[Click eStock] Samsung Card, Limited Impact from Fee Rate Revision

[Image source=Yonhap News]

[Asia Economy Reporter Junho Hwang] Korea Investment & Securities has maintained the target price for Samsung Card at 44,000 KRW.

Samsung Card's third-quarter net profit was 139.5 billion KRW, in line with market expectations. Despite some consumer slowdown, a significant increase in personal credit card usage was a notable feature.

Third-quarter personal credit card usage increased by 14.5% compared to the same period last year. This was the result of continuous high growth since the beginning of the year in sectors such as online shopping, department stores, and fuel. Market share is estimated to have risen to 19% from the previous quarter due to increased transaction volume per member through improved member efficiency.

Profitability is also showing a steady trend. Except for the issue of fee refunds for small and medium-sized merchants among new affiliates, the merchant fee rate is expected to remain unchanged. The effect of the July statutory maximum interest rate reduction is expected to be around 15 billion KRW reflected in the second half of this year.

An announcement on the merchant fee restructuring plan is expected at the end of next month. However, despite the impact of the merchant fee rate reduction and rising funding costs, net profit next year is projected to decrease by only 2% compared to the previous year due to an increase in card assets and stabilization of bad debt expenses.

Baekdusang, a researcher at Korea Investment & Securities, stated, "Although the merchant fee restructuring plan is expected to be announced at the end of next month, despite the impact of the merchant fee rate reduction and rising funding costs, net profit in 2022 is expected to decrease by only 2% compared to the previous year due to an increase in card assets and stabilization of bad debt expenses."