bargain
purchase option at expiration date of the lease contract. The lessor has the legal ownership of the financial assets
as collateral for the finance lease obligation; the collateral amounts to ₩2,222 million and ₩2,500 million as
of March 31, 2012 and December 31, 2011, respectively.
(2) Finance lease liabilities of March 31, 2012 and December 31, 2011 are as follows (Unit: Won in millions):
March 31, 2012 December 31, 2011
Minimum lease Present value of Minimum lease Present value of
payments minimum lease payments payments minimum lease payments
Less than 1 year ₩ 1,202 ₩ 1,111 ₩ 1,202 ₩ 1,096
1-5 years 1,202 1,169 1,503 1,452
Present value
discounts (124) (157)
Present value ₩ 2,280 ₩ 2,548
15. RETIREMENT BENEFIT PLAN:
(1) Defined Contribution Plan
The Company operates a defined contribution plan for participating employees. The Company pays fixed
contributions into a separate fund, and the plan assets are managed by a trustee as a separately from the
Company’s assets. Plan forfeitures occur when a terminated participant who is not fully vested receives a plan
distribution of his or her account balance, which will reduce the Company’s contribution to pay.
The Company is required to contribute a specified percentage of employee’s earnings to the plan fund. The only
obligation that the Company has with respect to the plan is to make the specified contributions in the future.
The expense related to post-employment benefit plans under defined contribution plans during the three-month
period ended March 31, 2012 and 2011 are ₩2 million and ₩0, respectively, which represents contribution
payable to these plans based on the rate as of March 31, 2012 and December 31, 2011. ₩2 million and ₩1
million are recorded as payables as of March 31, 2012 and December 31, 2011, respectively. The amount is
subject to be transferred to other account operated for the defined contribution plan participants.
The expense recognized in the consolidation statements of comprehensive income related to post-employment
benefit plan under the defined contribution plan for the three month period ended March 31, 2012 and 2011 are
as follows (Unit: Won in millions):
March 31, 2012 March 31, 2011
Defined contribution plan ₩ 2 ₩ -
Total ₩ 2 ₩ -
20. - 13 -
(2) Defined benefit plan
The Company also operates a defined benefit plan. Actuarial evaluation of plan assets and defined benefit
obligation were performed by HMC Investment Securities Co., Ltd. as of March 31, 2012. The present value of
the defined benefit obligation, current service cost and past service cost is calculated using the projected unit
credit method.
1) Details of defined benefit plan are as follows (Unit: Won in millions):
As of March 31, 2012 and December 31, 2011, the amounts recognized in the consolidation statements of
financial position related to retirement benefit obligation are as follows (Unit: Won in millions):
March 31, 2012 December 31, 2011
Present value of defined benefit obligation ₩ 38,211 ₩ 37,007
Fair value of plan assets (18,681) (19,195)
Transferred to national pension fund (37) (37)
Retirement benefit obligation ₩ 19,493 ₩ 17,775
2) Changes in the present value of the defined benefit obligation for the three months ended March 31, 2012 and
2011 are as follows (Unit: Won in millions):
Three months ended March 31,
2012 2011
Beginning balance ₩ 37,007 ₩ 27,790
Current service cost 2,193 1,782
Interest cost 366 314
Transfer of employees between the
Company and the related companies 22 236
Actuarial gains (losses) (147) -
Benefits paid (1,230) (147)
Ending balance ₩ 38,211 ₩ 29,975
3) Changes in the fair value of the plan assets for the three months ended March 31, 2012 and 2011 are as
follows (Unit: Won in millions):
Three months ended March 31,
2012 2011
Beginning balance ₩ 19,195 ₩ 18,143
Contributions from the employer - 1,500
Expected return on plan assets 184 174
Actuarial gains (losses) 14 16
Transfer of employees between the
Company and its related companies 10 200
Benefits paid (722) (151)
Ending balance ₩ 18,681 ₩ 19,882
21. - 14 -
4) Details of pension expenses are as follows (Unit: Won in millions):
Three months ended March 31,
2012 2011
Current service cost ₩ 2,193 ₩ 1,782
Interest cost 366 314
Expected return on plan assets (184) (174)
Actuarial gains (161) (16)
Total ₩ 2,214 ₩ 1,906
Return on plan assets ₩ 198 ₩ 190
5) Details of the fair value of the plan assets as of March 31, 2012 and December 31, 2011 are as follows (Unit:
Won in millions):
March 31, 2012 December 31, 2011
Amount Ratio Amount Ratio
Deposits ₩ 18,681 100% ₩ 19,195 100%
6) Actuarial assumption as of March 31, 2012 and December 31, 2011 are as follows:
March 31, 2012 December 31, 2011
Discount rate (%) 4.29 4.23
Expected return on plan assets (%) 4.08 4.08
Expected rate of salary increase (%) 5.60 5.60
16. EMPLOYEE BENEFITS:
Details of employee benefits for the three months ended March 31, 2012 and 2011 are as follows (Unit: Won in
millions):
Three months ended March 31,
2012 2011
Short-term employee benefits ₩ 24,963 ₩ 25,356
Pension expenses 2,216 1,906
Ending balance ₩ 27,179 ₩ 27,262
17. PROVISION:
(1) Details of provision for the three months ended March 31, 2012 and the year ended December 31, 2011 are
as follows (Unit: Won in millions):
March 31, 2012 December 31, 2011
Provision for unused credit limits ₩ 48,894 ₩ 47,167
Provision for mileage points 11,779 11,240
Other provisions 19,584 21,826
₩ 80,257 ₩ 80,233
22. - 15 -
(2) Provision for unused credit limits
The Company recognizes loss provision for expected future use of unused portions of credit limits. The changes
in loss provision are as follows (Unit: Won in millions):
March 31, 2012 March 31, 2011
Beginning ₩ 47,167 ₩ 46,073
Increase 1,727 2,620
Ending ₩ 48,894 ₩ 48,693
(3) Provision for mileage points
The Company records provisions for projected expenses considering past rewards history and experience. The
changes in provision for mileage points are as follows (Unit: Won in millions):
March 31, 2012 March 31, 2011
Point Customer loyalty Point Customer loyalty
Beginning ₩ 3,685 ₩ 7,555 ₩ 2,368 ₩ 12,069
Increase (decrease) (307) 846 (61) 397
Ending ₩ 3,378 ₩ 8,401 ₩ 2,307 ₩ 12,466
(4) Other provisions
March 31, 2012 March 31, 2011
Beginning ₩ 21,826 ₩ 20,916
Increase (decrease) (2,242) -
Ending ₩ 19,584 ₩ 20,916
Above amounts include provision for deposits in escrow account of ₩14,058 million, provision for pending
litigations of ₩5,489 million and provision for relief from voice phishing of ₩37 million.
23. - 16 -
18. DERIVATIVES AND HEDGE ACCOUNTING:
(1) There are no derivative instruments held for trading as of March 31, 2012 and December 31, 2011.
(2) Cash flow hedge
1) Fair value of cash flow hedge as of March 31, 2012 and December 31, 2011 are as follows (Won in
millions):
March 31, 2012 December 31, 2011
Contract Contract
Amount Asset Liabilities Amount Asset Liabilities
Interest rate
swap ₩ 280,000 ₩ 972 195 ₩ 280,000 ₩ 643 ₩ 931
Cross currency
swap 972,973 5,589 6,324 582,573 1,912 4,395
Total ₩ 1,252,973 ₩ 6,561 ₩ 6,519 ₩ 862,573 ₩ 2,555 ₩ 5,326
For transactions between local currencies and foreign currencies, the unsettled amount of transaction is presented
using the basic foreign exchange rate on the contract amount in foreign currencies. For transaction between
foreign currencies and other foreign currencies, the unsettled amount is presented using the basic foreign
exchange rate on the contract amount in foreign currencies purchased.
2) Expected cash flow for cash flow hedge
The maximum period, of which the Company is exposed to future cash flows fluctuations arising from
currency swaps are as follows (Won in millions):
March 31, 2012 December 31, 2011
Less than 1month ₩ (1,723) ₩ (1,228)
1-3 months (5,847) (398)
3-12 months (13,980) (10,805)
1-5 years (7,648) 367
₩ (29,198) ₩ (12,064)
19. SHARE CAPITAL:
(1) The Parent’s authorized shares are 600,000,000 (₩5,000 per shares), and 160,465,286 shares of common
stocks (₩802,326 million) are issued as of March 31, 2012.
(2) There are no changes in shares of the Parent for the three months ended March 31, 2012.
(3) 50,572,187 shares (₩252,861 million) of common stock issued by the Parent are owned by Hyundai Motors
Company as of March 31, 2012.
20. CAPITAL SURPLUS:
Details of capital surplus as of March 31, 2012 and December 31, 2011 are as follows (Unit: Won in millions):
March 31, 2012 December 31, 2011
Share premium ₩ 45,399 ₩ 45,399
Other capital surplus 12,305 12,305
₩ 57,704 ₩ 57,704
24. - 17 -
21. RETAINED EARNINGS:
(1) Details of retained earnings as of March 31, 2012 and December 31, 2011 are as follows (Unit: Won in
millions):
March 31, 2012 December 31, 2011
Legal reserve (*) ₩ 20,143 ₩ 20,143
Reserve for bad loans 458,179 439,031
Retained earnings 745,072 689,223
₩ 1,223,394 ₩ 1,148,397
(*) The Korean Commercial Code requires a company to appropriate at least 10 percent of dividends paid
as legal reserve for each fiscal period, until the reserve equals 50 percent of paid-in capital. This
reserve is not available for payment of cash dividends; however, it can be used to reduce deficit or be
transferred to capital.
(2) Changes in retained earnings for the three months ended March 31, 2012 and 2011 are as follows (Unit: Won
in millions):
Three months ended March 31,
2012 2011
Beginning ₩ 1,148,397 ₩ 909,749
Net income attributable to the owners of the Company 74,997 74,050
Total dividends - -
Ending ₩ 1,223,394 ₩ 983,799
22. RESERVES:
(1) Reserves as of March 31, 2012 and December 31, 2011 are as follows (Unit: Won in millions):
March 31, 2012 December 31, 2011
Cash flow hedging reserve ₩ (6,776) ₩ (11,764)
(2) Cash flow hedging reserve
Details of cash flow hedging reserve for the three months ended March 31, 2012 and 2011 are as follows
(Unit: Won in millions):
Three months ended March 31,
2012 2011
Beginning ₩ (11,764) ₩ (3,150)
Cash flow hedging reserve gains (losses)
Interest rate swap 1,065 1,098
Cross currency swap 5,505 (1,570)
Tax effect (1,582) 37
Amount reclassified to current income - -
Tax effect related to reclassified amounts to current
income - -
Ending ₩ (6,776) ₩ (3,585)
Cash flow hedging reserve represents the cumulative gain or loss of hedging instruments related to the effective
portion of the Company’s hedge accounting. The cumulative deferred gains or losses of hedging instruments is
reclassified to income or loss only when the hedged item is reflected in income or loss, or by which initial book
value of non-financial hedged item is adjusted in accordance with relevant accounting policy.
25. - 18 -
23. RESERVE FOR BAD LOANS:
Reserve for bad loans is calculated and disclosed according to Article 11, Supervisory Regulation on Company
Specialized Credit Finance.
(1) Reserve for bad loans reflected in retained earnings as of March 31, 2012 and December 31, 2011 are as
follows (Unit: Won in millions):
March 31, 2012 December 31, 2011
Accumulated reserve for bad loans ₩ 439,031 ₩ 192,810
Expected reserve for bad loans 19,148 246,221
Reserve for bad loans ₩ 458,179 ₩ 439,031
(2) The provision of reserve for bad loans and adjusted income after reserve for bad loans for the three months
ended of March 31, 2012 and 2011 are as follows (Unit: Won in millions):
March 31, 2012 December 31, 2011
Provision ₩ 19,148 ₩ 28,182
Adjusted income after reserve for bad loans 55,850 45,868
Adjusted EPS after reserve for bad loans 348 286
24. GENERAL AND ADMINISTRATIVE EXPENSES:
Details of general and administrative expenses as of March 31, 2012 and 2011 are as follows (Unit: Won in
millions):
Three months ended March 31,
2012 2011
PAYROLL
Salaries wages ₩ 19,414 ₩ 20,699
Pension expenses 2,216 1,906
Employee benefits 7,546 6,588
29,176 29,193
OTHER EXPENSES
Travel expenses ₩ 502 ₩ 422
Communication expenses 5,414 5,590
Post expense 3,120 3,057
Rental expenses 6,740 5,039
Taxes dues 3,777 4,868
Repair and maintenance expenses 151 181
Insurance premiums 4 7
Entertainment expenses 184 256
Advertising expenses 9,799 10,433
Supply expenses 529 386
Vehicle maintenance expenses 8 9
Periodicals expenses 27 27
Publication expenses 1,831 1,310
Training expenses 843 733
Electronic data processing expense 8,345 6,997
Expense for temporary staff 8,750 8,325
Professional expenses 33,513 21,688
Delivery commission 980 641
Commission expense 5,872 5,919
Business activities expense 915 778
Depreciation expense 6,510 4,573
Amortization expense 3,440 2,403
Event expense 667 157
Conference expense 96 103
Building administrative expense 718 598
102,735 84,500
₩ 131,911 ₩ 113,693
26. - 19 -
25. INCOME TAX FROM CONTINUING OPERATIONS
(1) Income tax expense for the three months ended March 31, 2012 and 2011 are summarized as follows (Unit:
Won in millions):
Three months ended March 31,
2012 2011
Income tax currently payable ₩ 23,143 ₩ 21,796
Changes in deferred tax assets (liabilities) by temporary differences (*) (17,707) (1,890)
Total 5,436 19,906
Changes in income tax expense reflected directly in shareholders’
equity (1,582) 1,147
Income tax expense ₩ 3,854 ₩ 21,053
(*) Ending net deferred tax assets due to temporary differences ₩ 130,110 ₩ 126,953
Beginning net deferred tax assets due to temporary differences 112,403 125,063
Changes in net deferred tax assets due to temporary differences ₩ (17,707) ₩ (1,890)
(2) Income tax expenses reflected directly in shareholders’ equity for the three months ended March 31, 2012
are as follows (Unit: Won in millions):
January 1, 2012 March 31, 2012 Increase (Decrease)
Loss on valuation of derivatives ₩ 3,732 ₩ 2,150 ₩ (1,582)
(3) A reconciliation between income before income tax and income tax expense for the three months ended
March 31, 2012 and 2011 are as follows (Unit: Won in millions):
Three months ended March 31,
2012 2011
Income before income tax ₩ 78,852 ₩ 95,103
Income tax payable by the statutory income tax rate (23.6%
and 24.2% for the three months ended March 31, 2012 and
2011) 18,620 22,988
Tax reconciliations:
Non-taxable income - -
Non-deductible expenses 283 9
Revision of beginning deferred taxes (*) (17,481) -
Consolidation effect - (1,495)
Others (45) (449)
Sub-total (17,243) (1,935)
Any adjustments recognized in the period due to current tax of
prior period 2,477 -
Income tax of continued operation ₩ 3,854 ₩ 21,053
(*) True-up adjustment due to difference in the amount disclosed in prior year’s audit report and the actual
tax return amount
Details of changes in accumulated temporary differences for the three months ended March 31, 2012 and for the
year ended December 31, 2011 are as follows (Unit: Won in millions):
Three months ended March 31, 2012
Beginning Ending Deferred
Descriptions balance(*) Decrease Increase balance tax asset (liab.)
Temporary differences to be deducted:
Escrow deposit ₩ 14,058 ₩ - ₩ - ₩ 14,058 ₩ 3,386
Present value discount 9,178 303 - 8,875 2,138
Provision for unused commitments 47,167 47,167 48,894 48,894 11,776
Accrued expenses 62,771 62,771 56,732 56,732 13,664
Provision for mileage point 295,241 295,241 302,418 302,418 72,836
Unearned revenue (annual fee) 63,864 63,864 68,983 68,983 16,615
Debt-for-equity swap 7,459 - - 7,459 1,796
Loss on impairment of financial assets 8,247 67 - 8,180 1,970
27. - 20 -
Three months ended March 31, 2012
Beginning Ending Deferred
Descriptions balance(*) Decrease Increase balance tax asset (liab.)
available-for-sale
Allowance for doubtful accounts - - 115 115 28
Retirement benefit obligation 28,056 - 2,476 30,532 7,354
Loss on fair value of currency swaps 19,062 15,410 10,257 13,909 3,350
Provision for pending litigation 7,768 7,768 5,526 5,526 1,331
Loss on fair value of interest rate swaps 931 931 195 195 47
563,802 493,522 495,596 565,876 136,291
Temporary differences to be added:
Retirement insurance premium ₩ (19,195) ₩ - ₩ (514) ₩ (19,709) ₩ (4,747)
Accrued income (243) - - (243) (59)
Foreign currency translation gains (3,652) - - (3,652) (880)
Gain on fair value of currency swaps (202) (202) (554) (554) (133)
Gain on fair value of interest rate swaps (643) (643) (972) (972) (234)
Amortization of intangible assets (531) - - (531) (128)
(24,466) (845) (2,040) (25,661) (6,181)
Deferred income tax assets ₩ 130,110
(*) True-up adjustment of ₩(17,481) million, due to the difference between the amount disclosed in prior year’s audit
report and the actual tax return is reflected in the beginning balances.
Year ended December 31, 2011
Beginning Ending Deferred
Descriptions balance(*) Decrease Increase balance tax asset (liab.)
Temporary differences to be deducted:
Escrow deposit ₩ 18,116 ₩ 18,116 ₩ 14,058 ₩ 14,058 ₩ 3,385
Present value discount 804 8,644 17,551 9,711 2,339
Provision for unused commitments 215,032 46,073 47,167 216,126 52,047
Accrued expenses 57,894 59,541 64,418 62,771 15,116
Provision for mileage points 233,069 14,437 79,006 297,638 71,676
Debt-for-equity swap 7,450 - - 7,450 1,794
Loss on impairment of financial assets
available-for-sale 16,262 8,015 8 8,255 1,988
Foreign currency translation losses 20,419 20,419 - - -
Retirement benefit obligation 21,278 - - 21,278 5,124
Loss on fair value of currency swaps(PL) (9,993) - 13,645 3,652 879
Loss on fair value of currency swaps 4,136 4,136 15,410 15,410 3,712
Loss on fair value of interest rate swaps 973 973 931 931 224
585,440 180,354 252,194 657,280 158,284
Temporary differences to be added:
Retirement insurance premium (20,998) - - (20,998) (5,056)
Allowance for doubtful accounts 12,754 12,754 - - -
Accrued expenses - 533 (2,397) (2,930) (705)
Accrued income (291) (291) - - -
Foreign currency translation gains (10,373) - 6,721 (3,652) (879)
Provision for pending litigation - 2,800 (158,391) (161,191) (38,818)
Gain on fair value of currency swaps - - (202) (202) (49)
Gain on fair value of interest rate swaps (458) (458) (643) (643) (155)
Gain on fair value of securities (67) - 67 - -
Amortization of intangible assets - - (909) (909) (219)
Others (IFRS conversion effect) (107,893) (107,893) - - -
(127,326) (92,555) (155,754) (190,525) (45,881)
Deferred income tax assets ₩ 112,403
(*) True-up adjustment of ₩(7,156) million, due to a difference between the amount disclosed in prior year’s audit
report and the actual tax return is reflected in the beginning balances.
28. - 21 -
26. EARNINGS PER SHARE:
(1) Earnings per share for the three months ended March 31, 2012 and 2011 is as follows.
Three months ended March 31,
2012 2011
Net income ₩ 74,997,698,096 ₩ 74,049,884,990
Weighted average number of shares 160,465,286 160,465,286
Net income per share ₩ 467 ₩ 461
In addition, earnings per share for the year ended December 31, 2011 is ₩1,487 won.
(2) Diluted earnings per share
As the Company has not issued any diluted securities, as such, diluted earnings per share is the same as
basic earnings per share for the three months March 31, 2012.
27. CONTINGENCIES AND COMMITMENTS:
(1) Credit line agreement
a. The Company’s credit line agreement as of March 31, 2012 and December 31, 2011 (Unit: Won in
millions):
Type Financial instruments March 31, 2012 December 31, 2011
Overdraft limit SC First Bank ₩ 50,000 ₩ 50,000
Intraday overdraft limit Shinhan Bank and others 250,000 250,000
b. Credit Facility Agreement
The Company entered into a Credit Facility Agreement with GE Capital Corporation (“GECC”) on August 4,
2010. The Credit Facility limit is Euro equivalent of USD200 million. The Company will pay 28bp of
commitment fee for the amount and the maturity is renewable every 364 days, up to 3 years.
With regard to the Credit Facility Agreement, the Company, GECC, Hyundai Motor Company and Kia
Motors Corp. entered into a Support Agreement and the contract date of Support Agreement is the same as
that of Credit Facility Agreement. In accordance with the Support Agreement, GECC has the right of debt-
for-equity swap for the unredeemed amount in case that the Company is not able to repay after a year from
the first withdrawal of Credit Facility. Additionally, GECC has a put option to sell 41% of convertible stock
to Hyundai Motor Company and 15% of convertible stock to Kia Motors Corp. at the time of debt-for-equity
swap. Hyundai Motor Company and Kia Motors Corp. have call options to buy stocks from GECC on the
same condition of put option in case that GECC does not exercise a put option. The Company will pay 15bp
of commitment fee on the amount equivalent to 41% and 15% of settled amount of Credit Facility to
Hyundai Motor Company and Kia Motors Corp., respectively.
c. Revolving Credit Facility
The Company has a revolving credit facility agreement with many financial institutions for credit lines for
the period ended March 31, 2012 detail are as follows (Unit: Won in millions):
Financial instruments Credit line Term
Kookmin Bank ₩ 100,000 2012-01-30 ~ 2013-01-28
Kookmin Bank 30,000 2011-05-28 ~ 2012-05-28
Kookmin Bank 30,000 2011-10-24 ~ 2012-10-22
Nong Hyup 100,000 2012-03-29 ~ 2013-03-29
Citibank, Seoul 50,000 2011-12-24 ~ 2012-12-23
Woori Bank 200,000 2011-06-30 ~ 2012-06-30
Shinhan Bank 50,000 2011-04-28 ~ 2012-04-28
Shinhan Bank 50,000 2011-05-31 ~ 2012-05-31
29. - 22 -
(2) Alliance
The Company has separate agency agreements regarding its credit card business with SC First Bank,
Shinhan Bank, Woori Bank, Korea Exchange Bank, Citibank, Hana Bank, Gwangju Bank, Jeonbuk Bank,
Cheju Bank, Postal Office, Korea Computer Co., Ltd. and others.
(3) License Agreement and Franchise Agreement
The Company entered into Member Issuance and Franchise Agreements with Master Card International,
Visa International and Diners Club International for credit card issuance, and pays each a fee based on a
fixed rate for each credit card issued.
(4) Overseas Travel Insurance Agreement
The Company has a travel insurance agreement with Hyundai Marine & Fire Insurance Co., Ltd. to cover
the risks and damages that may occur during credit cardholders’ travel. As of March 31, 2012, the maximum
amount of insurance claim is ₩1.2 billion per cardholder.
(5) Directors and Officers Liability Insurance
The Company has insurance for its directors and officers covering indemnity with the limit of ₩20 billion
and financial accident liability with the limit of ₩1 billion.
(6) Pending Lawsuits
As of March 31, 2012, the following are the pending lawsuits, whose outcomes cannot be ascertained as of
the report date (Unit: Won in millions):
Type Plaintiff Defendant Amount Status
Claim for loss Hankook Cardnet and 6 The Company and 16
compensation others defendants ₩ 2,742 Ongoing
Claim for loss Jeong, Seong Hwa and 70 The Company and 16
compensation others defendants 5,971 Ongoing
Claim for loss Lee, Bok Gi The Company and 16
compensation and 113 others defendants 153 Ongoing
Claim for loss Shin, Gwang Sik and 5 The Company and 16
compensation others defendants 1,801 Ongoing
Claim for loss HanKook Card System and The Company and 16
compensation 18 others defendants 1,700 Ongoing
Unfair profits Jung, So Yeon and 26 The Company and 5
others defendants 21 Ongoing
Claim for loss Jang, Won Sik and 124 The Company and 11
compensation others defendants 700 Ongoing
Claim for loss Ko, Sung Bong and 108 The Company and 16
compensation others defendants 109 Ongoing
Claim for loss Yoon, Yong Seob and 30 The Company and 16
compensation others defendants 310 Ongoing
Claim for loss Lee, Kyoung Hee and 3 The Company and 16
compensation others defendants 80 Ongoing
Claim for loss Kang, Kyoung Hee and 53 The Company and 16
compensation others defendants 108 Ongoing
Claim for loss The Company and 16
compensation Shin, Dong Wook defendants 2 Ongoing
Claim for loss The Company and 16
compensation Yoo, Jae Won and 5 others defendants 100 Ongoing
Claim for loss The Company and 16
compensation SPECOM Co. Ltd. defendants 845 Ongoing
Claim for loss Lim, Byeong Gwi and 30 The Company and 16
compensation others defendants 2,481 Ongoing
Claim for loss ZIO TECHNET and 32 The Company and 16 903 Ongoing