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Hyundai card ir material (fy 2014 1 q) en_final
Hyundai card ir material (fy 2014 1 q) en_final
Hyundai card ir material (fy 2014 1 q) en_final
Hyundai card ir material (fy 2014 1 q) en_final
Hyundai card ir material (fy 2014 1 q) en_final
Hyundai card ir material (fy 2014 1 q) en_final
Hyundai card ir material (fy 2014 1 q) en_final
Hyundai card ir material (fy 2014 1 q) en_final
Hyundai card ir material (fy 2014 1 q) en_final
Hyundai card ir material (fy 2014 1 q) en_final
Hyundai card ir material (fy 2014 1 q) en_final
Hyundai card ir material (fy 2014 1 q) en_final
Hyundai card ir material (fy 2014 1 q) en_final
Hyundai card ir material (fy 2014 1 q) en_final
Hyundai card ir material (fy 2014 1 q) en_final
Hyundai card ir material (fy 2014 1 q) en_final
Hyundai card ir material (fy 2014 1 q) en_final
Hyundai card ir material (fy 2014 1 q) en_final
Hyundai card ir material (fy 2014 1 q) en_final
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Hyundai card ir material (fy 2014 1 q) en_final

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  • 1. Hyundai Card CorporationHyundai Card Corporation Investor Presentation (1Q 2014)
  • 2. Disclaimer These presentation materials have been prepared by Hyundai Card Corporation, Inc. (“HCC or the Company”), solely for the use at this presentationThese presentation materials have been prepared by Hyundai Card Corporation, Inc. (“HCC 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 Companies nor any of theirs 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 Companies nor any of their 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 Companies’ 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 Companies have not verified such dataCertain industry and market data in this presentation was obtained from various trade associations, and the Companies have not verified such data with independent sources. Accordingly, the Companies 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 Companies 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 Companies 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 Companies, 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.
  • 3. Finance Business of Hyundai Motor GroupFinance Business of Hyundai Motor GroupFinance Business of Hyundai Motor GroupFinance Business of Hyundai Motor Group Main Business Structure of HMG Finance Companies in HMG Car MakerCar Maker Auto PartsAuto Parts Business Shareholders FinanceFinance Hyundai Card Credit Card HMG 54% GECC 43% Hyundai Capital Auto Finance (Passenger Vehicles) HMC 56.5% GECC 43.3% Hyundai Auto Finance (Commercial HMG 50% 3 SteelSteelConstructionConstruction Commercial (Commercial Vehicles) HMG 50% Hyundai Life Life Insurance HMG 98%
  • 4. Solid Marketing Base Superior Management DNA Shareholding Structure and Strengths of HCCShareholding Structure and Strengths of HCCShareholding Structure and Strengths of HCCShareholding Structure and Strengths of HCC 43.0%54.0% • Solid growth base of M Point program aligned with HMG 9 years Joint Venture between HMC and GE Capital 4 • Solid growth base of M Point program aligned with HMG • Stable performance based on the successful Joint venture structure • Incomparable leadership in super premium market + Icon of culture marketing and design • Inheritor of GE’s business management know-how • Unparalleled corporate culture embodied in the organization • Business synergy among 4 Hyundai Finance Companies (Card, Capital, Commercial, Life)
  • 5. Characteristics of Korean Credit Card IndustryCharacteristics of Korean Credit Card IndustryCharacteristics of Korean Credit Card IndustryCharacteristics of Korean Credit Card Industry High Usage of Credit Card (unit: KRW Tn) Private Consumption Credit Card Usage Ratio* Strong Credit Infrastructure • Finance transactions centrally collected (Banks, Credit card, Non-bank FIs, Insurance) • Extensive information for sequential analysis (default and good credit) 595 637 679 708 729 63.3% 64.8% 65.2% 67.6% 67.2% Rigorous Regulation • Exclusive organizations within FSS: capital market supervisory and investigation • Monthly management of capital adequacy, (default and good credit) • i.e. customer profile(job, income, etc), Accounts(loans, credit transaction and limits, etc), history (payment, card usage), delinquency (amount, payment schedule, etc) 5 '09 '10 '11 '12 '13 * Purchase payments only (excludes corporate accounts) Source: Credit Finance Association • Monthly management of capital adequacy, leverage, loan ratio, marketing expense, new product and etc. • Frequent supervision on information security and customer satisfaction/protection • Regular (every 3 year) and irregular (when necessary) business assessment
  • 6. Credit Card Market SizeCredit Card Market SizeCredit Card Market SizeCredit Card Market Size Check Card Credit Card (Purchase) Credit Card As Frequent Payment Method (unit: KRW Tn) • Credit card centric payment habit • Credit + Check, dual payment portfolio 412 443 478 490 406 464 510 561 578 98 105 104 100 97 • Credit + Check, dual payment portfolio – Small amount-check, Big spending-credit card – Check-card growth nearly matured • Consistent demand for card benefits and finance service Finance service amount (unit: KRW Tn) 6 Source: Credit Finance Association 29 51 67 83 88 377 412 '09 '10 '11 '12 '13 97 '09 '10 '11 '12 '13
  • 7. HCC position in MarketHCC position in MarketHCC position in MarketHCC position in Market Byword of Super Premium Card Icon of Culture Marketing Design Company 7
  • 8. Macro EconomyMacro EconomyMacro EconomyMacro Economy GDP Growth Rate & Unemployment Rate 2010 2011 2012 2013 1Q14 2014(e) GDP Growth Rate 6.1% 3.6% 2.0% 2.8% 3.9% 4.0% Source: Bank of Korea * Seasonal adjustment rate Unemployment (yr.) 3.7% 3.4% 3.2% 3.1% 3.5%* 3.2% Macro & Private Consumption: Direct Macro & Delinquency: Inverse 8% GDP growth rate Private consumption growth rate 4%8% GDP growth rate (left) Delinquncy ratio of Non-bank Finance (right) 8 0% 4% '06 '07 '08 '09 '10 '11 '12 '13 2% 3% 0% 4% '07 '08 '09 '10 '11 '12 '13
  • 9. Product PortfolioProduct PortfolioProduct PortfolioProduct Portfolio Receivables Breakdown by Product Market Share Others 0.7% Credit Purchase* Market Lump Sum 42.1% Installment 21.2% Cash Advance 8.6% Card Loan 27.4% 0.7% 15.7% 15.5% 15.5% 14.5% 14.3% 14.1% 14.3% 14.5% 13.8% 13.8% Total Credit Card Market (credit purchase*+ financial products) Credit Purchase* Market 9 21.2%8.6% • Financial Receivables : KRW 9.9Tn (Approx. USD 9.3 Bn) • % credit purchase : 63.3% 14.1% 13.8% 13.8% '10 '11 '12 '13 1Q14 * Excludes corporate accounts Source: FISIS
  • 10. Chapter 2: New Start for Next 10 yearsChapter 2: New Start for Next 10 yearsChapter 2: New Start for Next 10 yearsChapter 2: New Start for Next 10 years Two Track Brand Portfolio and Simplified Customer Benefits Simplified Product Structure Reasonable Compensation Scheme • Focus more on core benefits • Eliminate or reduce undifferentiated and immaterial benefits • Premium vs. Point vs. Cash back • 22 products → 7 products 10 Differentiated Reward Level • Higher accumulation rate for loyal customers (M card: over 1Mn KRW/month → x 1.5) • No points if monthly spending under 0.5M KRW
  • 11. Revenue and ProfitRevenue and ProfitRevenue and ProfitRevenue and Profit 2012 2013 1Q 13 1Q 14 YoY Operating Revenues 2,526 2,527 643 642 - (unit: KRW Bn) • Increase in operating revenues – Interest income increased from higher (excl. FX effect) 2,469 2,515 609 635 4.2% Operating Expenses 2,288 2,308 581 535 -7.9% (excl. FX effect) 2,232 2,295 547 527 -3.7% Interest expenses 343 313 79 76 -4.0% Bad Debt expenses 203 248 55 60 9.5% – Interest income increased from higher finance service volume in 2013 • Decrease in operating expenses – Decreased expense from 1 month industry wide freeze in TM and sales of P.loan after customer information leakage by 3 credit card companies – Decreased credit card point expense since late 2013 (Chapter 2) – Declined interest expenses from lower 11 Operating Income 237 220 62 108 73.7% Net Income 194 163 47 82 76.6% ROA 2.0% 1.7% 2.0% 3.4% 1.4% ROE 9.2% 7.1% 8.5% 13.6% 5.1% – Declined interest expenses from lower funding rate offset by increase in bad debt expenses • Increase cost efficiency from increased active member ratio* * Ratio of members who used more than once within a month
  • 12. Well Maintained Reserve (unit: KRW Bn) Stable Asset Quality and ReserveStable Asset Quality and ReserveStable Asset Quality and ReserveStable Asset Quality and Reserve 30+ Delinquency Ratio Maintained Low Allowance for bad debt Reserve Regulatory Coverage 378 544 594 589 128% 199% 157% 144% 143% 0.4% 0.6% 0.7% 0.8% 0.9% 12 174 181 205 206 204 363 389 384 189 378 '10 '11 '12 '13 1Q14'10 '11 '12 '13 1Q14
  • 13. Characteristics of HCC Risk Management • Major decision regarding Risk • Systematic response to Business Cycle Multi-layered Risk Management Framework Governance Strategy Infrastructure Major decision regarding Risk • Controlling Risk limits • System • Analytic models Systematic response to Business Cycle • Profit & Risk Optimization • Support new business growth • Monitor major Risk Indexes • Risk Model & Score Validation i.e. – Risk Control Committee – New Product Introduce – Credit Review Point i.e. – Debt To Income Ratio – Champion-Challenger Test – Collection Channel Optimization 13 Monitoring Infrastructure• Analytic models • Information • Risk Model & Score Validation • Operation Risk Minimize i.e. – Maturity Expected Loss – Economic Capital – Anti-Fraud System – Collection scoring system i.e. – Portfolio Quality Review – Risk Appetite Monitoring – Stress Test – Contingency Plan
  • 14. Diversified, Stable Funding PortfolioDiversified, Stable Funding PortfolioDiversified, Stable Funding PortfolioDiversified, Stable Funding Portfolio Funding Portfolio by Product Loans Funding Portfolio by Maturity (Unit: KRW Bn) Domestic Bond 89.6% 3.0% ABS 7.4% 597 760 1,963 1,520 1,168 1,111 14 • Total balance : KRW 7.1Tn • Product mix guidelines : ABS 20%, CP 10% • ALM ratio :155% 2Q14 2H14 '15 '16 '17 '18~ 8.4% 10.7% 27.6% 21.4% 16.4% 15.6% Ratio to total balance
  • 15. Sound Capital Structure StrengthenedSound Capital Structure StrengthenedSound Capital Structure StrengthenedSound Capital Structure Strengthened Improved Capital Profile (Unit: KRW Bn) Capital Adequacy Ratio / Leverage 20.5% 1,769 2,008 2,197 2,367 2,447 18.7% 19.6% 18.7% 19.4% 20.5% Regulation: Over 8% Regulation: Under 6X (Since 2012) 15 '10 '11 '12 '13 1Q 14 6.0 x 5.4 x 5.1 x 5.0 x 4.8 x '10 '11 '12 '13 1Q 14 * Separate Financial sheet
  • 16. Liquidity Profile (unit: KRW Bn) Strong Liquidity Position and Contingency PlansStrong Liquidity Position and Contingency PlansStrong Liquidity Position and Contingency PlansStrong Liquidity Position and Contingency Plans Credit LineCash Short-term Debt Coverage Ratio* Contingency Framework Crisis Detection • Daily monitoring of key market indicators (Early Warning System) Stress Test Liquidity Management Decision Body Normal • FC (Funding Committee) • ALCO (Asset Liability Committee) • EFC (Executive Finance Committee) • Short term 1M841 824 866 770 1,148 1,584 1,514 1,646 1,580 36.7% 79.0% 65.5% 87.5% 88.1% 16 * Short-term Debt Coverage Ratio = (Cash + Unused committed credit line)/ Short-term debt balance Volatile Actions • Contingency funding • Asset slow down (Sales) • Crisis communication • Contingency monitoring • Long term 12M 650 743 690 780 810 498 841 824 770 '10 '11 '12 '13 1Q14
  • 17. InvestmentInvestmentInvestmentInvestment HighlightsHighlightsHighlightsHighlights – Strategic Subsidiary within HMG that endowed business base from Co-Marketing – Strong presence in premium card segment and unrivaled in culture marketing • Value Proposition of HCC – Steady and solid fundamental – Corporate DNA that promises constant growth • Key Financials of 1Q 2014 – Financial Receivables : KRW 9.9 Tn – Operating Income : KRW 108 Bn 17 – Net Income : KRW 82 Bn – ROA : 3.4% – 30+ Delinquency Ratio : 0.9% – Leverage : 4.8X
  • 18. Appendix. Credit Card Crunch: Then and NowAppendix. Credit Card Crunch: Then and NowAppendix. Credit Card Crunch: Then and NowAppendix. Credit Card Crunch: Then and Now Non-core Business Ratio 65% 57% 58% 30+ Delinquency Ratio 6.6% Avg = 60% Avg = 32% Avg = 4.1% Avg = 1.7% 33% 31% 33% '00 '01 '02 '11 '12 '13 Leverage 3.2% 2.6% 1.6% 1.9% 1.5% '00 '01 '02 '11 '12 '13 Infrastructure & Regulatory Changes Avg =12.5X Avg = 4.1X • Credit bureau system established • Reinforce regulation 18 Source: FSS 16.8 9.4 11.3 4.3 4.1 3.8 '00 '01 '02 '11 '12 '13 • Reinforce regulation – reinforce credit card issue hurdle and process – reinforce limit on non-core business ratio – conservative Reserve appropriation and asset classification – establishment of recommended risk management standard
  • 19. Further InformationFurther InformationFurther InformationFurther Information 19 IR Homepage : http://ir.hyundaicard.com/ IR email address : irhcc@hyundaicard.com

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