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3. 2014 Overview
• Profitability turnaround: YoY +36.4% in operating income
- Increased interest income from normalized Installment and increased Card Loan volume
- Service cost optimization through Chapter 2 (reduction of product service and related exp.)
• Growth based on profit contributing card members
- Established member acquisition scheme focused on recruiting high spending card members
(increased proportion of newly acquired members with spending above KRW 500k/month)
- Established “Farming" customer management framework for steady income inflow by
providing customized benefits to induce more spending
• Stable asset quality (30+ days delinquency ratio under 1%)
• Sound capital structure
- Leverage 4.9X, CAR 18.2%
- Total liquidity 1.3 tn, short-term debt coverage 62.4%
4. 14.3% 14.5%
13.8% 13.8%
2011 2012 2013 2014
Asset Portfolio (KRWTn)
Asset and Market Share
Market Share
Total (Credit*+ Finance)
* retail spending only
Source: FISIS
Profitability/Stability balance with credit purchase
centered portfolio
- Lump sum + Installment: 64.0%
Increased proportion of finance to enhance
profitability
- Mainly increased with card loans, for lower risk
Maintained 3rd in market share
Asset growth from increased volume of Credit
Purchase and Card Loan
Increase finance proportion within total risk
management limit
4
Key Highlights
Forecast and Strategy
4.1 4.4 4.3 4.4
2.4 2.2 2.1 2.5
1.0 0.9 0.8
0.8
2.0 2.3 2.6
3.0
9.6 9.9 9.9
10.8
2011 2012 2013 2014
Lump Sum Installment CA CL Others
5. 2011 2012 2013 2014 YoY
Op Revenues* 2,370 2,460 2,515 2,584 2.7%
Op Expenses * 2,045 2,223 2,295 2,284 -0.5%
Product/Service
Expense
488 560 566 525 -7.3%
Operating Income 324 237 220 300 36.4%
Net Income 239 194 163 224 36.9%
Income Statement (KRW Bn)
Profitability
2.6%
2.0% 1.7%
2.2%
2011 2012 2013 2014
ROA
Increase in operating revenues
- Installment sales volume normalized
- Interest income Increased from finance product
sales increase
Decrease in operating expenses
- Decrease in product/service expenses
Result of Chapter 2 linked to profit enhancement
Continue Optimizing cost efficiency (Chapter 2)
Accrue more members to broaden profit base
5
Key Highlights
Forecast and Strategy
* excl. FX effect
6. Asset Quality and Reserve
30+ Delinquency Ratio
0.6% 0.7% 0.8% 0.9%
2011 2012 2013 2014
2011 2012 2013 2014
Total Reserve* 378 544 594 698
FSS Coverage** 199.1% 157.1% 144.0% 132.2%
Delinquency maintained under 1%
- Slight deterioration with increase in finance
product volume vs. 2013
- Yet, maintained at 0.9% since 1Q14
Increased total reserve
- FSS Coverage about 132%
Maintain stability/profitability balance with total
risk management
Maintain conservative reserve policy
6
Key Highlights
Forecast and Strategy
Reserve (KRW Bn)
* Reserve under IFRS + supplemental reserve
** Total Reserve / FSS Requirement
7. 19.6%
18.7% 19.4%
18.2%
2011 2012 2013 2014
Capital Structure
5.4x 5.1x 5.0x 4.9x
2011 2012 2013 2014
Capital Adequacy Ratio
Decrease in leverage, despite of asset growth
- Increased capital from retained earning
FSS regulation enforced since 2012: under 6X
- Managed based on more conservative internal
guideline
Manage leverage within FSS regulation
Dividend in compliance with regulation
7
Key Highlights
Forecast and Strategy
Leverage (KRW Bn)
Total Asset / Total Equity*
FSS guideline: 7%
* Since 2013, previous quarter’s equity have been used for calculation.
※ Leverage and CAR based on separate balance sheet
8. • Total Balance: 7.9 KRW Tn
• Overseas funding: 9.5%
• % Long Term : 73.8%
Funding Portfolio by Product
Funding
Stable portfolio based on high bond proportion
Diversification in currency
- Overseas ABS 290 USD Mn (2Q14)
Product mix guidelines : ABS < 20%, CP < 10%
% of Long-term debt guideline > 60%
8
Key Highlights
Forecast and Strategy
Domestic
Bond
84.2%
Loan
2.5%
ABS
13.3%
9. 743 690 780 810
841 824 866
490
1,584 1,514
1,646
1,300
2011 2012 2013 2014
Liquidity Position
79.0%
65.5%
87.5%
62.4%
Liquidity Profile (KRW Bn)
Debt Maturity (KRW Bn)
Reinforced liquidity guideline under new stress
test model
Early warning detection by monitoring daily
market indicators
ALM based funding: Only 26% of total debt
maturing within 1 year
More cash for stronger liquidity position
(replacing Credit Line)
Debt maturity > Asset maturity : maintain ALM
over 100%
Maintain short-term debt coverage over 60%
9
Key Highlights
Forecast and Strategy
Credit LineCash Short-term debt Coverage Ratio*
* Short-term debt Coverage Ratio
= (Cash + Unused credit line)/ short-term debt under 1 yr.
1,100 983
1,760
2,261
1,831
13.9% 12.4%
22.2%
28.5%
23.1%
1H15 2H15 2016 2017 2018~
