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  • 1. Hyundai Card is... Investor Presentation Hyundai Card 3Q13
  • 2. Disclaimer These presentation materials have been prepared by Hyundai Card Co., Ltd. (“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 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 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.
  • 3. Key Highlights 3Q13 1 • Stable profitability : Operating profit of KRW 171 billion and ROA of 1.8% • Effective marketing : Innovative branding increased market share to 14.1% as of 1H13 • Excellent asset quality : 0.8% delinquency rate, the lowest rate among Korean FIs • Sound capital structure : Leverage of 4.7x and a capital adequacy ratio of 20.8% • Strong liquidity : Short term debt coverage ratio of 81.5% • Chapter 2, turn the page : Announced two new brand portfolio, M and X card
  • 4. Resilient GDP Growth and Increasing Credit Card Usage 2 Despite of slower GDP growth, unemployment rate has been stabilized Credit card usage takes up high portion of total private consumption GDP Growth Rate & Unemployment Rate GDP Growth Rate 3.6% Unemployment Rate Credit Card Spending & Usage Rate Credit Card Spending (KRW Tn) Credit card spending / Total private consumption 3.7% 3.4% 3.2% 66.3% 3.2% 56.8% 59.6% 451.2 52.8% 6.1% 66.2% 390.2 350.7 303.9 3.6% 228.4 2.0% 2.4% 0.2% 2009 2010 2011 2012 Source: Bank of Korea, Unemployment averge of period 3Q13 2009 2010 Source: Credit Finance Association 2011 2012 2Q13
  • 5. Balanced-Risk Asset Portfolio and Consistent Market Share 3 Credit purchase accounts for more than 60% of total asset Maintain stable market share with 15% lever for credit purchase and 14% lever for total card usage Asset Portfolio (KRW Bn) Lump Sum Installments Card Loan Market Share Trend Others 9,186 21.6% 9,563 21.0% Cash Advance Credit Purchase* Market Total Credit Card Market (credit purchase*+ financial products) 9,898 9,431 23.4% 26.9% 15.7% 15.7% 15.5% 15.5% 14.1% 14.3% 14.5% 2010 2011 2012 7,136 15.0% 12.6% 10.7% 25.0% 10.6% 25.4% 14.9% 9.5% 9.0% 22.3% 20.2% 14.1% 13.1% 25.8% 48.5% 40.7% 2009 2010 42.8% 44.4% 2011 2012 43.3% 9M13 2009 * Excludes corporate accounts Source: FISIS 2Q13
  • 6. Good Profitability Underscores Strong Fundamentals 4 Income Statement (KRW Bn) Return on Equity & Return on Assets ROE 2010 2011 2012 9M12 9M13 ROA YoY 15.1% Operating Revenues 2,337 2,408 2,526 1,859 1,876 12.6% 0.9% (Excluding FX effect) 2,260 2,370 2,460 1,835 1,862 17.6% 1.5% 3.5% Operating expenses 1,966 2,084 2,292 1,663 1,705 3.2% 2.6% 2.5% (Excluding FX effect) 1,890 2,045 2,227 1,638 1,692 3.5% Bad debt expense 185 200 203 144 177 22.7% 2009 2010 2011 9.0% 7.5% 2.0% 1.8% 2012 9M13 Key Highlights Operating income was down YoY due to: Operating income 371 324 233 196 171 -12.9% - Reduced profitability as a result of regulatory changes - Increase in bad debt expense due to economy slowdown Net Income 278 239 191 164 127 -22.5% Maintained stable market share and number of card holders
  • 7. Excellent Asset Quality and Conservative Reserve Policy 5 30+ Delinquency rate has been slightly increased due to the slowdown in the macro economy Maintained conservative reserve policy which is always higher than regulatory requirement 30+ Day Delinquency Rate (%) Total Reserve VS Regulatory Requirement (KRW Bn) Regulatory Requirement Reserve under Accounting Principles Supplemental Reserve Total Reserve/ Regulatory Requirement 199.1% 157.1% 123.9% 127.7% 146.0% 550 544 0.6% 0.3% 0.7% 0.8% 378 0.4% 359 363 204 346 189 142 114 2009 2010 2011 2012 3Q13 2009 174 148 2011 181 191 190 2010 376 2012 3Q13
  • 8. Leverage and Capital Adequacy Soundly Managed 6 Leverage was controlled below FSS regulation of 6X Capital adequacy ratio has been well controlling above the regulatory guideline of 8% Leverage Trend (KRW Bn) Capital Adequacy Ratio (KRW Bn) Total Assets / Total Shareholders' Equity Total Assets Adjusted Capital CAR 6.0x 5.4x 4.9x 22.5% 5.1x 18.7% 4.7x 10,417 10,848 11,251 19.6% 18.7% 1,845 1,801 2011 2012 20.8% 10,940 7,291 1,699 2009 2010 2011 2012 3Q13 1,843 2009 2010 1,900 3Q13
  • 9. Well Diversified, Stable Funding Portfolio 7 Funding Portfolio by Product Funding Principles • Maintain the proportions of ABS and CP under 20% and 10%, respectively ABS 13.3% CP 0.9% • Maintain the average maturity ratio of Loans 3.3% liability-to-asset at over 100% Bonds 82.4% • Contingency plans under regular review 3Q13 Achievement • Enhance long-term funding : short-term • Funding Balance : KRW 6,733Bn • Long-term funding : 68.8% coverage 81% • Stabilize funding portfolio : CP portion less than 5%
  • 10. Strong Liquidity Position and Well-Spread Debt Maturity 8 Liquidity coverage was extended to 6M from 3M in 2011 and since that, well-achieving the target Well diversified debt maturity Liquidity Profile (Unit: KRW Bn) Cash Debt Maturity Profile (Unit: KRW Bn) Short-term Debt Coverage Ratio* Credit Line Bond CP Loan 28.3% 81.5% 79.0% ABS 1,903 65.5% 450 36.7% 18.6% 1,584 19.0% 1,713 1,514 1,279 16.5% 15.6% 1,111 868 1,148 841 298 824 9.4% 498 411 20 650 630 743 845 690 2010 2011 2012 50 11.3% 760 83 70 1,453 1,279 1,000 730 690 1H14 2H14 399 391 2009 149 23 60 1,050 3Q13 * Short-term Debt Coverage Ratio = (Cash + Unused committed credit line)/ Short-term debt balance 3Q13 2015 2016 2017~
  • 11. Hyundai Card Company Overview Hyundai Card Investor Presentation 3Q13
  • 12. I. Who is Hyundai Card?
  • 13. The Premier Korean Credit Card Company 9 • Industry leader across key quality metrics - Excellent asset quality with the industry’s lowest delinquency rate of only 0.8% - Strong customer loyalty with high card usage per customer • Marketing innovations differentiate brand and drive growth - Strategic marketing program with Hyundai Motor Group - Leadership position in super premium segment • Seven-year-long partnership between two global leaders: Hyundai Motor Group and GE Capital - Strong governance with GE Capital's active involvement in management & daily operations - Joint promotions with Hyundai Motor Group • Strong credit profile based on robust fundamentals - International – Fitch: BBB / S&P: BBB - Domestic – AA+
  • 14. Shareholder Financial & Operational Support 10 Relationship with Shareholders - Innovative “Point Programs” GE Capital’s Financial Support 2012 - Total Investment to date : U$725mm - GE Capital provides U$200mm back-up credit-line 2008 - 2006 ~ 2008 Exercising of Warrants (Additional equity investment) 2006 54.0% - Extensive sales network - Total Investment to date : U$575mm (As of 3Q13 end) 2010 - Stable & solid operational base 2013 - GE Capital increases paid in capital by KRW 165bn 2005 - Establishment of joint venture with GE Capital - Powerful financing arm - Effective marketing tool - Most successful joint venture - Sole consumer finance window in Korea 43.3% - Advanced knowledge of risk management - Financial support - Active involvement in management and daily operations - GE Capital purchases KRW 200bn subordinated bond - GE Capital acquires KRW 313bn equity interest in HCC
  • 15. Management Strategy 11 • Continuous product and service innovation and profit improvement to overcome regulatory changes and intensifying market competition • Enhance customer value through spending stimulation and increasing customer loyalty • Achieve sustainable growth through prioritizing risk management and a strong capital structure
  • 16. Committed to Transparent Corporate Governance 12 Board of Directors • HMC 5 : GECC 4 : Outside directors 3 • GECC has veto rights Risk Control Committee Executive Finance Committee Compliance Review Board • Member : 5 from HMC, 5 from GECC • Member : 4 from HMC, 3 from GECC • Member : 9 from HMC, 7 from GECC • Frequency : Monthly • Frequency : Monthly • Frequency : Quarterly • Function • Function • Function -Determination of risk indicator levels and appropriate course of actions in respect thereof GE Presence -Approval of various operating expenses, Capex, business and funding plans -Formulation and execution of 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
  • 17. Product Overview & Market Share 13 Market Share Trend Business Area Features Credit Purchase* Market Total Credit Card Market (credit purchase*+ financial products) Lump sum • Single-payment purchases • Repaid on a monthly billing cycle Credit Purchase 15.7% 15.7% 15.5% 15.5% Installment 13.8% • Multiple-payment purchases • Payment period of 2-12 months 14.9% 12.8% 14.5% 14.1% 14.3% 14.1% 11.8% 13.1% 11.2% Card loan • Unsecured loans to cardholders • 3 – 36 month maturity 10.1% 8.8% Financial Products Cash advance • Cash withdrawal • Lump sum or installment payback 2006 2007 2008 * Excludes corporate accounts Source: FISIS 2009 2010 2011 2012 2Q13
  • 18. II. Premium Brand & Marketing
  • 19. One of Korea’s Most Well Recognized & Respected Brands 14 Strong Brand Drives Higher Customer Loyalty Innovative Branding Activities Strategy: Innovative Experience - Liquid metal card plates - Super event series Emotional Communication Classic - British Rock Sound Identity Dynamic • Music platform promoting independent artists • Customizable card materials • Restaurant review Smartphone application • ‘Pop-up stores’ in style & design - Pop-up stores Result: - Well respected, trendsetting image with high customer awareness* - Higher customer loyalty & spending, evidenced through average card usage per customer *88.1% (Source: TNS RI Research 2011) -focused locations
  • 20. Chapter 2 : For the Next New 10 years 15 Two Track Brand Portfolio Point Two Key Benefit • Simple Card Product - Simplify Product portfolio - Concentrate on saving Point • Differentiated Service - Selecting card product by usage amount (M1~M3) Cash Back • Discount through cash-back system - Cash-back from every merchandizes • Differentated Service - Selecting card product by usage amount (X1~X2)
  • 21. III. Macro & Industry Environment
  • 22. Korea’s Macro Environment 16 GDP Growth Rate & Consumer Price Index GDP Growth Rate Consumer Price Index Credit Card Spending & Usage Rate Credit Card Spending (KRW Tn) Credit card spending / Total private consumption 4.0% 2.8% 66.3% 3.0% 56.8% 2.2% 59.6% 451.2 52.8% 1.2% 6.1% 66.2% 390.2 350.7 303.9 3.6% 228.4 2.0% 2.4% 0.2% 2009 2010 Source: Bank of Korea 2011 2012 3Q13 2009 2010 Source: Credit Finance Association 2011 2012 2Q13
  • 23. Korean Credit Card Market Features 17 • Conservative lending environment - Low usage of revolving credit card products, as full payment of monthly balance preferred • Strong credit infrastructure - Well developed credit bureau system provides a quantitative customer credit score based on all previous credit history • Cash-less society - Ubiquitous acceptance of credit cards, high popularity of online shopping, and tax incentives for credit card use • Strict government oversight - Regulations governing new origination practices and customer cash advance limits
  • 24. Korea Credit Card Industry: Then & Now 18 Combined Asset portfolio Credit Purchase Total Asset Quality (30+ Day Delinquency Rate) Financial Products 35.1% 28.3% 64.9% 64.9% 2.0% 35.1% 2003 2Q13 Combined Capital Adequacy Ratio 2003 2Q13 Regulatory & Infrastructure Changes: - Credit bureau system established 27.6% - Marketing regulations restricting new originations - Companies must maintain capital adequacy ratio of above 8% -5.5% - Leverage limit of 6x (Dec. 2012) 2003 Source: FSS 2Q13
  • 25. IV. Asset Portfolio & Performance
  • 26. Balanced Asset Portfolio of Credit and Financial Products 19 Asset Portfolio (Unit: KRW Bn) Lump Sum Installments Card Loan Cash Advance Others 9,186 21.6% 9,563 21.0% 7,136 15.0% 5,618 4,507 13.5% 3,508 7.9% 19.0% 11.9% 12.3% 14.5% 12.6% 12.6% 10.7% 25.0% 2006 9,431 23.4% 26.9% 9.5% 9.0% 25.4% 22.3% 20.2% 25.8% 28.9% 23.5% 48.5% 58.5% 10.6% 9,898 50.6% 2008 2009 2010 44.4% 43.3% 2011 2012 3Q13 44.0% 2007 40.7% 42.8%
  • 27. Best in Class Risk Management 20 Strong governance for risk monitoring • Risk Control Committee (RCC) – Decision making for most supreme risk – Review portfolio risk performance • Systematic New Product Risk Analysis - Two-stage RCC approval process - Pre-launch new product introduction and credit review point assessment Examples of pre-emptive risk management Category Cash Advance Recent actions taken Lowered cash advance limits for lower credit quality customers • Risk Appetite Management – Establish guidelines for portfolio / asset quality – Determine risk management strategy per product Card Loan Tightened underwriting policy for heavy debtors Credit Purchase Tightened underwriting policy for revolving products and new originations • 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
  • 28. Historical Asset Quality 21 30+ Day Delinquency Rate (%) 2.2% 0.7% 0.7% 0.4% 0.3% 2006 2007 2008 2009 0.4% 2010 0.8% 0.6% 2011 2012 3Q13
  • 29. Historical Reserve & FSS Requirement Coverage Ratio 22 Total Reserve VS Regulatory Requirement (KRW Bn) Regulatory Requirement 178.1% Reserve under Accounting Principles Total Reserve/ Regulatory Requirement Supplemental Reserve 200.4% 199.1% 143.3% 157.1% 123.9% 127.7% 146.0% 550 544 378 359 363 204 346 89 158 2006 52 104 2007 94 135 2008 K-GAAP 142 114 2009 148 189 2010 190 174 2011 377 181 2012 K-IFRS 191 3Q13
  • 30. Sustainable Growth Based on Strong Fundamentals 23 Income Statement (KRW Bn) K-GAAP K-IFRS 2008 2009 2010 2011 2012 9M12 9M13 YoY Operating Revenues 1,594 1,841 2,337 2,408 2,526 1,859 1,876 0.9% (excl. FX effect) 1,444 1,795 2,260 2,370 2,460 1,835 1,862 1.5% Operating Expenses 1,337 1,555 1,966 2,084 2,292 1,663 1,705 2.5% (excl. FX effect) 1,186 1,509 1,890 2,045 2,227 1,638 1,692 3.2% Card expenses 506 730 863 924 1,044 776 767 -1.1% Interest expenses 187 221 319 357 343 259 234 -9.8% SG&A Expenses 367 398 484 538 610 437 467 6.8% 357 441 570 525 436 344 349 1.4% Bad Debt expenses 103 113 185 200 203 144 177 22.7% Provision for unused Credit Line -3 42 14 1 0 4 2 -60.7% Operating Income 258 286 371 324 233 196 171 -12.9% ROA 3.9% 3.5% 3.5% 2.6% 2.0% 2.3% 1.8% - ROE 16.7% 15.1% 17.6% 12.6% 9.0% 10.4% 7.5% - Income before Tax 272 295 371 324 233 197 172 -12.6% Net Income 202 213 278 239 191 164 127 -22.5% PPOP
  • 31. V. Capitalization, Funding & Liquidity
  • 32. Strong Capital Structure 24 Capital Adequacy Ratio (Unit: KRW Bn) CAR Adjusted Capital 31.3% 28.4% 23.5% 22.5% 20.8% 19.6% 18.7% 1,865 18.7% 1,801 1,900 2011 2012 3Q13 1,843 1,699 1,080 1,306 2006 2007 1,406 2008 2009 2010
  • 33. Well Controlled Leverage 25 Leverage Trend Total Assets / Total Shareholders' Equity Managed Borrowings / Total Shareholders' Equity 12.3x 11.3x 6.0x 4.1x 4.1x 4.6x 5.4x 4.9x 5.1x 4.7x 4.4x 2.6x 2005 2006 3.2x 3.5x 3.5x 3.2x 2.6x 2007 2008 2009 2010 2011 2012 2.9x 3Q13
  • 34. Diversification of Funding Portfolio over Time 26 Managed Borrowings (KRW Bn) Bond-domestic Bond-overseas ABS-domestic ABS-overseas Bank loans CP 7,197 14.1% 2,933 2,199 9.3% 15.9% 13.6% 19.5% 59.4% 47.3% 2006 % of LT Funding 14.8% 2007 50.5% 62.6% 8.3% 10.1% 6,733 6.9% 10.1% 3,980 7,073 9.2% 5,165 7,067 6.3% 4.9% 1.9% 12.7% 3.3% 4.6% 13.3% 11.0% 6.4% 7.7% 11.0% 80.2% 73.2% 83.6% 82.4% 15.1% 61.8% 49.6% 2008 63.1% 2009 57.3% 2010 56.5% 2011 71.6% 2012 67.3% 3Q13 68.8%
  • 35. Substantial Improvement in Liquidity Position 27 Liquidity Profile (KRW Bn) Cash Credit Line Short-term Debt Coverage Ratio* 81.5% 79.0% 65.5% 27.3% 36.7% 32.7% 18.6% 13.1% 1,713 1,584 1,148 1,514 868 841 824 498 480 299 143 150 143 2007 411 20 650 743 690 2011 2012 845 149 2006 120 360 391 2008 2009 * Short-term Debt Coverage Ratio = (Cash + Unused committed credit line)/ Short-term debt balance 2010 3Q13
  • 36. Investor Relations Contacts Jungsang Kim, Head of Investor Relations Phone +82 2 2167 7034 jungsang.kim@hyundaicard.com Suh ye Choi, Manager of Investor Relations Phone +82 2 2167 7541 sychoi@hyundaicard.com Justin Lee, Manager of Investor Relations 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 http://ir.hyundaicard.com/