2. 1
Disclaimer
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presentation and have not been independently verified. No representations or warranties, express or implied, are made as to, and no reliance
should be placed on, the accuracy, fairness or completeness of the information presented or contained in this presentation. Neither the
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3. 2
Major issues in 1H15
Focus on Member acquisition and management to prepare for enhanced profitability going-
forward
Maintain Stability and improve customer profile through finance product's qualitative growth
Secure Loyal members and strengthen New members’ lock-in through Differentiated branding
4. 3
Business Environment
Domestic Economy Private Consumption
(unit: KRW tn)
Slow growth of card industry
• Card usage closely linked to private consumption, as a
major means of payment
Economic recovery delayed
• GDP growth rate lowered (Bank of Korea, ‘15. 7)
Low interest continued
• Competition intensified as funding cost gap narrows
2.0%
2.8%
3.3%
2.4%
2.75%
2.50%
2.00%
1.50%
2012 2013 2014 1H15
GDP growth rate Key rate
708 728 749
192
478 490 501
123
67.6% 67.3% 66.9% 64.4%
2012 2013 2014 1Q15
Private consumption Credit card usage
% of credit card usage
5. 4
Asset
Asset Portfolio Business Strategies 2015
(unit: KRW tn)
2012 2013 2014 1H15 YTD
Lump sum 4,397 4,263 4,445 4,113 -7.5%
Installment 2,208 2,133 2,470 2,488 0.7%
Cash advance 940 849 838 785 -6.3%
Card loan 2,352 2,702 3,048 3,072 0.8%
(unit: KRW bn)
Reference : E-mart E card
Strengthened New member Acquisition
• Focus on prime customer
• Expand recruiting channel strategic alliance with large
distribution company
Prime-focused Recruitment
• Provide customized benefits
• Mobile App integrating Card mgmt. and payment (1st in industry)
• Reinforce finance service marketing to prime customers
Creating a New Rule of Alliance
• SSG Point accumulated for all spending
• No hurdles e.g. Min. usage etc.
• Full line-up : check card to corporate card
→ Differentiated benefits and wide usage
6,605 6,396 6,915 6,601
3,292 3,552
3,885 3,857
9,898 9,947
10,800 10,458
66.7% 64.3% 64.0% 63.1%
2012 2013 2014 1H15
Credit purchase Finance % of Credit purchase
6. 5
Profitability
(unit: KRW bn)
① Excluding FX effects
Summary of Income Statement
2013 2014 1H14 1H15 YoY
Operating Rev①
2,527.5 2,618.0 1,268.0 1,269.4 0.1%
Card revenue 2,453.3 2,515.8 1,241.3 1,242.1 0.1%
Operating Exp①
2,307.6 2,318.0 1,093.4 1,129.0 3.3%
Card expense 1,028.2 1,041.3 498.4 529.3 6.2%
SG&A 636.5 647.0 300.3 332.7 10.8%
Interest expense 312.9 305.9 153.6 140.8 -8.3%
Bad debt expense 247.7 265.9 126.3 105.9 -16.1%
Operating income 219.9 300.0 179.2 145.1 -19.1%
Net income 163.2 205.1 137.0 110.8 -19.1%
ROA 1.8% 2.2% 2.8% 2.1% -0.7%p
Analysis on Income Statement
Operating Revenue
• Credit purchase stagnant due to consumption decrease
• Intensified competition on Finance
Operating Expense
• Increased card expense due to acquisition and marketing
to prepare for LT profitability
• Interest and bad debt expense reduction to sustain
profitability
25.7 26.2
1H14 1H15
Sales volume of credit purchase
7. 6
Asset Quality
Delinquency and Reserve Risk Management Strategies
2012 2013 2014 1H15 YTD
Total Reserve 544 594 649 596 -8.3%
Allowance 181 205 236 231 -1.9%
Reserve 363 389 413 364 -11.9%
FSS coverage 157% 144% 132% 133% 1.0%p
Qualitative growth pursued on Finance
• Pursue finance sales focused on Prime customers
• Restriction of card loan sales to sub-prime (CB 8 or lower)
(unit: KRW bn)
0.7%
0.8%
0.9% 0.9%
0.5%
0.6% 0.6% 0.6%
2012 2013 2014 1H15
30+days delinquency ratio
30+days delinquency ratio (excl. re-aged loan)
4.2 4.2 4.1 4.0 4.0 3.9
51.9% 52.0%
53.8%
56.1% 56.1%
58.2%
1Q14 2Q14 3Q14 4Q14 1Q15 2Q15
Avg. CB of card loan customer % of CB 1-4
8. 7
Capital Structure
Leverage
① Based on previous quarter’s total capital since 2013
2012 2013 2014 1H15 YTD
Total Asset 11,252 11,521 12,397 12,112 -2.3%
Total Capital① 2,192 2,325 2,549 2,615 2.6%
(Unit: KRW bn)
Capital Adequacy Ratio
2012 2013 2014 1H15 YTD
Adjusted
Total Asset
9,638 9,616 11,273 10,928 -3.1%
Adjusted
Total Capital
1,801 1,869 2,048 2,198 7.4%
(unit: KRW bn)
5.1X 5.0X 4.9X
4.6X
2012 2013 2014 1H15
18.7% 19.4%
18.2%
20.1%
2012 2013 2014 1H15
9. 8
Funding
Funding Portfolio by product Asset-Liability Maturity
2014 1H15
Total Funding 3,584 900
Bond 1,820 540
ABS 604 -
others 1,160 360
(unit: KRW bn)
Funding Portfolio Guidelines
• Long-term debt : 60% or more
• By Product: ABS <20%, CP <10%
• ALM ratio : 100% or more
Domestic
bond
87.6%
Domestic
ABS
4.0%
Overseas
ABS
5.0%
Loans
2.7%
CP
0.7%
2014 1H15
1.8yr
2.1yr 2.1yr
1.9yr
133.4%
158.7%
137.9% 140.7%
2012 2013 2014 1H15
Debt maturity ALM ratio
Domestic
bond
84.2%
Domestic
ABS
3.8%
Overseas
ABS
9.5%
Loans
2.5%
KRW
7.9tn
KRW
7.5tn
10. 9
Liquidity
Liquidity Position Short-term debt Coverage
Contingency framework
• Early warning and response system in place
• Daily monitoring of key market indicators
(unit: KRW bn)
Liquidity Management
• Satisfies Basel III Liquidity coverage ratio
• Diversified Credit lines by lender and tenor
(unit: KRW bn)
690 780 810 973
824
866
490
490
1,514
1,646
1,300
1,463
2012 2013 2014 1H15
Cash Credit line
2,311
1,881 2,083 2,103
65.5%
87.5%
62.4%
69.6%
2012 2013 2014 1H15
Short-term debt Short-term debt coverage ratio
11. 10
Branding Progress
2013.2
Design Library
2015.5
Music Library + UNDERSTAGE
Hyundai card Library Card Factory
2014.4
Travel Library
Visualize financial capital through industrial capital
• Demonstrates manufacturing process of “Card”, the most
advanced currency
• Design motifs on Industrial Revolution
• Provides user experience of actual card issuance
