Shinhan Card posted double-digit profit growth in the second quarter despite a decline in sales.
According to Shinhan Card's second-quarter earnings disclosure Thursday, net profit for the period came to 138 billion won ($93.2 million), up 2.7 billion won, or 24.4 percent, from 110.9 billion won in the same period last year.
Operating revenue fell 180.7 billion won, or 10.3 percent, year-on-year to 1.58 trillion won from 1.76 trillion won. Profit rose even as revenue declined because costs fell by a wider margin. Fee and other operating expenses shrank 213.6 billion won, or 24.1 percent, to 671.9 billion won from 885.5 billion won — a reduction that exceeded the drop in operating revenue.
The revenue decline was most pronounced in the "other" segment. Other operating revenue fell 183.4 billion won, or 27.7 percent, to 478.9 billion won from 662.3 billion won, accounting for the bulk of the overall decrease. The leasing segment also contracted 15.6 billion won, or 8.2 percent, to 173.9 billion won from 189.5 billion won.
Revenue from the core credit card business grew a modest 2.1 percent, rising 17.9 billion won to 856.9 billion won from 839 billion won. Installment finance was essentially flat, edging up 0.5 percent to 70 billion won from 69.6 billion won.
On a cumulative first-half basis, net profit for January through June reached 253.4 billion won, up 6.8 billion won, or 2.8 percent, from 246.6 billion won in the same period last year.
First-half operating revenue rose 49.9 billion won, or 1.5 percent, to 3.29 trillion won from 3.24 trillion won a year earlier. Credit card revenue led the growth, climbing 56.6 billion won, or 3.5 percent, to 1.69 trillion won from 1.63 trillion won, while installment finance added 3.3 billion won, or 2.4 percent, to 140.4 billion won from 137.1 billion won. Leasing continued to contract, falling 29.2 billion won, or 7.6 percent, to 356.6 billion won from 385.8 billion won.
Loan-loss provisions were in effect the sole driver of first-half profit growth. Provisions fell 37.6 billion won, or 7.4 percent, to 472.1 billion won from 509.7 billion won — more than five times the 6.8 billion won increase in net profit.
Despite the sharp drop in provisions, net profit growth remained limited because selling, general and administrative expenses rose. First-half SG&A expenses climbed 33.3 billion won, or 8.4 percent, to 428.4 billion won from 395.1 billion won, the highest growth rate among major line items. Fee and other operating expenses also increased 33.8 billion won, or 2.3 percent, to 1.49 trillion won from 1.46 trillion won.
Interest expenses rose only 6.1 billion won, or 1.1 percent, to 559.2 billion won from 553.1 billion won, suggesting that funding conditions were similar to or slightly better than last year.
The delinquency rate as of end-June stood at 1.21 percent, down 0.09 percentage point quarter-on-quarter.
A Shinhan Card official said the company would continue to strengthen its membership base and corporate sales capabilities to enhance its core payment competitiveness, and deepen collaboration with the group's digital platform "New Super SOL" to prepare for shifts in the future payments market. "We plan to build in-house capabilities in new payment instruments such as stablecoins and agentic payment," the official added.
won@heraldcorp.com
