"Uncertainty for Female Warriors Remains... Prepare in Advance with a Funding Plan"

The 12th Goddess Finance Forum Held

Specialized credit finance companies, including card companies, have been urged to proactively establish and prepare funding plans to cope with uncertainties.

On the 6th, Kim So-young, Vice Chairman of the Financial Services Commission, emphasized this in a congratulatory speech at the 12th Credit Finance Forum held at the Bankers' Hall in Jung-gu, Seoul, under the theme "2024 Credit Finance Industry Status and Outlook." Vice Chairman Kim stated, "The credit finance industry is going through a period of consolidation and restructuring after a phase of expansion amid a low-interest-rate environment," adding, "With uncertainties such as escalating geopolitical tensions and the possibility of continued global tightening, credit finance companies must proactively establish funding plans and inspect vulnerable sectors."

She continued, "Especially in difficult times, efforts must be made to reorganize internal controls to secure market trust," and added, "Since financial accidents reflecting the unique characteristics of the industry may occur, it is necessary to prepare and faithfully implement internal control improvement measures tailored to these characteristics."

At the forum, the impact of growing recession concerns on credit finance companies was also discussed. Oh Tae-rok, a research fellow at the Korea Institute of Finance, said, "Next year, the profitability of the credit sales sector and the soundness of loan assets are unlikely to improve significantly compared to this year due to the continuation of high interest rates, consumption slowdown, and accumulated household debt," and diagnosed, "Even if interest rates next year fall below this year's levels, the proportion of credit finance bonds issued before the arrival of high interest rates remains high, so refinancing costs for these debts will increase more than this year."

Therefore, he emphasized that card companies need to discover new growth engines as profitability in their core business may shrink. Research fellow Oh explained, "In the mid to long term, differentiated growth efforts such as discovering customized merchant services leveraging the strengths of merchant and consumer payment information or advancing personal business owner credit bureaus are necessary," adding, "In the short term, profitability improvement through reducing operating expenses such as marketing costs and soundness management considering the actual repayment burden of borrowers are required."

There was also an analysis that capital companies need to prepare. Jeon Se-wan, senior researcher at Korea Credit Rating, explained, "Next year, capital companies with high exposure to real estate finance may face further deterioration in soundness," and added, "To enhance liquidity response capabilities amid funding shortages, it is necessary to diversify alternative funding methods such as allowing securitization of rental assets."

Jung Wan-gyu, Chairman of the Credit Finance Association, said in his opening remarks, "Although the profitability of credit finance companies has worsened, card companies are maintaining leadership in the payment market despite the shocks of online shopping and simple payments, and capital companies have also supplied necessary funds to areas other financial sectors cannot reach, achieving total assets of 200 trillion won," and stated, "The Credit Finance Association will support the innovation of the credit finance industry in every possible way and strive for institutional reforms."

From the fourth on the left in the first row, Jeong Wankyu, President of the Korea Credit Finance Association, Yoon Changhyun, Member of the People Power Party, and Kim Soyoung, Vice Chairman of the Financial Services Commission (Photo by Korea Credit Finance Association)