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    1 h13 hcs_jap 1 h13 hcs_jap Presentation Transcript

    • Hyundai CapitalHyundai Capital is... Hyundai Capital Investor Presentation 1H13
    • Disclaimer These presentation materials have been prepared by Hyundai Capital Services., Inc. (“HCS or the Company”), solely for the use at this presentation and have not been independently verified. No representations or warranties, express or implied, are made as to, and no reliance should be placed on, the accuracy, fairness or completeness of the information presented or contained in this presentation. Neither the Company nor any of its affiliates, advisers or representatives accepts any responsibility whatsoever for any loss or damage arising from any information presented or contained in this presentation. The information presented or contained in this presentation is current as of the date hereof and is subject to change without notice and its accuracy is not guaranteed. Neither the Company nor any of its affiliates, advisers or representatives make any undertaking to update any suchits accuracy is not guaranteed. Neither the Company nor any of its affiliates, advisers or representatives make any undertaking to update any such information subsequent to the date hereof. This presentation should not be construed as legal, tax, investment or other advice. Certain information and statements made in this presentation contain “forward-looking statements.” Such forward-looking statements can be identified by the use of forward-looking terminology such as “anticipate,” “believe,” “considering,” “depends,” “estimate,” “expect,” “intend,” “plan,” “planning,”“planned,” “project,”“trend,” and similar expressions. All forward-looking statements are the Company’s current expectation of future events and are subject to a number of factors that could cause actual results to differ materially from those described in the forward-looking statements. Caution should be taken with respect to such statements and you should not place undue reliance on any such forward-looking statements. Certain industry and market data in this presentation was obtained from various trade associations, and the Company have not verified such data with independent sources. Accordingly, the Company make no representations as to the accuracy or completeness of that data, and such data involves risks and uncertainties and is subject to change based on various factors. This presentation does not constitute an offer or invitation to purchase or subscribe for any shares or other securities of the Company and neither any part of this presentation nor any information or statement contained therein shall form the basis of or be relied upon in connection with any contract or commitment whatsoever. Any decision to purchase shares in any offering of shares of the Company should be made solely on the basis of the information contained in the offering document which may be published or distributed in due course in connection with any offering of shares of the Company, if any. The contents of this presentation may not be reproduced, redistributed or passed on, directly or indirectly, to any other person or published, in whole or in part, for any purpose.
    • Key Highlights 1H13 • Strong Fundamentals - Good profitability: Operating income of KRW 250 billion and an ROA of 2.5% - Stable asset quality: 30+ day delinquency rate of 2.7% - Strong capital structure: Leverage of 6.7x and capital adequacy ratio of 15.3% 1 - Strong capital structure: Leverage of 6.7x and capital adequacy ratio of 15.3% • Committed & Capable Shareholder Support - HMC showed resilient performance with global sales up 7.7% (YoY) - GE Capital continues to provide committed financial and operations support • Solid Credit Profiles - Global Ratings: S&P (BBB+), Moody's (Baa1), Fitch (BBB+) - Niche Markets: RAM (AAA), JCR (A+)- Niche Markets: RAM (AAA), JCR (A+) - Domestic Ratings: AA+ • New Growth Engine: Global Expansion - Performance starting in China and UK, Record-high performance in the USA - True captive financing arm covering from the domestic market to global markets
    • Resilient Economic Growth and Steady Demand for New Cars GDP Growth Rate & Unemployment Rate Domestic Auto Sales (‘000s) GDP Growth Rate Unemployment Rate 2 Despite of slower GDP growth, unemployment rate has been stabilized Sales slightly downed due to the sluggish consumption but, HMG’s M/S trended up with superior brand power HMC HMC+KMC Market ShareKMC Others 6.1% 3.6% 3.6% 3.5% 3.0% 3.2% 3.1% GDP Growth Rate Unemployment Rate 413 485 493 482 279 321 297 261 80.1% 78.2% 79.9% 81.5% 81.6% 81.5%81.5%81.5%81.5% 1,394 1,465 1,475 HMC HMC+KMC Market ShareKMC Others 552552552552 (HMG)(HMG)(HMG)(HMG) 567567567567 (HMG)(HMG)(HMG)(HMG) 1,411 0.2% 3.6% 2.0% 1.9% 2009 2010 2011 2012 1H13 Source: Bank of Korea 703 660 684 668 328 325 239 227 128 125 2009 2010 2011 2012 1H12 1H13 677695
    • 8.8%8.8%8.8%8.8% 9.6%9.6%9.6%9.6% 19,80619,80619,80619,806 20,28620,28620,28620,286 20,29320,29320,29320,293 Receivables Breakdown by Product (KRW Bn) Low Risk-focused Product Portfolio 3 Auto asset to non-auto asset in the proportion of 80:20 ⇒ balance btw stability & Profitability Over 90% of the total receivables have underlying assets such as vehicles or real estate 55558888.1%.1%.1%.1% 57.2%57.2%57.2%57.2% 57.6%57.6%57.6%57.6% 54.2%54.2%54.2%54.2% 52.8%52.8%52.8%52.8% 15.8%15.8%15.8%15.8% 16.3%16.3%16.3%16.3% 17.3%17.3%17.3%17.3% 18.8%18.8%18.8%18.8% 19.4%19.4%19.4%19.4%7.2%7.2%7.2%7.2% 8.4%8.4%8.4%8.4% 7.9%7.9%7.9%7.9% 6.9%6.9%6.9%6.9% 6.9%6.9%6.9%6.9%9.9%9.9%9.9%9.9% 8.7%8.7%8.7%8.7% 9.1%9.1%9.1%9.1% 9.7%9.7%9.7%9.7% 1111.7%.7%.7%.7% 10.9%10.9%10.9%10.9% 9.9%9.9%9.9%9.9% 8.8%8.8%8.8%8.8% 9.8%9.8%9.8%9.8% 8.1%8.1%8.1%8.1%7.4%7.4%7.4%7.4% 8.8%8.8%8.8%8.8% 7.4%7.4%7.4%7.4% 16,48016,48016,48016,480 18,78818,78818,78818,788 19,80619,80619,80619,806 20,28620,28620,28620,286 20,29320,29320,29320,293 8.8%8.8%8.8%8.8% 1.5%1.5%1.5%1.5% 8888 2009200920092009 2010201020102010 2011201120112011 2012201220122012 1H131H131H131H13 New Car Financing Auto Lease Used Car Financing Personal Loan Mortgage GECK Others 81.1%81.1%81.1%81.1% 81.9%81.9%81.9%81.9% 82.8%82.8%82.8%82.8% AutoAutoAutoAuto----relatedrelatedrelatedrelated AssetsAssetsAssetsAssets (New Car, Auto Lease, Used Car) ProductsProductsProductsProducts 79.9%79.9%79.9%79.9% 79.1%79.1%79.1%79.1%
    • 2010 2011 2012 1H12 1H13 YoY Income Statement (KRW Bn) Good Profitability Underscores Strong Fundamentals Return on Equity & Return on Assets ROE ROA 4 Even in 2013, operating income decreased due to slower new car sales & bigger bad debt expense Return on assets increased up to 2.5% with one-time effect such as the disposal of office building 21.3% 22.0% 20.3% 14.7% 17.5% 15.7% 2010 2011 2012 1H12 1H13 YoY Operating Revenues 3,274 3,331 3,542 1,643 1,835 11.7% (Excluding FX effect) 2,889 3,125 3,071 1,538 1,454 -5.5% Operating expenses 2,644 2,672 2,953 1,312 1,585 20.8% (Excluding FX effect) 2,259 2,466 2,483 1,207 1,203 -0.3% Bad debt expense 145 354 377 179 204 13.5% ROE ROA 2.6% 2.8% 2.6% 2.2% 2.5% 2.5% 2009 2010 2011 2012 1H12 1H13 Bad debt expense 145 354 377 179 204 13.5% Operating income 630 659 589 331 250 -24.4% Income before Tax 639 663 584 335 335 -0.2% Net Income 489 507 432 245 248 1.2%
    • Stable Asset Quality and Conservative Reserve Policy 30+ Day Delinquency Rate (%) Total Reserve VS Regulatory Requirement (KRW Bn) 5 30+ Delinquency rate has been stabilized due to stringent underwriting policy and reinforced collection Maintained conservative reserve policy which is always higher than regulatory requirement 280 364 153.3% 118.0% 117.1% 108.8% 113.7% 1.8% 1.6% 2.0% 2.5% 2.7% 2.7% 610 665 Total 30+ delinquency rate New Car 30+ delinquency rate Regulatory Requirement Reserve under Accounting Principles Supplemental Reserve Total Reserve/ Regulatory Requirement K-IFRSK-GAAP Exceptional Period* 776 ** ** ** 288 401 521 611 683 442 474 345 385 412 265 280 0.7% 0.6% 0.8% 1.0% 1.1% 1.1% 2009 2010 2011 2012 1Q13 1H13 2009 2010 2011 2012 EL MethodEL MethodEL MethodEL Method * After global financial crisis, applied too tighten underwriting policy 1H13 ** Included NPL asset acquired from a commercial bank in 4Q12
    • Sound Capital Structure Maintained Leverage Trend Capital Adequacy Ratio (KRW Bn) 6 Leverage was controlled below conservative internal ceiling of 8X while following leverage regulation of 10X Capital adequacy ratio has been well controlled above the regulatory guideline of 7% 2,432 2,375 2,622 2,954 3,142 15.7% 13.7% 13.0% 14.5% 15.3% Adjusted Capital CAR 15,854 20,749 21,919 21,885 21,768 7.4X 9.3X 8.3X 7.2X 6.7X Total asset Total Assets / Total Shareholders' Equity Leverage Regulation < 10X FSS Guide Line > 7.0% 2009 2010 2011 2012 1H13 15,854 2009 2010 2011 2012 1H13
    • Diversified Funding by Type, Duration & Region In order to reduce risk of wholesale funding, maintain long-term funding > 65% Furthermore, funding sources are diversified into global markets as well as niche markets Funding Portfolio by Product Funding Strategies in 2013 ABS 7 Ⅰ.Ⅰ.Ⅰ.Ⅰ. More Weight on LongMore Weight on LongMore Weight on LongMore Weight on Long----term Fundingterm Fundingterm Fundingterm Funding • Long-term funding: 70% from 65% • ALM Target: 140% Ⅱ.Ⅱ.Ⅱ.Ⅱ. Expanding Alternative FundingExpanding Alternative FundingExpanding Alternative FundingExpanding Alternative Funding • Structure finance : Auto lease ABS • Retail Bond, Bond with option Funding Portfolio by Currency Bonds 75.8% ABS 12.7% Loans 8.7% CP 2.8% • Balance : KRW 17,050Bn • Long-term funding: 69.8% • Overseas funding: 36.5% Key Issuance since 2012 • 144/RegS: 5.5yrs, $500M • Dimsum: 1.5yrs, RMB500M • Samurai: 1.5yrs/2yrs, JPY20Bn/8Bn • ABS: $500M • Kangaroo: AU$ 250M Ⅲ.Ⅲ.Ⅲ.Ⅲ. Strengthening Overseas Funding CapabilityStrengthening Overseas Funding CapabilityStrengthening Overseas Funding CapabilityStrengthening Overseas Funding Capability • Product & Regional diversification • Target # of accessible markets : 6 global markets Funding Portfolio by Currency 0.5% 2.2% 2.9% 3.5% 5.9% 21.4% 63.5% CNY JPY MYR AUD CHF USD KRW
    • Cash Credit Line Strong Liquidity Position Financial Receivables Liquidity coverage was extended to 6M from 3M in 2011 and since that, well-achieving the target ALM policy : Funding duration > asset duration Liquidity Profile (Unit: KRW Bn) Cash Flow Profile (KRW Bn) Short-term Debt Coverage Ratio* 8 2,511 2,365 3,808 3,580 3,468 Cash Credit Line Financial Receivables Liabilities (Debt)36.0% 39.1% 63.5% 69.2% 67.4% Short-term Debt Coverage Ratio* 6M Coverage 10,641 5,694 2,456 733 251 517 ~1Y 1-2Y 2-3Y 3-4Y 4-5Y Over 5Y 5,148 4,405 2,678 2,490 2,049 280 739 1,027 1,297 1,100 978 1,367 1,338 2,511 2,480 2,490 2,106 2,365 2009 2010 2011 2012 1H13 Net Cash Flow * Short-term Debt Coverage Ratio = (Cash + Unused committed credit line)/ Short-term debt balance ~1Y 1-2Y 2-3Y 3-4Y 4-5Y Over 5Y 5,493 1,289 -222 -1,756 -1,797 237 ~1Y 1-2Y 2-3Y 3-4Y 4-5Y Over 5Y
    • Why Global Business? Current Overseas Operations Ⅰ. New Growth Engine UK JV Office/Corporation without funding Corporate with Direct Funding Global Expansion to Support HMG’s Sales and to Find New Growth 9 • Limited growth within the domestic auto financing market • HMG's solid performance Ⅱ. Request from HMG • Needs of captive finance companies to support global sales Hyundai Capital America Established : Sep.1989 Financial receivables : USD 18.8 bn Capital : USD 1.2Bn Stake : HMA 85%, KMA 15% UK JV Established : Dec 2011 Financial receivables : £ 530mm Capital : £ 20mm Stake : HCS 29.99% Hyundai Capital Europe Established : May 2010 Capital : € 2.8mm Stake : HCS 100% China JV Established : Jun 2012 Financial receivables : RMB 1.2 bn Capital : RMB 500 mm Stake : HCS 46% Hyundai Capital India Advisory Branch Hyundai Capital Russia Established : May 2011 Capital : € 290,000 Stake : HCE 100% Local (Financial) Institution and the form of JVs • Alliance with the local financial institutions to lessen entry risk Hyundai Capital Germany Established : Sept 2009 Capital : € 2mm Stake : HCS 30.01% Established : Nov 2012 Australia Post Representatives dispatched Brazil Post Representatives dispatched (Financial receivables, Capital: as of June 2013)
    • 10 Business Strategy & Global Vision Business Strategy StepⅠ.StepⅠ.StepⅠ.StepⅠ. Captive finance focusingCaptive finance focusingCaptive finance focusingCaptive finance focusing • Operating Business, focusing on New Car Financing within the Captive Markets Step Ⅱ.Step Ⅱ.Step Ⅱ.Step Ⅱ. Diversifying Product LineDiversifying Product LineDiversifying Product LineDiversifying Product Line----upupupup • Diversifying product line-up including used-car financing StablizationStablizationStablizationStablization Financing within the Captive Markets • Acquiring Market Knowledge financing • Diversifying sources of profit based on auto financing Global Auto Sales Volume (As of year 2012, Unit : 0000) Nextstep 1,450 1,470 1,403 HMG TotalHMG Total Growth Drivers Ⅰ.Ⅰ.Ⅰ.Ⅰ. High PTRHigh PTRHigh PTRHigh PTR Becoming a trueBecoming a trueBecoming a trueBecoming a true captive financingcaptive financingcaptive financingcaptive financing DriversDriversDriversDrivers EffectEffectEffectEffect USA UK China W-Europe India Brazil Russia Korea 204 203 364 294 126126126126 (8.7%) 135135135135 (9.1%) 39393939 (19.2%) 15151515 (4.0%) 36363636 (12.3%)14141414 (6.9%) 141 81818181 (5.8%) 115115115115 (81.5%) Ⅰ.Ⅰ.Ⅰ.Ⅰ. High PTRHigh PTRHigh PTRHigh PTR Ⅱ.Ⅱ.Ⅱ.Ⅱ. Usage ratio ofUsage ratio ofUsage ratio ofUsage ratio of financingfinancingfinancingfinancing captive financingcaptive financingcaptive financingcaptive financing arm covering mostarm covering mostarm covering mostarm covering most of global marketsof global marketsof global marketsof global markets and the domesticand the domesticand the domesticand the domestic marketmarketmarketmarket
    • 11 HCS' Strategy & Commitment Product • New Car/Auto lease : Shifting a paradigm into marketing driven market and holding above 80% market share Commitment to InvestorsStrategy in 2013 • Moderate asset growth targeting 80% forModerate asset growth targeting 80% forModerate asset growth targeting 80% forModerate asset growth targeting 80% for auto assets and 20% for nonauto assets and 20% for nonauto assets and 20% for nonauto assets and 20% for non----auto assetsauto assetsauto assetsauto assets Product Risk market share • Used Car : Utilizing our market position for future growth under new regulation • Non-Auto : Taking advantage of X-sell • Reinforcing asset security through more lien and meticulous underwriting • Implementing effective collection strategy • Focusing on improving collection rate of early delinquent assets auto assets and 20% for nonauto assets and 20% for nonauto assets and 20% for nonauto assets and 20% for non----auto assetsauto assetsauto assetsauto assets • IdealIdealIdealIdeal----balance between profitability andbalance between profitability andbalance between profitability andbalance between profitability and solid asset qualitysolid asset qualitysolid asset qualitysolid asset quality • Strengthening financial stability by puttingStrengthening financial stability by puttingStrengthening financial stability by puttingStrengthening financial stability by putting more focus on longmore focus on longmore focus on longmore focus on long----term funding ( >70%)term funding ( >70%)term funding ( >70%)term funding ( >70%) • Entering new markets and products toEntering new markets and products toEntering new markets and products toEntering new markets and products to Treasury Global Business • Maintaining our current conservative treasury policy - 6M liquidity coverage - ALM-based funding - Diversification of funding resources • Performing in global market as UK & China • Germany & Canada : Plans to establish a captive financing arm complete diversification strategycomplete diversification strategycomplete diversification strategycomplete diversification strategy • Expanding global business whileExpanding global business whileExpanding global business whileExpanding global business while simultaneously stabilizing existing globalsimultaneously stabilizing existing globalsimultaneously stabilizing existing globalsimultaneously stabilizing existing global operationsoperationsoperationsoperations
    • Hyundai CapitalHyundai Capital Company Overview Hyundai Capital Investor Presentation 1H13
    • I. Who is Hyundai Capital?
    • No.1 Consumer Finance Company • Leading auto financier in Korea with dominant market share • Nine-year-long partnership between two global leaders; 12 • Nine-year-long partnership between two global leaders; Hyundai Motor and GE Capital - Jointly formed boards ensure active oversight - GE Capital appoints key executives in risk management & finance • Increasingly profitable since the establishment of the joint venture • Captive finance company for Hyundai Motor Group in Korea, and GE Capital’s only operating platform in Korea • Excellent credit ratings based on strong fundamentals - Fitch: BBB+(S) / S&P: BBB+(S) / Moody’s: Baa1(S) / Domestic: AA+(S)
    • - Leading auto maker in Korea with approximately 80% market share - Stable & solid operational base Committed Shareholder Financial & Operational Support Relationship with Shareholders GE Capital’s Financial Support 13 2013201320132013 -GE Capital total investment as of 1H13 (US$ 1.6bn) - HCS is GE Capital’s sole consumer finance business in Korea - GE Capital provides US$ 871mm in direct funding - GE Capital increases its back-up credit Line to US$ 1 bn 56.5% - Stable & solid operational base - Extensive sales network - Powerful financing arm - Effective marketing tool - Most successful joint venture - Sole consumer finance window in Korea 2009200920092009 2007200720072007 2006200620062006 2012201220122012 - GE Capital extends credit line (Total investment as of 2012: US$ 1.9bn) - GE Capital acquires 38% equity interest in HCS - GE Capital increases its holdings to 43.3% - GE Capital provides US$ 600mm back-up credit line finance business in Korea 43.3% - Advanced knowledge on risk management - Financial support - Active involvement in daily operations as well as management 2005200520052005 2004200420042004
    • • Maintain leadership in auto financing while operating in non-auto financing sector to diversify business portfolio Strategy : Capitalize on Our Leading Position 14 • Use innovative marketing to attract customers and keep them satisfied • Expand internationally through providing financing services to HMC/KMC’s global customers’ • Place top priority on stringent risk management
    • Committed to Transparent Corporate Governance Board of DirectorsBoard of DirectorsBoard of DirectorsBoard of Directors • Members : 4 from HMC, 3 from GECC GECC’s veto right 15 GECC’s veto right Risk Control CommitteeRisk Control CommitteeRisk Control CommitteeRisk Control Committee • Member : 5 from HMC, 5 from GECC • Frequency : Monthly • Function -Determination of risk indicator levels and appropriate course of actions in Executive Finance CommitteeExecutive Finance CommitteeExecutive Finance CommitteeExecutive Finance Committee • Member : 4 from HMC, 3 from GECC • Frequency : Monthly • Function -Approval of various operating expenses, Capex, business and Compliance Review BoardCompliance Review BoardCompliance Review BoardCompliance Review Board • Member : 9 from HMC, 7 from GECC • Frequency : Quarterly • Function -Formulation and execution of compliance strategy, schemes, andand appropriate course of actions in respect thereof expenses, Capex, business and funding plans compliance strategy, schemes, and improvements • C-Suite executives: Vice President, Deputy CFO, Deputy CRO, Deputy CMO, Controller • Working level : GE employees also involved in day-to-day operations • Transfer of advanced knowledge in various functions through best practice sharing program GE Presence
    • II. Macro Environment
    • Korea’s Macro Environment GDP Growth Rate & Government Debt to GDP ratio Key Interest Rate & 3Y KTB Rate GDP Growth Rate Government Debt to GDP 16 5.32 3.89 3.74 3.68 2.82 2.88 Key rate(%) 3Y KTB(%) 6.1% 3.6% 33.8% 33.4% 34.0% 37.9% Consumer Confidence Index & Unemployment Rate Germany 102 104 3.00 2.00 2.50 3.25 2.75 2.50 2.82 2.88 2009 2010 2011 1H132008 * As of Aug 22th 2013, HCS’ bond rate with 3 year maturity is 3.28% 2012 0.2% 2.0% 1.9% 2009 2010 2011 2012 1H13 KoreaKoreaKoreaKorea Japan U.K U.S.A Australia Canada France Germany 94 96 98 100 102 0% 2% 4% 6% 8% 10% 12% Unemployment rate CCI Source: Bank of Korea Source: OECD * CCI: Consumer confidence index / Unemployment rate (as of FY2012)
    • 73.1% 73.6% 76.9% 80.1% 78.2% 79.9% 81.5% 81.6% 81.5% Domestic Auto Market Domestic Auto Sales (‘000s) HMC HMC+KMC Market ShareKMC Others 17 252 271 272 316 413 485 493 482 320 313 322 267 278 320 296 261 128 1,1431,1431,1431,143 1,1651,1651,1651,165 1,2191,2191,2191,219 1,1541,1541,1541,154 1,3941,3941,3941,394 1,4651,4651,4651,465 1,4741,4741,4741,474 1,4111,4111,4111,411 695695695695 676676676676 72.0% 73.1% 73.6% 571 581 625 571 703 660 684 668 328 325 252 239 226 128 125 2005200520052005 2006200620062006 2007200720072007 2008200820082008 2009200920092009 2010201020102010 2011201120112011 2012201220122012 1H121H121H121H12 1H131H131H131H13 Source: KAMA
    • Korean Consumer Finance Market’s Unique Features • Conservative lending environment - Average auto loan life of 1.5Y (notional life of 36M + amortization structure) - Average down-payment for a car is approximately 30% 18 - Average down-payment for a car is approximately 30% - Low usage of revolving credit card products • Favorable market environment for captive finance companies - New car dealerships exclusively managed by automakers - Stable second-hand car market: high residual value of used cars • Strong credit infrastructure ’- Government’s strict regulation on LTV & DTI Ratios · Average LTV ratio for mortgages is less than 50% (Commercial Banks) -Well developed credit bureau system
    • • Industry Assets Hyundai Capital's Position in the Industry Dominant Position in Industry** Incomparably Profitable and Sound Total Industry Asset Size : KRW 45,520 bn • Profitability: ROE (Net Income/Equity) OthersHCS 19 OthersOthersOthersOthers 52.5%52.5%52.5%52.5% HCSHCSHCSHCS 47.5%47.5%47.5%47.5% 21.3% 22.0% 20.3% 14.7% 15.7% 5.8% 5.5% 4.6% 4.6% 1.8% 2009 2010 2011 2012 1H13 KRW 45,520 bn • Industry Operating Income Total Industry • Asset Quality: 30+Day Delinquency Rate 3.2% 3.2% 3.2% * Source: Financial Statistics Information System Total Industry Operataing Income Size: KRW 1,694.7 bn * Source: Financial Statistics Information System, at 1Q 2013 ** Installment Finance Industry 1.8% 1.6% 2.0% 2.5% 2.7% 3.2% 3.2% 2.8% 3.2% 3.2% 2009 2010 2011 2012 1H13 OthersOthersOthersOthers 45.7%45.7%45.7%45.7% HCSHCSHCSHCS 54.3%54.3%54.3%54.3%
    • III. Asset Portfolio & Financial Performance
    • New Car Financing Auto Lease Used Car Financing Personal Loan Mortgage GECK Others 7.4%7.4%7.4%7.4% 8.1%8.1%8.1%8.1% 1.5%1.5%1.5%1.5% Historical Asset Portfolio Breakdown Receivables Breakdown by Product (KRW Bn) 20 8.8%8.8%8.8%8.8% 1.7%1.7%1.7%1.7% 18,78818,78818,78818,788 19,80619,80619,80619,806 20,28620,28620,28620,286 20,29320,29320,29320,293 12.6%12.6%12.6%12.6% 8.1%8.1%8.1%8.1% 6.9%6.9%6.9%6.9% 14.4%14.4%14.4%14.4% 9.4%9.4%9.4%9.4% 4.0%4.0%4.0%4.0% 59.9%59.9%59.9%59.9% 14.3%14.3%14.3%14.3% 8.0%8.0%8.0%8.0% 7.8%7.8%7.8%7.8% 7.4%7.4%7.4%7.4% 7.7%7.7%7.7%7.7% 56.8%56.8%56.8%56.8% 14.8%14.8%14.8%14.8% 8.0%8.0%8.0%8.0% 7.8%7.8%7.8%7.8% 10.9%10.9%10.9%10.9% 58.1%58.1%58.1%58.1% 15.8%15.8%15.8%15.8% 7.2%7.2%7.2%7.2% 7.4%7.4%7.4%7.4% 9.9%9.9%9.9%9.9% 57.2%57.2%57.2%57.2% 16.3%16.3%16.3%16.3% 8.4%8.4%8.4%8.4% 8.7%8.7%8.7%8.7% 8.8%8.8%8.8%8.8% 57.6%57.6%57.6%57.6% 17.3%17.3%17.3%17.3% 7.9%7.9%7.9%7.9% 9.1%9.1%9.1%9.1% 54.2%54.2%54.2%54.2% 18.8%18.8%18.8%18.8% 6.9%6.9%6.9%6.9% 9.7%9.7%9.7%9.7% 52.8%52.8%52.8%52.8% 19.4%19.4%19.4%19.4% 6.9%6.9%6.9%6.9% 9.8%9.8%9.8%9.8% 8.8%8.8%8.8%8.8% 120,49120,49120,49120,49 13,47213,47213,47213,472 15,13015,13015,13015,130 16,03016,03016,03016,030 16,48016,48016,48016,480 2005200520052005 2006200620062006 2007200720072007 2008200820082008 2009200920092009 2010201020102010 2011201120112011 2012201220122012 1H131H131H131H13 68.0%68.0%68.0%68.0% 63.3%63.3%63.3%63.3% 59.9%59.9%59.9%59.9% 56.8%56.8%56.8%56.8% AutoAutoAutoAuto relatedrelatedrelatedrelated 88.7%88.7%88.7%88.7% 87.1%87.1%87.1%87.1% 82.3%82.3%82.3%82.3% 79.5%79.5%79.5%79.5% 81.1%81.1%81.1%81.1% 81.9%81.9%81.9%81.9% 82.8%82.8%82.8%82.8% 79.9%79.9%79.9%79.9% 79.1%79.1%79.1%79.1%
    • Best in Class Risk Management Strong governance for risk monitoring Examples of pre-emptive risk management Category Actions taken Details Asset slowdown • Limited funding during global financial crisis • Risk Control Committee (RCC) – Decision making for most supreme risk – Review portfolio risk performance 21 Strategy Asset slowdown (Y2008) financial crisis • Reduce non-core businesses to focus on new car financing New car Risk-based pricing • Lower pricing for customers with better credit profile Used car Policy tightening (Y2010) • Tightened underwriting policy preemptively • Sacrificed market share due to focus on asset quality – Review portfolio risk performance • Systematic New Product Risk Analysis - Two-stage RCC approval process - Pre-launch new product introduction and credit review point assessment • Risk Appetite Management – Establish guidelines for portfolio / asset quality – Determine risk management strategy per product P-loan Cross-sell • More weight on cross-selling channels to new car customers Mortgage Residual value insurance • Reflecting volatile housing market conditions • Only company insured in Korea • Portfolio Quality Review – Monitoring of main risk indices – Follow-up on effects of credit policy changes • Stress Test & Contingency Planning – Scenario analysis based on economic forecasting – Prepare action plans per contingency stage
    • Historical Asset Quality 30+ Day Delinquency Rate (%) Total 30+ delinquency rate New Car 30+ delinquency rate 22 3.5% 1.7% 1.6% 2.3% 1.8% 1.6% 2.0% 2.5% 2.7% 1.5% 1.2% 1.0% 1.3% 0.7% 0.6% 0.8% 1.0% 1.1% 2005200520052005 2006200620062006 2007200720072007 2008200820082008 2009200920092009 2010201020102010 2011201120112011 2012201220122012 1H131H131H131H13
    • 2008 2009 2010 2011 2012 1H12 1H13 YoY Solid Profit Underscores Strong Fundamentals Income Statement (KRW Bn) KKKK----IFRSIFRSIFRSIFRSKKKK----GAAPGAAPGAAPGAAP 23 Operating Revenues 4,330 2,989 3,274 3,331 3,542 1,643 1,835 11.7% (excl. FX effect) 2,384 2,485 2,889 3,126 3,071 1,538 1,454 -5.5% Operating Expenses 3,824 2,448 2,642 2,672 2,953 1,312 1,585 20.8% (excl. FX effect) 1,879 1,944 2,259 2,466 2,483 1,207 1,203 -0.3% Interest expenses 674 679 890 956 895 454 402 -11.5% Lease expenses 587 550 557 505 517 252 251 -0.7% SG&A Expenses 498 496 586 603 637 282 315 11.7% PPOP 600 717 778 1,014 966 511 454 -11.1% Bad Debt expenses 95 176 145 354 377 179 204 13.5% Operating Income 505 541 630 659 589 331 250 -24.4% Income before Tax 518 538 639 663 584 335 335 -0.2% Net Income 377 411 489 507 432 245 248 1.2% ROA 2.4% 2.6% 2.8% 2.6% 2.2% 2.5% 2.5% ROE 25.1% 21.3% 22.0% 20.3% 20.0% 17.5% 15.7%
    • 195.4% 164.0% 158.5% 151.6% 153.3% Historical Reserve & FSS Requirement Coverage Ratio Total Reserve VS Regulatory Requirement (KRW Bn) Regulatory Requirement Reserve under Accounting Principles Supplemental Reserve Total Reserve/ Regulatory Requirement 24 611 683 265 280 364 151.6% 153.3% 118.0% 117.1% 108.8% 113.7% 776 610 665 240 222 241 279 288 401 521 611 469 364 382 423 442 474 345 385 412 2009200920092009 2010201020102010 2011201120112011 201220122012201220082008200820082005200520052005 2006200620062006 2007200720072007 K-IFRS 1H131H131H131H13 K-GAAP
    • Historical Leverage Trend Leverage Trend Total Assets / Total Shareholders' Equity 25 16.0x 12.6x 9.7x 9.7x 9.3x 10.3x 7.4x 8.3x 7.2x 6.7x 2004200420042004 2005200520052005 2006200620062006 2007200720072007 2008200820082008 2009200920092009 2010201020102010 2011201120112011 2012201220122012 1H131H131H131H13
    • 15.7% 14.5% 15.3% Historical Capital Structure Capital Adequacy Ratio (KRW Bn) Adjusted Capital CAR 26 2,432 2,375 2,622 2,954 3,142 11.3% 12.7% 12.8% 11.7% 11.5% 13.7% 13.0% 14.5% 1,033 1,337 1,540 1,591 1,825 2,432 2,375 2,622 2004200420042004 2005200520052005 2006200620062006 2007200720072007 2008200820082008 2009200920092009 2010201020102010 2011201120112011 2012201220122012 1H131H131H131H13
    • IV. Funding & Liquidity
    • Diversification of Funding Portfolio Over Time Managed Borrowings (KRW Bn) 27 • Maintain ABS under 20%, CP under 10% • Diversify funding portfolio in terms of currency, region and product • Maintain the average liability to asset maturity ratio above 100% Funding Principles 13,21313,21313,21313,213 12,59712,59712,59712,597 12,56812,56812,56812,568 13,41213,41213,41213,412 14,33514,33514,33514,335 14,37814,37814,37814,378 16,56016,56016,56016,560 17,33017,33017,33017,330 17,33817,33817,33817,338 17,05017,05017,05017,050 Bond-domestic Bond-overseas ABS-domestic ABS-overseas Bank loans CP Total Managed Borrowings (KRW Bn) 31.0%31.0%31.0%31.0% 17.7%17.7%17.7%17.7% 11.5%11.5%11.5%11.5% 14.2%14.2%14.2%14.2% 17.2%17.2%17.2%17.2% 18.3%18.3%18.3%18.3% 12.9%12.9%12.9%12.9% 13.3%13.3%13.3%13.3% 5.7%5.7%5.7%5.7% 11.9%11.9%11.9%11.9% 8.3%8.3%8.3%8.3%9.9%9.9%9.9%9.9% 16.9%16.9%16.9%16.9% 8.7%8.7%8.7%8.7% 10.4%10.4%10.4%10.4% 10.3%10.3%10.3%10.3% 10.6%10.6%10.6%10.6% 10.7%10.7%10.7%10.7% 8.7%8.7%8.7%8.7% 8.2%8.2%8.2%8.2% 6.8%6.8%6.8%6.8% 6.7%6.7%6.7%6.7% 9.8%9.8%9.8%9.8% 7.4%7.4%7.4%7.4% 8.5%8.5%8.5%8.5% 5.9%5.9%5.9%5.9% 9.1%9.1%9.1%9.1% 8.7%8.7%8.7%8.7% 4.3%4.3%4.3%4.3% 3.9%3.9%3.9%3.9% 9.1%9.1%9.1%9.1% 9.4%9.4%9.4%9.4% 3.4%3.4%3.4%3.4% 6.9%6.9%6.9%6.9% 9.1%9.1%9.1%9.1% 7.1%7.1%7.1%7.1% 31.0%31.0%31.0%31.0% 29.3%29.3%29.3%29.3% 26.5%26.5%26.5%26.5% 25.7%25.7%25.7%25.7% 29.1%29.1%29.1%29.1% 27.5%27.5%27.5%27.5% 4.9%4.9%4.9%4.9% 7.8%7.8%7.8%7.8% 8.7%8.7%8.7%8.7% 2.8%2.8%2.8%2.8% 28.3%28.3%28.3%28.3% 2004200420042004 2005200520052005 2006200620062006 2007200720072007 2008200820082008 2009200920092009 2010201020102010 2011201120112011 2012201220122012 1H131H131H131H13 %%%% of LTof LTof LTof LT FundingFundingFundingFunding 39.1%39.1%39.1%39.1% 47.6%47.6%47.6%47.6% 57.5%57.5%57.5%57.5% 57.9%57.9%57.9%57.9% 59.0%59.0%59.0%59.0% 59.3%59.3%59.3%59.3% 63.5%63.5%63.5%63.5% 65.4%65.4%65.4%65.4% 70.1%70.1%70.1%70.1% 69.8%69.8%69.8%69.8% 36.9%36.9%36.9%36.9% 2.9%2.9%2.9%2.9% 34.0%34.0%34.0%34.0% 38.4%38.4%38.4%38.4% 18.3%18.3%18.3%18.3% 26.3%26.3%26.3%26.3% 30.7%30.7%30.7%30.7% 39.1%39.1%39.1%39.1% 41.9%41.9%41.9%41.9% 42.9%42.9%42.9%42.9% 46.7%46.7%46.7%46.7% 14.1%14.1%14.1%14.1% 31.0%31.0%31.0%31.0% 47.5%47.5%47.5%47.5%
    • Funding by Currency & Outstanding Global Bonds Funding Portfolio by Currency Outstanding Global Bonds* Issue Date Maturity Amount 144A/Reg S Nov.’09 5.5 years USD 500m Jan.’11 5.5 years USD 700m 28 JPY 2.2%JPY 2.2%JPY 2.2%JPY 2.2% AUD 3.5%AUD 3.5%AUD 3.5%AUD 3.5% 144A/Reg S Jan.’11 5.5 years USD 700m Mar.’12 5.5 years USD 500m Samurai Nov. ‘12 1.5 years JPY 20,000m Nov. ‘12 2 years JPY 8,000m Swiss Franc Jul. ’10 5 years CHF 150m Oct. ’10 4 years CHF 200m May ’11 2.5 years CHF 150m May’11 5 years CHF 150m Feb.’12 5 years CHF 200m KRWKRWKRWKRW 63.5%63.5%63.5%63.5% USDUSDUSDUSD 21.4%21.4%21.4%21.4% CHF 5.9%CHF 5.9%CHF 5.9%CHF 5.9% MYR 2.9%MYR 2.9%MYR 2.9%MYR 2.9% ’ Malaysian Ringgit May ’11 2.5 years MYR 650m Feb.’12 5 years MYR 320m May ’12 3 years MYR 370m Australian Dollar Jun. ’12 3 years AUD 175m Kangaroo May ’13 4 years AUD 250m Dim Sum Sep. ‘12 1.5 years RMB 500m (*As of Jun, 2013) • Funding Balance: KRW 17,050 Bn • Foreign Exchange Risk: -100% of foreign currency exposure is hedged through swap transactions entered into at the time of bond issuance.
    • 29 Liquidity Profile (Unit: KRW Bn) Cash Short-term Debt Coverage Ratio* Historical Liquidity Position 63.5% 69.2% 67.4% Credit Line 1,367 1,338 2,511 2,480 2,490 1,332 1,336 1,789 2,106 2,365 3,808 3,580 3,468 4.6% 16.0% 25.0% 23.7% 30.4% 36.0% 39.1% 63.5% 67.4% 370 405 401 398 707 739 1,027 1,297 1,100 978 652 931 938 1,082 1,367 370 1057 1,332 1,336 2004200420042004 2005200520052005 2006200620062006 2007200720072007 2008200820082008 2009200920092009 2010201020102010 2011201120112011 2012201220122012 1H131H131H131H13 * Short-term Debt Coverage Ratio = (Cash + Unused committed credit line)/ Short-term debt balance
    • V. Others
    • 30 Credit Ratings & Rationale HCS’ Global Credit Ratings* Credit Rating Rationale A+(S) AAA • Strong Standalone Profile – Sustainable track record of strong profit performance and robust credit fundamentals Baa1(S) BBB+(S) BBB+(S) Moody's S&P Fitch JCR RAM HCS & Competitors’ Domestic Credit Ratings performance and robust credit fundamentals – Low risk-focused product portfolio and prudent risk management – Adequate liquidity and sound capitalization – Strong market position as HMC's key captive financing arm • Capable & Willing Shareholder Support - Solid backup line provided by GE Capital through AA+ AA- - Solid backup line provided by GE Capital through its capital and managerial support - Strong likelihood of HMC’s assistance in contingency given its strong relationship with the parent evident in its capital contribution, board members and business base. AA- A+ A+ A+ Hyundai Capital W Financial A Capital W Capital N Capital (*As of Jun, 2013)
    • 31 Performance of Hyundai Motor Company Strength Performance Product Mix 61% Total Sales (‘000s) 3,612 4,059 4,392 2,134 2,299 16% 17% 6% Compact Mid & Large RV Commercial Market Diversification 14.2% 15.7% 9.2% 21.5% 39.4% Korea US Europe China Others OP Margin 2,134 2,299 2010 2011 2012 1H12 1H13 8.8% 10.4% 10.0% 11.0% 9.6% 2010 2011 2012 1H12 1H13Korea US Europe China Others Brand Value • Increase in residual value of vehicles due to strengthened brand awareness • Boost in luxury car sales has increased the average selling price Net Profit (KRW Bn) 2010 2011 2012 1H12 1H13 6,001 8,105 9,056 5,001 4,661 2010 2011 2012 1H12 1H13
    • Investor Relations Contacts Jungsang Kim, Head of Investor Relations Phone +82 2 2167 7034 jungsang.kim@hyundaicard.com Minchul Seo, Deputy General Manager of Investor Relations Phone +82 2 2167 7051 mcseo@hyundaicapital.com Suh ye Choi, Manager of Investor Relations Phone +82 2 2167 7541 Justin Lee, Manager of Investor Relations Phone +82 2 2167 8082Phone +82 2 2167 7541 sychoi@hyundaicard.com http://ir.hyundaicapital.com/ Phone +82 2 2167 8082 justin.j.lee@hyundaicard.com Jay Moon, Assistant Manager of Investor Relations Phone +82 2 2167 5312 jaymoon@hyundaicapital.com Hyunyoung Jang, Assistant Manager of Investor Relations Phone +82 2 2167 6955 hyunyoung.jang@hyundaicard.com