SEOUL, March 20 (Korea Bizwire) — South Korean card firms saw their net profit drop 4 percent last year compared with a year earlier, due mainly to steep interest hikes and concerns about an economic slowdown, regulator’s data showed Monday.
The combined net profit of the big eight card issuers here, including KB Kookmin, Lotte, BC and Samsung, stood at 2.6 trillion won (US$1.98 billion) in 2022, down 107.6 billion won from a year ago, according to data compiled by the Financial Supervisory Service (FSS).
Card firms’ expenses increased as steep interest hikes pushed up the borrowing costs, the FSS said.
The firms also jacked up their larger loan-loss reserves for a potential rise in bad debts, bracing for a potential economic slowdown, the regulator added.
Last month, the Bank of Korea left its policy interest rate unchanged at 3.5 percent, the first freeze after seven straight months of increases amid growing concerns over an economic slowdown.
The central bank also lowered its growth outlook for this year to 1.6 percent from a 1.7 percent rise predicted three months earlier.
During the same 12-month period, card firms’ operational profit increased amid larger spending, FSS data showed.
The combined credit and check card payments totaled 1,076.6 trillion won in 2022, up 12.1 percent from a year earlier.
Credit loans extended by card firms, however, contracted 3.2 percent on-year to 103.8 trillion won.