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    Hcs 1 q13_ir_eng Hcs 1 q13_ir_eng Presentation Transcript

    • Hyundai CapitalHyundai Capitalis...Hyundai Capital Investor Presentation 1Q13
    • DisclaimerThese presentation materials have been prepared by Hyundai Capital Services., Inc. (“HCS or the Company”), solely for the use at this presentation andhave not been independently verified. No representations or warranties, express or implied, are made as to, and no reliance should be placed on, theaccuracy, 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 thispresentation. The information presented or contained in this presentation is current as of the date hereof and is subject to change without notice andits 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 suchinformation 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 canbe 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 futureevents and are subject to a number of factors that could cause actual results to differ materially from those described in the forward-lookingstatements. Caution should be taken with respect to such statements and you should not place undue reliance on any such forward-lookingstatements.Certain industry and market data in this presentation was obtained from various trade associations, and the Company have not verified such data withindependent sources. Accordingly, the Company make no representations as to the accuracy or completeness of that data, and such data involves risksand 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 anypart of this presentation nor any information or statement contained therein shall form the basis of or be relied upon in connection with any contract orcommitment whatsoever. Any decision to purchase shares in any offering of shares of the Company should be made solely on the basis of theinformation contained in the offering document which may be published or distributed in due course in connection with any offering of shares of theCompany, 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 wholeor in part, for any purpose.
    • Key Highlights 1Q13• Strong Fundamentals- Good profitability: Operating income of KRW 119 billion and an ROA of 3.0%- Solid asset quality: 30+ day delinquency rate of 2.7%- Strong capital structure: Leverage of 6.8x and capital adequacy ratio of 15.1%1- Strong capital structure: Leverage of 6.8x and capital adequacy ratio of 15.1%• Committed & Capable Shareholder Support- HMC showed resilient performance with global sales up 7.9% (YoY)- GE Capital continues to provide committed financial and operations support• Solid Credit Profiles- Global Ratings: S&P (BBB+), Moodys (Baa1), Fitch (BBB+)- Niche Markets: RAM (AAA), JCR (A+)- Niche Markets: RAM (AAA), JCR (A+)- Domestic Ratings: AA+• New Growth Engine: Global Expansion- Successful launching 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 CarsGDP Growth Rate & Unemployment Rate Domestic Auto Sales (‘000s)GDP Growth Rate Unemployment Rate2Despite of slower GDP growth, unemployment rate has been stabilizedSales slightly downed due to the sluggish consumption but, HMG’s M/S trended up with superior brand powerHMC HMC+KMC Market ShareKMC Others6.1%3.6%3.6% 3.5%3.0%3.2%3.4%GDP Growth Rate Unemployment Rate413 485 493 482279321 29726180.1%78.2%79.9%81.5% 81.8%81.1%81.1%81.1%81.1%1,3941,465 1,475HMC HMC+KMC Market ShareKMC Others1,4110.2%3.6%2.0%1.5%2009 2010 2011 2012 1Q13Source: Bank of Korea703 660 684 668155 154116 10960 612009 2010 2011 2012 1Q12 1Q13324324324324263263263263(HMG)(HMG)(HMG)(HMG)271271271271(HMG)(HMG)(HMG)(HMG)331
    • 8.8%8.8%8.8%8.8%9.6%9.6%9.6%9.6%19,80619,80619,80619,80620,28620,28620,28620,286 20,21420,21420,21420,214Receivables Breakdown by Product (KRW Bn)Low Risk-focused Product Portfolio3Maintain auto asset to non-auto asset in the proportion of 80:20 ⇒ balance btw stability & ProfitabilityOver 90% of the total receivables have underlying assets such as vehicles or real estate55558888.1%.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% 53.2%53.2%53.2%53.2%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% 19.1%19.1%19.1%19.1%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%9.7%9.7%9.7%9.7%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%16,48016,48016,48016,48018,78818,78818,78818,78819,80619,80619,80619,80620,28620,28620,28620,286 20,21420,21420,21420,2148.6%8.6%8.6%8.6%1.5%1.5%1.5%1.5%88882009200920092009 2010201020102010 2011201120112011 2012201220122012 1Q131Q131Q131Q13New Car Financing Auto Lease Used Car Financing Personal Loan Mortgage GECK Others81.1%81.1%81.1%81.1% 81.9%81.9%81.9%81.9% 82.8%82.8%82.8%82.8%AutoAutoAutoAuto----relatedrelatedrelatedrelatedAssetsAssetsAssetsAssets (New Car, Auto Lease,Used Car)ProductsProductsProductsProducts79.9%79.9%79.9%79.9% 79.2%79.2%79.2%79.2%
    • 2010 2011 2012 1Q12 1Q131Q131Q131Q13 YoYIncome Statement (KRW Bn)Good Profitability Underscores Strong FundamentalsReturn on Equity & Return on AssetsROE ROA4Even in 2013, operating income decreased due to slower new car sales & bigger bad debt expenseReturn on assets increased up to 3.0% with one-time effect such as the disposal of office building21.3%22.0%20.3% 20.0%19.1%19.7%19.7%19.7%19.7%2010 2011 2012 1Q12 1Q131Q131Q131Q13 YoYOperating Revenues 3,274 3,331 3,542 916 921 0.5%(Excluding FX effect) 2,889 3,125 3,071 769 722 -6.1%Operating expenses 2,644 2,672 2,953 735 802 9.2%(Excluding FX effect) 2,259 2,466 2,483 588 603 2.6%ROE ROA2.6%2.8%2.6%2.2%2.6%3.0%3.0%3.0%3.0%2009 2010 2011 2012 1Q12 1Q13Bad debt expense 145 354 377 83 101 21.6%Operating income 630 659 589 181 119 -34.5%Net Income 489 507 432 129 153 18.4%
    • Excellent Asset Quality and Conservative Reserve Policy30+ Day Delinquency Rate (%) Total Reserve VS Regulatory Requirement (KRW Bn)530+ Delinquency rate has been slightly increased due to the slowdown in the macro economyMaintained conservative reserve policy which is always higher than regulatory requirement280 265153.3%118.0% 117.1%108.8% 101.5%1.8%1.6%2.0%2.5%2.7%610665Total 30+ delinquency rate New Car 30+ delinquency rate Regulatory Requirement Reserve under Accounting PrinciplesSupplemental Reserve Total Reserve/ Regulatory RequirementK-IFRSK-GAAPExceptionalPeriod*664****288401521611 654442 474345385399265280 2650.7%0.6%0.8%1.0%1.1%2009 2010 2011 2012 1Q13 2009 2010 2011 2012EL MethodEL MethodEL MethodEL Method* After global financial crisis, applied too tighten underwriting policy1Q13** Included NPL asset acquired from a commercial bank in 4Q12
    • Sound Capital Structure MaintainedLeverage Trend Capital Adequacy Ratio (KRW Bn)6Leverage was controlled below conservative internal ceiling of 8X while following leverage regulation of 10XCapital adequacy ratio has been well controlling above the regulatory guideline of 7%2,432 2,3752,6222,9543,07115.7%13.7%13.0%14.5%15.1%Shareholders Equity Adjusted Capital CAR15,85420,74921,919 21,885 21,6257.4X9.3X8.3X7.2X6.8XTotal asset Total Assets / Total Shareholders EquityLeverage Regulation < 10XFSS Guide Line > 7.0%2,156 2,2162,6563,031 3,1622009 2010 2011 2012 1Q1315,8542009 2010 2011 2012 1Q13
    • Diversified Funding by Type, Duration & RegionIn order to reduce risk of wholesale funding, maintain long-term funding > 65%Furthermore, funding sources are diversified into global markets as well as niche marketsFunding Portfolio by Product Funding Strategies in 2013Loans CP7Ⅰ.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 optionFunding Portfolio by CurrencyBonds76.1%ABS12.0%Loans8.6%CP3.3%• Balance : KRW 16,943Bn• Long-term funding: 69.9%• Overseas funding: 37.0%Key Issuance since 2012• 144/RegS: 5.5yrs, $500M• Dimsum: 1.5yrs, RMB500M• Samurai: 1.5yrs/2yrs, JPY20Bn/8Bn• ABS: $500M• Kangaroo: AU$ 250MⅢ.Ⅲ.Ⅲ.Ⅲ. Strengthening Overseas Funding CapabilityStrengthening Overseas Funding CapabilityStrengthening Overseas Funding CapabilityStrengthening Overseas Funding Capability• Product & Regional diversification• Target # of accessible markets : 7 global marketsFunding Portfolio by Currency0.5%1.8%2.2%2.8%5.8%23.9%63.0%CNYAUDJPYMYRCHFUSDKRW
    • Cash Credit LineStrong Liquidity PositionFinancial ReceivablesLiquidity coverage was extended to 6M from 3M in 2011 and since that, well-achieving the targetALM policy : Funding duration > asset durationLiquidity Profile (Unit: KRW Bn) Cash Flow Profile (KRW Bn)Short-term Debt Coverage Ratio*82,5112,3653,8083,5803,388Cash Credit Line Financial ReceivablesLiabilities (Debt)36.0%39.1%63.5%69.2%66.4%Short-term Debt Coverage Ratio*6M Coverage10,5605,6952,502726226505~1Y 1-2Y 2-3Y 3-4Y 4-5Y Over 5Y5,1063,959 3,3352,2771,6116557391,0271,297 1,100 1,0101,3671,3382,5112,4802,3782,1062,3652009 2010 2011 2012 1Q13Net 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 5Y5,4541,736-834 -1,551 -1,384-150~1Y 1-2Y 2-3Y 3-4Y 4-5Y Over 5Y
    • Why Global Business? Current Overseas OperationsⅠ. New Growth EngineOffice/Corporation without fundingCorporate with Direct FundingGlobal Expansion to Support HMG’s Sales and to Find New Growth9• Limited growth within thedomestic auto financingmarket• HMGs solid performanceⅡ. Request from HMG• Needs of captive financecompanies to supportglobal salesHyundai Capital AmericaEstablished : Sep.1989Capital : USD 1.6BnStake : HMA 85%, KMA 15%UK JVEstablished : Dec 2011Capital : £ 20mmStake : HCS 29.99%Hyundai Capital EuropeEstablished : May 2010Capital : € 2.8mmStake : HCS 100%China JVEstablished : Jun 2012Capital : RMB 500 mmStake : HCS 46%Hyundai Capital IndiaAdvisory BranchEstablished : Nov 2012Hyundai Capital RussiaEstablished : May 2011Capital : 290,000€Stake : HCE 100%Local (Financial) Institutionand the form of JVs• Alliance with the localfinancial institutions to lessenentry riskHyundai Capital GermanyEstablished : Sept 2009Capital : € 2mmStake : HCS 30.01%Established : Nov 2012Australia PostRepresentatives dispatchedBrazil PostRepresentatives dispatched
    • 10Business Strategy & Global VisionBusiness StrategyStepⅠ.StepⅠ.StepⅠ.StepⅠ. Captive finance focusingCaptive finance focusingCaptive finance focusingCaptive finance focusing• Operating Business, focusing on New CarFinancing within the Captive MarketsStep Ⅱ.Step Ⅱ.Step Ⅱ.Step Ⅱ. Diversifying Product LineDiversifying Product LineDiversifying Product LineDiversifying Product Line----upupupup• Diversifying product line-up including used-carfinancingStablizationStablizationStablizationStablizationFinancing within the Captive Markets• Acquiring Market Knowledgefinancing• Diversifying sources of profit based on auto financingGlobal Auto Sales Volume (As of year 2012, Unit : 00000) Global VisionCorps • 3 Corps. • 7 Corps.7 Corps.7 Corps.7 Corps.Nextstep1,4501,4701,403HMG TotalHMG Total2012 2017(E)Asset • 20Trn • 50Trn50Trn50Trn50TrnUSA UK China W-Europe India Brazil Russia Korea204 203364294126126126126 (8.7%)135135135135 (9.1%)39393939 (19.2%)15151515 (4.0%) 36363636 (12.3%)14141414 (6.9%)14181818181 (5.8%)115115115115 (81.5%) OpProfit• 320Bn • 850Bn850Bn850Bn850Bn
    • 11HCS Strategy & Commitment• New Car/Auto lease : Shifting a paradigm intomarketing driven market and holding above 80%market shareCommitment to InvestorsStrategy in 2013• Moderate asset growth targeting 80% forModerate asset growth targeting 80% forModerate asset growth targeting 80% forModerate asset growth targeting 80% forauto assets and 20% for nonauto assets and 20% for nonauto assets and 20% for nonauto assets and 20% for non----auto assetsauto assetsauto assetsauto assetsProductRiskmarket share• Used Car : Utilizing our market position for futuregrowth under new regulation• Non-Auto : Taking advantage of X-sell• Implementing effective collection strategy• Focusing on improving collection rate of earlydelinquent assets• Maintaining our current conservative treasury policyauto 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 andsolid asset qualitysolid asset qualitysolid asset qualitysolid asset quality• Strengthening financial stability by puttingStrengthening financial stability by puttingStrengthening financial stability by puttingStrengthening financial stability by puttingmore 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 toTreasuryGlobalBusiness• Maintaining our current conservative treasury policy- 6M liquidity coverage- ALM-based funding- Diversification of funding resources• Germany : Preparing set-up for a captive financing arm• Brazil : Establishing a financial consulting firmcomplete diversification strategycomplete diversification strategycomplete diversification strategycomplete diversification strategy• Expanding global business whileExpanding global business whileExpanding global business whileExpanding global business whilesimultaneously stabilizing existing globalsimultaneously stabilizing existing globalsimultaneously stabilizing existing globalsimultaneously stabilizing existing globaloperationsoperationsoperationsoperations
    • Hyundai CapitalHyundai CapitalCompany OverviewHyundai Capital Investor Presentation 1Q13
    • I. Who is Hyundai Capital?
    • No.1 Consumer Finance Company• Leading auto financier in Korea with dominant market share• Eight-year-long partnership between two global leaders;11• Eight-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, andGE 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 Koreawith approximately 80% market share- Stable & solid operational baseCommitted Shareholder Financial & Operational SupportRelationship with Shareholders GE Capital’s Financial Support122013201320132013 -GE Capital total investment as of 1Q13(US$ 1.6bn)- HCS is GE Capital’s sole consumerfinance business in Korea- GE Capital provides US$ 871mm in directfunding- GE Capital increases its back-upcredit Line to US$ 1 bn56.5%- Stable & solid operational base- Extensive sales network- Powerful financing arm- Effective marketing tool- Most successful joint venture- Sole consumer finance window in Korea2009200920092009200720072007200720062006200620062012201220122012 - GE Capital extends credit line(Total investment as of 2012: US$ 1.9bn)- GE Capital acquires 38%equity interest in HCS- GE Capital increases itsholdings to 43.3%- GE Capital provides US$ 600mmback-up credit linefinance business in Korea43.3% - Advanced knowledge on riskmanagement- Financial support- Active involvement in dailyoperations as well as management20052005200520052004200420042004
    • • Maintain leadership in auto financing while operatingin non-auto financing sector to diversify business portfolioStrategy : Capitalize on Our Leading Position13• Use innovative marketing to attract customers and keep themsatisfied• Expand internationally through providing financing services toHMC/KMC’s global customers’• Place top priority on stringent risk management
    • Committed to Transparent Corporate GovernanceBoard of DirectorsBoard of DirectorsBoard of DirectorsBoard of Directors• Members : 4 from HMC, 3 from GECCGECC’s veto right14GECC’s veto rightRisk Control CommitteeRisk Control CommitteeRisk Control CommitteeRisk Control Committee• Member : 5 from HMC, 5 from GECC• Frequency : Monthly• Function-Determination of risk indicator levelsand appropriate course of actions inExecutive Finance CommitteeExecutive Finance CommitteeExecutive Finance CommitteeExecutive Finance Committee• Member : 4 from HMC, 3 from GECC• Frequency : Monthly• Function-Approval of various operatingexpenses, Capex, business andCompliance Review BoardCompliance Review BoardCompliance Review BoardCompliance Review Board• Member : 9 from HMC, 7 from GECC• Frequency : Quarterly• Function-Formulation and execution ofcompliance strategy, schemes, andand appropriate course of actions inrespect thereofexpenses, Capex, business andfunding planscompliance strategy, schemes, andimprovements• 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 programGEPresence
    • II. Macro Environment
    • Korea’s Macro EnvironmentGDP Growth Rate &Government Debt to GDP ratioKey Interest Rate & 3Y KTB Rate37.9%GDP Growth Rate Government Debt to GDP 5.323.893.74 3.682.75Key rate(%) 3Y KTB(%)156.1%3.6%33.8% 33.4% 34.0%3.00 2.002.50 3.252.682.75Consumer Confidence Index & Unemployment RateGermany1021042009 2010 2011 1Q132008* As of May 23th 2013, HCS’ bond rate with 3 year maturity is 2.61%0.2%2.0%1.5%2009 2010 2011 2012 1Q13KoreaKoreaKoreaKoreaJapan U.KU.S.AAustraliaCanadaFranceGermany9496981001020% 2% 4% 6% 8% 10% 12%Unemployment rateCCISource: Bank of KoreaSource: OECD* CCI: Consumer confidence index / Unemployment rate (as of FY2012)
    • 73.1% 73.6%76.9%80.1%78.2%79.9% 81.5% 81.8% 81.1%Domestic Auto MarketDomestic Auto Sales (‘000s)HMC HMC+KMC Market ShareKMC Others16252 271272 316413 485 493 482320 313322267278320 2962611,1431,1431,1431,143 1,1651,1651,1651,1651,2191,2191,2191,2191,1541,1541,1541,1541,3941,3941,3941,3941,4651,4651,4651,465 1,4741,4741,4741,4741,4111,4111,4111,41172.0%73.1% 73.6%571 581 625 571703 660 684 668155 154252116 10960 61331331331331 3243243243242005200520052005 2006200620062006 2007200720072007 2008200820082008 2009200920092009 2010201020102010 2011201120112011 2012201220122012 1Q121Q121Q121Q12 1Q131Q131Q131Q13Source: 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%17- 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 AssetsHyundai Capitals Position in the IndustryDominant Position in Industry** Incomparably Profitable and SoundTotal Industry Asset Size :KRW 45,307 bn• Profitability: ROE (Net Income/Equity)OthersHCS18OthersOthersOthersOthers51.3%51.3%51.3%51.3%HCSHCSHCSHCS48.7%48.7%48.7%48.7%25.1%21.3% 22.0%20.3% 20.0%6.0% 5.8% 5.5%11.3% 9.9%2008 2009 2010 2011 2012KRW 45,307 bn• Industry Net IncomeOthersOthersOthersOthers20.720.720.720.7%%%%0000 0000Total Industry Net Income Size:• Asset Quality: 30+Day Delinquency Rate3.2% 3.2%* Source: Financial Statistics Information System20.720.720.720.7%%%%HCSHCSHCSHCS79.379.379.379.3%%%%Total Industry Net Income Size:KRW 552.1 bn* Source: Financial Statistics Information System, at end of 2012** Installment Finance Industry2.3%1.8%1.6%2.0%2.5%3.0%3.2% 3.2%2.8%3.2%2008 2009 2010 2011 2012
    • III. Asset Portfolio &Financial Performance
    • New Car Financing Auto Lease Used Car Financing Personal Loan Mortgage GECK Others7.4%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 BreakdownReceivables Breakdown by Product (KRW Bn)198.6%8.6%8.6%8.6%1.7%1.7%1.7%1.7%18,78818,78818,78818,78819,80619,80619,80619,80620,28620,28620,28620,286 20,21420,21420,21420,21412.6%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%53.2%53.2%53.2%53.2%19.1%19.1%19.1%19.1%6.9%6.9%6.9%6.9%9.7%9.7%9.7%9.7%8.6%8.6%8.6%8.6%120,49120,49120,49120,4913,47213,47213,47213,47215,13015,13015,13015,13016,03016,03016,03016,03016,48016,48016,48016,4802005200520052005 2006200620062006 2007200720072007 2008200820082008 2009200920092009 2010201020102010 2011201120112011 2012201220122012 1Q131Q131Q131Q1368.0%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%AutoAutoAutoAutorelatedrelatedrelatedrelated88.7%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% 79.2%79.2%79.2%79.2%
    • Best in Class Risk ManagementStrong governance for risk monitoring Examples of pre-emptive risk managementCategory Actions taken DetailsAsset slowdown• Limited funding during globalfinancial crisis• Risk Control Committee (RCC)– Decision making for most supreme risk– Review portfolio risk performance20StrategyAsset slowdown(Y2008)financial crisis• Reduce non-core businessesto focus on new car financingNew carRisk-basedpricing• Lower pricing for customerswith better credit profileUsed carPolicy tightening(Y2010)• Tightened underwriting policypreemptively• Sacrificed market share due tofocus on asset quality– Review portfolio risk performance• Systematic New Product Risk Analysis- Two-stage RCC approval process- Pre-launch new product introduction and credit reviewpoint assessment• Risk Appetite Management– Establish guidelines for portfolio / asset quality– Determine risk management strategy per productP-loan Cross-sell• More weight on cross-sellingchannels to new car customersMortgageResidual valueinsurance• Reflecting volatile housingmarket 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 Quality30+ Day Delinquency Rate (%)Total 30+ delinquency rate New Car 30+ delinquency rate213.5%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 1Q131Q131Q131Q13
    • 2008 2009 2010 2011 2012 1Q12 1Q131Q131Q131Q13 YoYSolid Profit Underscores Strong FundamentalsIncome Statement (KRW Bn)KKKK----IFRSIFRSIFRSIFRSKKKK----GAAPGAAPGAAPGAAP22Operating Revenues 4,330 2,989 3,274 3,331 3,542 916 921921921921 0.5%(excl. FX effect) 2,384 2,485 2,889 3,126 3,071 769 722 -6.1%Operating Expenses 3,824 2,448 2,642 2,672 2,953 735 802802802802 9.2%(excl. FX effect) 1,879 1,944 2,259 2,466 2,483 588 603 2.6%Interest expenses 674 679 890 956 895 229 204 -11.1%Lease expenses 587 550 557 505 517 124 128 3.1%SG&A Expenses 498 496 586 603 637 136 154 13.3%PPOP 600 717 778 1,014 966 264 220220220220 -16.9%Bad Debt expenses 95 176 145 354 377 83 101 21.6%Operating Income 505 541 630 659 589 181 119119119119 -34.5%Income before Tax 518 538 639 663 584 184 206 12.4%Net Income 377 411 489 507 432 129 153153153153 18.4%ROA 2.4% 2.6% 2.8% 2.6% 2.2% 2.2% 3.0%ROE 25.1% 21.3% 22.0% 20.3% 20.0% 20.0% 19.7%
    • 195.4%164.0% 158.5% 151.6% 153.3%Historical Reserve & FSS Requirement Coverage RatioTotal Reserve VS Regulatory Requirement (KRW Bn)Regulatory Requirement Reserve under Accounting Principles Supplemental Reserve Total Reserve/ Regulatory Requirement23521611654265280 265151.6% 153.3%118.0% 117.1% 108.8% 101.5%664610665240 222 241279 288401521469364 382423442 474345385 3992009200920092009 2010201020102010 2011201120112011 201220122012201220082008200820082005200520052005 2006200620062006 2007200720072007K-IFRS1Q131Q131Q131Q13K-GAAP
    • 22.0xHistorical Leverage TrendLeverage TrendTotal Assets / Total Shareholders Equity Managed Borrowings / Total Shareholders Equity2416.0x12.6x 9.7x 9.7x9.3x14.6x10.7x10.3x 7.4x8.3x7.2x6.8x9.5x8.7x6.7x7.5x6.5x5.7x 5.4x2004200420042004 2005200520052005 2006200620062006 2007200720072007 2008200820082008 2009200920092009 2010201020102010 2011201120112011 2012201220122012 1Q131Q131Q131Q13
    • 15.7%14.5%15.1%Historical Capital StructureCapital Adequacy Ratio (KRW Bn)Adjusted Capital CAR252,432 2,3752,6222,954 3,07111.3%12.7% 12.8%11.7% 11.5%13.7%13.0%14.5%1,033 1,3371,5401,5911,8252,432 2,3752,6222004200420042004 2005200520052005 2006200620062006 2007200720072007 2008200820082008 2009200920092009 2010201020102010 2011201120112011 2012201220122012 1Q131Q131Q131Q13
    • IV. Funding & Liquidity
    • Diversification of Funding Portfolio Over TimeManaged Borrowings (KRW Bn)26• 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 Principles13,21313,21313,21313,21312,59712,59712,59712,597 12,56812,56812,56812,56813,41213,41213,41213,41214,33514,33514,33514,335 14,37814,37814,37814,37816,56016,56016,56016,56017,33017,33017,33017,330 17,33817,33817,33817,33816,94316,94316,94316,943Bond-domestic Bond-overseas ABS-domesticABS-overseas Bank loans CPTotalManaged 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%3.4%3.4%3.4%3.4%8.5%8.5%8.5%8.5%8.6%8.6%8.6%8.6%3.3%3.3%3.3%3.3%28.1%28.1%28.1%28.1%2004200420042004 2005200520052005 2006200620062006 2007200720072007 2008200820082008 2009200920092009 2010201020102010 2011201120112011 2012201220122012 1Q131Q131Q131Q13%%%% of LTof LTof LTof LTFundingFundingFundingFunding39.1%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% 69.9%69.9%69.9%69.9%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%47.9%47.9%47.9%47.9%
    • Funding by Currency & Outstanding Global BondsFunding Portfolio by Currency Outstanding Global Bonds*Issue Date Maturity Amount144A/Reg SNov.’09 5.5 years USD 500mJan.’11 5.5 years USD 700m27MYR 2.9%MYR 2.9%MYR 2.9%MYR 2.9%JPY 2.2%JPY 2.2%JPY 2.2%JPY 2.2%AUD 1.8%AUD 1.8%AUD 1.8%AUD 1.8%144A/Reg S Jan.’11 5.5 years USD 700mMar.’12 5.5 years USD 500mSamuraiNov. ‘12 1.5 years JPY 20,000mNov. ‘12 2 years JPY 8,000mSwiss FrancJul. ’10 5 years CHF 150mOct. ’10 4 years CHF 200mMay ’11 2.5 years CHF 150mMay’11 5 years CHF 150mFeb.’12 5 years CHF 200mKRWKRWKRWKRW63.0%63.0%63.0%63.0%USDUSDUSDUSD23.9%23.9%23.9%23.9%CHF 5.8%CHF 5.8%CHF 5.8%CHF 5.8%MYR 2.9%MYR 2.9%MYR 2.9%MYR 2.9%Feb.’12 5 years CHF 200mMalaysian RinggitMay ’11 2.5 years MYR 650mFeb.’12 5 years MYR 320mMay ’12 3 years MYR 370mAustralian Dollar Jun. ’12 3 years AUD 175mDim Sum Sep. ‘12 1.5 years RMB 500m(*As of Mar, 2013)• Funding Balance: KRW 16,943 Bn• Foreign Exchange Risk:-100% of foreign currency exposure is hedgedthrough swap transactions entered into at thetime of bond issuance.
    • 28Liquidity Profile (Unit: KRW Bn)Cash Short-term Debt Coverage Ratio*Historical Liquidity Position63.5%69.2%66.4%Credit Line1,3671,3382,5112,4802,3781,332 1,3361,7892,1062,3653,8083,5803,3884.6%16.0%25.0% 23.7%30.4%36.0%39.1%63.5%66.4%370 405 401 398707 7391,0271,297 1,100 1,010652931 9381,0821,36737010571,332 1,3362004200420042004 2005200520052005 2006200620062006 2007200720072007 2008200820082008 2009200920092009 2010201020102010 2011201120112011 2012201220122012 1Q131Q131Q131Q13* Short-term Debt Coverage Ratio = (Cash + Unused committed credit line)/ Short-term debt balance
    • V. Others
    • 29Credit Ratings & RationaleHCS’ Global Credit Ratings* Credit Rating RationaleA+(S)AAA• Strong Standalone Profile– Sustainable track record of strong profitperformance and robust credit fundamentalsBaa1(S) BBB+(S) BBB+(S)Moodys S&P Fitch JCR RAMHCS & Competitors’ Domestic Credit Ratingsperformance and robust credit fundamentals– Low risk-focused product portfolio and prudentrisk management– Adequate liquidity and sound capitalization– Strong market position as HMCs key captivefinancing arm• Capable & Willing Shareholder Support- Solid backup line provided by GE Capital throughAA+- Solid backup line provided by GE Capital throughits capital and managerial support- Strong likelihood of HMC’s assistance incontingency given its strong relationship with theparent evident in its capital contribution, boardmembers and business base.A+ A+ A+AHyundaiCapitalW Financial A Capital W Capital N Capital(*As of Mar, 2013)
    • 30Performance of Hyundai Motor CompanyStrength PerformanceProduct Mix61%Total Sales (‘000s)3,6124,059 4,39217% 16%6%Compact Mid & Large RV CommercialMarket Diversification15.2% 16.0%10.1%19.3%39.4%Korea US Europe China OthersOP Margin1,072 1,1722010 2011 2012 1Q12 1Q138.8%10.4% 10.0% 10.4%8.7%2010 2011 2012 1Q12 1Q13Korea US Europe China OthersBrand Value• Increase in residual value of vehicles due tostrengthened brand awareness• Boost in luxury car sales has increased theaverage selling priceNet Profit (KRW Bn)2010 2011 2012 1Q12 1Q136,0018,1059,0562,453 2,0882010 2011 2012 1Q12 1Q13
    • Investor Relations ContactsJungsang Kim, Head of Investor RelationsPhone +82 2 2167 7034jungsang.kim@hyundaicard.comMinchul Seo, Deputy General Manager of Investor RelationsPhone +82 2 2167 7051mcseo@hyundaicapital.comSuh ye Choi, Manager of Investor RelationsPhone +82 2 2167 7541Justin Lee, Manager of Investor RelationsPhone +82 2 2167 8082Phone +82 2 2167 7541sychoi@hyundaicard.comhttp://ir.hyundaicapital.com/Phone +82 2 2167 8082justin.j.lee@hyundaicard.comJay Moon, Assistant Manager of Investor RelationsPhone +82 2 2167 5312jaymoon@hyundaicapital.comHyunyoung Jang, Assistant Manager of Investor RelationsPhone +82 2 2167 6955hyunyoung.jang@hyundaicard.com