Sales Performance Grew... But Impacted by Interest Expenses and Allowance for Bad Debts
[Asia Economy Reporter Minwoo Lee] Shinhan Card posted a net profit of 641.4 billion KRW last year, showing a slight decline compared to the previous year. Although there was balanced growth in credit card, loan products, and leasing sectors, the increase in interest expenses due to higher funding costs and a rise in allowance for loan losses are considered the main reasons.
On the 8th, Shinhan Card announced that it recorded sales of 4.846 trillion KRW and a net profit of 641.4 billion KRW last year. Sales increased by 10.8% compared to the same period last year, but net profit decreased by 5.0%.
While key business performance was solid, the increase in various interest expenses and allowance for loan losses is seen as the cause. Credit card sales amounted to 2.9327 trillion KRW, up 2.5% from the previous year. During the same period, installment financing grew by 23.0% to 195.3 billion KRW, and leasing increased by 29.7% to 517.9 billion KRW. Other sales also rose 25.7% year-on-year to 1.2001 trillion KRW.
However, interest expenses surged sharply, recording 710.7 billion KRW, a 40.2% increase from the previous year. This is attributed to increased funding costs amid a tightening bond market. To prepare for future uncertainties, the allowance for loan losses was also increased, reaching 560.2 billion KRW, up 26.5% year-on-year.
Shinhan Card stated that considering these factors, they have reaffirmed a sustainable profit structure. The revenue base of new businesses has expanded, diversifying the composition and contribution of net profit. The proportion of sales from new businesses, including installment financing and leasing (excluding derivative and foreign exchange-related income), rose to 35.3% of the total, up 4.9 percentage points from 30.4% in the same period last year.
The digital sector also grew. Digital payment amounts increased by 20%, from approximately 37.3 trillion KRW in 2021 to about 45 trillion KRW last year. The monthly active users (MAU) of Shinhan Play also grew from 6 million at the end of 2021 to 8.04 million at the end of 2022.
A Shinhan Card official said, "From a mid- to long-term perspective, Shinhan Card has continuously discovered and invested in future new businesses, achieving balanced growth between its core and new business sectors, and became the first in the industry to reach a total transaction amount of 214 trillion KRW in 2022." He added, "We will continue to grow as a life and finance platform company integrating financial and non-financial services by putting data- and digital-based businesses at the forefront."
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