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 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
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Certain industry and market data in this presentation was obtained from various trade associations, and the Company have not verified such data with
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and uncertainties and is subject to change based on various factors.
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3. • Stable profitability : Operating profit of KRW 62 billion and ROA of 2.0%
1
Key Highlights 1Q13
• Effective marketing : Innovative branding increased market share to 14.5% as of 2012
• 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 20.7%
• Strong liquidity : Short term debt coverage ratio of 75.5%
4. 2
Resilient GDP Growth and Increasing Credit Card Usage
GDP Growth Rate & Unemployment Rate
GDP Growth Rate Unemployment Rate
Credit Card Spending & Usage Rate
Credit Card Spending (KRW Tn)
Despite of slower GDP growth, unemployment rate has been stabilized
Credit card usage takes up high portion of total private consumption
Credit card spending / Total private consumption
6.1%
3.6%
3.6% 3.5%
3.0%
3.2% 3.2%*
279.3
303.9
350.7
390.2
451.2
49.7%
52.8%
56.8%
59.6%
66.3%
Source: Bank of Korea, Unemployment Rate based on April Source: Credit Finance Association
0.2%
2.0%
1.5%
2009 2010 2011 2012 1Q13 2008 2009 2010 2011 2012
5. 3
Balanced-Risk Asset Portfolio and Consistent Market Share
Asset Portfolio (KRW Bn) Market Share Trend
Lump Sum Installments Cash Advance
Card Loan Others
Credit Purchase* Market
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
Card Loan Others
Total Credit Card Market (credit purchase*+ financial products)
13.8%
15.7% 15.7% 15.5% 15.5%
11.2%
13.1%
14.1% 14.3% 14.5%
7,136
9,186
9,563
9,898
9,165
25.8%
10.7%
15.0%
25.0%
12.6%
21.6%
25.4%
10.6%
21.0%
22.3%
9.5%
23.4%
18.7%
9.7%
25.8%
* Excludes corporate accounts
Source: FISIS
2008 2009 2010 2011 2012
2009 2010 2011 2012 1Q13
48.5% 40.7%
42.8% 44.4% 45.4%
6. 4
Good Profitability Underscores Strong Fundamentals
2010 2011 2012 1Q12 1Q13 YoY
Income Statement (KRW Bn) Return on Equity & Return on Assets
ROE ROA
15.1%
17.6%
Key Highlights
Operating Revenues 2,337 2,408 2,526 615 643 4.5%
(Excluding FX effect) 2,260 2,370 2,460 600 606 1.0%
Operating expenses 1,966 2,084 2,292 536 581 8.3%
(Excluding FX effect) 1,890 2,045 2,227 521 544 4.5%
15.1%
12.6%
9.0% 8.5%
3.5% 3.5%
2.6%
2.0% 2.0%
2009 2010 2011 2012 1Q13
Key Highlights
Operating income was down YoY due to:
- Reduced profitability as a result of regulatory changes
- Increase in bad debt expense due to economy slowdown
Maintained stable market share and number of card holders
Bad debt expense 185 200 203 42 55 30.0%
Operating income 371 324 233 79 62 -21.5%
Net Income 278 239 191 75 47 -37.0%
7. 5
Excellent Asset Quality and Conservative Reserve Policy
30+ Day Delinquency Rate (%) Total Reserve VS Regulatory Requirement (KRW Bn)
Regulatory Requirement Reserve under Accounting Principles
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
Supplemental Reserve Total Reserve/ Regulatory Requirement
0.3% 0.4%
0.6%
0.7%
0.8%
363 357
378
544 537
123.9% 127.7%
199.1%
157.1% 155.7%
0.3% 0.4%
2009 2010 2011 2012 1Q13
114 148 190
346
345
142
189 174
181
180
204
2009 2010 2011 2012 1Q13
8. 6
Leverage and Capital Adequacy Soundly Managed
Leverage Trend Capital Adequacy Ratio (KRW Bn)
Total Assets / Total Shareholders' Equity Adjusted Capital CAR
Leverage was controlled below FSS regulation of 6X
Capital adequacy ratio has been well controlling above the regulatory guideline of 8%
Managed Borrowings / Total Shareholders' Equity
4.9x
6.0x
5.4x
5.1x
4.7x
22.5%
18.7% 19.6% 18.7%
20.7%
3.5x
4.4x
3.5x
3.2x
2.9x
2009 2010 2011 2012 1Q13
1,699 1,843
1,845 1,801
1,838
2009 2010 2011 2012 1Q13
9. • Maintain the proportions of ABS and CP
under 20% and 10%, respectively
7
Well Diversified, Stable Funding Portfolio
Funding Portfolio by Product Funding Principles
ABSABSABSABS
13.6%13.6%13.6%13.6%
• Maintain the average maturity ratio of
liability-to-asset at over 100%
• Contingency plans under regular review
BondsBondsBondsBonds
84.4%84.4%84.4%84.4%
LoansLoansLoansLoans
1.9%1.9%1.9%1.9%
13.6%13.6%13.6%13.6%
1.0
1.2
HCC 3Y Spread (%)
• Funding Balance : KRW 6,589Bn
• Long-term funding : 68.1%
0.0
0.2
0.4
0.6
0.8
1.0
Jan-11 May-11 Sep-11 Jan-12 May-12 Sep-12 Jan-13 May-13
13. 9
The Premier Korean Credit Card Company
• 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- 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. - Innovative “Point Programs”
- Stable & solid operational base
- Extensive sales network
Shareholder Financial & Operational Support
Relationship with Shareholders GE Capital’s Financial Support
2013201320132013 - Total Investment to date : U$622mm
(As of 1Q13 end)
10
- GE Capital increases paid in capital
by KRW 165bn
- 2006 ~ 2008
Exercising of Warrants
(Additional equity investment)
- GE Capital provides U$200mm back-up
credit-line
54.0%
- Extensive sales network
- Powerful financing arm
- Effective marketing tool
- Most successful joint venture
- Sole consumer finance window in Korea
2010201020102010
2008200820082008
2006200620062006
2012201220122012 - Total Investment to date : U$725mm
- GE Capital acquires KRW 313bn
equity interest in HCC
- Establishment of joint venture
with GE Capital43.3% - Advanced knowledge of risk
management
- Financial support
- Active involvement in management
and daily operations
2005200520052005
- GE Capital purchases KRW 200bn
subordinated bond
15. 11
Management Strategy
• 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. 12
Committed to Transparent Corporate Governance
Board of DirectorsBoard of DirectorsBoard of DirectorsBoard of Directors
• HMC 5 : GECC 4 : Outside directors 3
• GECC has veto rights
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
17. 13
Business Area Features
Product Overview & Market Share
Market Share Trend
Total Credit Card Market (credit purchase*+ financial products)
Credit Purchase* Market
Credit
Purchase
Lump sum
• Single-payment purchases
• Repaid on a monthly billing cycle
Installment
• Multiple-payment purchases
• Payment period of 2-12 months
Card loan
• Unsecured loans to cardholders
9.8%
11.8%
12.8%
13.8%
15.7% 15.7% 15.5% 15.5%
10.1%
11.2%
13.1%
14.1% 14.3% 14.5%
Financial
Products
Card loan
• 3 – 36 month maturity
Cash advance
• Cash withdrawal
• Lump sum or installment payback
* Excludes corporate accounts
Source: FISIS
7.0%
8.8%
10.1%
2005 2006 2007 2008 2009 2010 2011 2012
22. 16
Korea’s Macro Environment
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
66.3%
6.1%
3.6%
2.8% 3.0%
4.0%
2.2%
1.4%
279.3
303.9
350.7
390.2
451.2
49.7%
52.8%
56.8%
59.6%
66.3%
Source: Bank of Korea Source: Credit Finance Association
0.2%
2.0%
1.5%
2009 2010 2011 2012 1Q13 2008 2009 2010 2011 2012
23. Korean Credit Card Market Features
17
• Conservative lending environment
- Low usage of revolving credit card products, as full payment of monthly balance
preferredpreferred
• 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. 18
Korea Credit Card Industry: Then & Now
Combined Asset portfolio Total Asset Quality (30+ Day Delinquency Rate)
Credit Purchase Financial Products
Combined Capital Adequacy Ratio Regulatory & Infrastructure Changes:
- Credit bureau system established
35.1%
66.3%
64.9%
33.7%
2003 2012
28.3%
1.9%
2003 2012
Source: FSS
- Credit bureau system established
- Marketing regulations restricting new originations
- Companies must maintain capital adequacy ratio of
above 8%
- Leverage limit of 6x (Dec. 2012)
-5.5%
25.8%
2003 2012
27. Best in Class Risk Management
Strong governance for risk monitoring Examples of pre-emptive risk management
Category Recent actions taken
• Risk Control Committee (RCC)
– Decision making for most supreme risk
– Review portfolio risk performance
20
Cash
Advance
Lowered cash advance limits for lower credit
quality customers
Card Loan
Tightened underwriting policy for heavy
debtors
• 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
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
