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1 h13 hcc_ir_eng
- 1. Hyundai CardHyundai Card is... HyundaiCard Investor Presentation 1H13
- 2. Disclaimer These presentation materialshave 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 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. • Stable profitability: Operating profit of KRW 113 billion and ROA of 1.8% 1 Key Highlights 1H13 • Effective marketing : Innovative branding increased market share to 14.1% as of 1Q13 • 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 67.7% • Chapter 2, turn the page : Announced two new brand portfolio, M and X card
- 4. 2 Resilient GDP Growthand 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 279.3 303.9 350.7 390.2 451.2 49.7% 52.8% 56.8% 59.6% 66.3% 6.1% 3.6% 3.5% 3.5% 3.0% 3.2% 3.1% Source: Bank of Korea, Unemployment Rate at the end of period Source: Credit Finance Association 2008 2009 2010 2011 2012 0.2% 2.0% 1.9% 2009 2010 2011 2012 1H13
- 5. 3 Balanced-Risk Asset Portfolioand 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) 7,136 9,186 9,563 9,898 9,306 25.8% 10.7% 15.0% 25.0% 12.6% 21.6% 25.4% 10.6% 21.0% 22.3% 9.5% 23.4% 19.3% 9.5% 26.4% 15.7% 15.7% 15.5% 15.5% 14.9% 13.1% 14.1% 14.3% 14.5% 14.1% * Excludes corporate accounts Source: FISIS 2009 2010 2011 2012 1H13 48.5% 25.8% 40.7% 42.8% 44.4% 44.3% 2009 2010 2011 2012 1Q13
- 6. 4 Good Profitability UnderscoresStrong Fundamentals 2010 2011 2012 1H12 1H13 YoY Income Statement (KRW Bn) Return on Equity & Return on Assets ROE ROA 17.6% Key Highlights Operating Revenues 2,337 2,408 2,526 1,234 1,308 6.0% (Excluding FX effect) 2,260 2,370 2,460 1,217 1,237 1.7% Operating expenses 1,966 2,084 2,292 1,113 1,195 7.4% (Excluding FX effect) 1,890 2,045 2,227 1,096 1,125 2.6% 15.1% 17.6% 12.6% 9.0% 7.4% 3.5% 3.5% 2.6% 2.0% 1.8% 2009 2010 2011 2012 1H13 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 98 115 16.9% Operating income 371 324 233 121 113 -6.9% Net Income 278 239 191 106 83 -21.5%
- 7. 5 Excellent Asset Qualityand 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% 363 366 378 544 123.9% 127.7% 199.1% 157.1% 155.2% 551 2009 2010 2011 2012 1H13 114 148 190 346 355 142 189 174 181 185 204 2009 2010 2011 2012 1H13
- 8. 6 Leverage and CapitalAdequacy Soundly Managed Leverage Trend (KRW Bn) 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% Total Assets 7,291 10,417 10,848 11,251 10,755 4.9x 6.0x 5.4x 5.1x 4.7x Total Assets / Total Shareholders' Equity 22.5% 18.7% 19.6% 18.7% 20.7% Total Assets 2009 2010 2011 2012 1H13 1,699 1,843 1,845 1,801 1,869 2009 2010 2011 2012 1H13
- 9. • Maintain theproportions 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 1H13 Achievement BondsBondsBondsBonds 83.0%83.0%83.0%83.0% LoansLoansLoansLoans 3.4%3.4%3.4%3.4% 13.6%13.6%13.6%13.6% • Enhance long-term funding : short-term • Funding Balance : KRW 6,586Bn • Long-term funding : 66.3% • Enhance long-term funding : short-term coverage 67.7% • Stabilize funding portfolio : CP portion less than 5%
- 10. 8 Strong Liquidity Positionand Well-Spread Debt Maturity Liquidity Profile (Unit: KRW Bn) Debt Maturity Profile (Unit: KRW Bn) Credit LineCash Short-term Debt Coverage Ratio* CP LoanBond ABS 28.4%28.4%28.4%28.4% 28.9%28.9%28.9%28.9% Liquidity coverage was extended to 6M from 3M in 2011 and since that, well-achieving the target Well diversified debt maturity 498 841 824 715 1,148 1,584 1,514 1,502 18.6% 36.7% 79.0% 65.5% 67.7% 153 50 298 450 8.2%8.2%8.2%8.2% 8.7%8.7%8.7%8.7% 28.4%28.4%28.4%28.4% 13.4%13.4%13.4%13.4% 12.5%12.5%12.5%12.5% 1,871 1,903 880 824 * Short-term Debt Coverage Ratio = (Cash + Unused committed credit line)/ Short-term debt balance 391 650 743 690 78720 498 411 2009 2010 2011 2012 1H13 538 399 1,420 1,453 830 82423 149 8.2%8.2%8.2%8.2% 8.7%8.7%8.7%8.7% 538 570 3Q13 4Q13 2014 2015 2016 2017~
- 11. Hyundai CardHyundai Card CompanyOverview Hyundai Card Investor Presentation 1H13
- 12. I. Who isHyundai Card?
- 13. 9 The Premier KoreanCredit 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 “PointPrograms” - 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$544mm (As of 2Q13 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 • Continuousproduct 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 TransparentCorporate 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 ProductOverview & 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 11.8% 12.8% 13.8% 15.7% 15.7% 15.5% 15.5% 14.9% 10.1% 11.2% 13.1% 14.1% 14.3% 14.5% 14.1% Financial Products Card loan • 3 – 36 month maturity Cash advance • Cash withdrawal • Lump sum or installment payback * Excludes corporate accounts Source: FISIS 8.8% 10.1% 2006 2007 2008 2009 2010 2011 2012 1Q13
- 18. II. Premium Brand& Marketing
- 19. 14 One of Korea’sMost Well Recognized & Respected Brands Strong Brand Drives Higher Customer Loyalty Innovative Branding Activities Strategy: Innovative Experience - Liquid metal card plates - British Rock Sound Identity - Pop-up stores - Super event series EmotionalEmotionalEmotionalEmotional CommunicationCommunicationCommunicationCommunication • Customizable card materials & design • Music platform promoting independent artists Innovative Experience Classic Dynamic *88.1% (Source: TNS RI Research 2011) • Restaurant review Smartphone application • ‘Pop-up stores’ in style -focused locations Result: - Well respected, trendsetting image with high customer awareness* - Higher customer loyalty & spending, evidenced through average card usage per customer
- 20. 15 Chapter 2 :For the Next New 10 years Two Track Brand Portfolio Two Key Benefit Point • Simple Card Product - Simplify Product portfolio Cash Back - 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 & IndustryEnvironment
- 22. 16 Korea’s Macro Environment GDPGrowth 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% 279.3 303.9 350.7 390.2 451.2 49.7% 52.8% 56.8% 59.6% 66.3% 6.1% 3.6% 2.8% 3.0% 4.0% 2.2% 1.3% Source: Bank of Korea Source: Credit Finance Association 2008 2009 2010 2011 2012 0.2% 2.0% 1.9% 2009 2010 2011 2012 1H13
- 23. Korean Credit CardMarket 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 CardIndustry: 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% 65.2% 64.9% 34.8% 2003 1Q13 28.3% 2.1% 2003 1Q13 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% 26.7% 2003 1Q13
- 25. IV. Asset Portfolio& Performance
- 26. 19 Balanced Asset Portfolioof Credit and Financial Products Asset Portfolio (Unit: KRW Bn) Lump Sum Installments Cash Advance Card Loan Others 9,186 9,563 9,898 9,306 3,508 4,507 5,618 7,136 9,186 9,306 28.9% 12.6% 14.5% 25.8% 10.7% 15.0% 25.0% 12.6% 21.6% 25.4% 10.6% 21.0% 12.3% 13.5% 7.9% 22.3% 9.5% 23.4% 19.3% 9.5% 26.4% 2006200620062006 2007200720072007 2008200820082008 2009200920092009 2010201020102010 2011201120112011 2012201220122012 1H131H131H131H13 44.0% 48.5% 40.7% 42.8% 50.6% 23.5% 58.5% 19.0% 11.9% 44.4% 44.3%
- 27. Best in ClassRisk 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
- 28. Historical Asset Quality 30+Day Delinquency Rate (%) 21 2.2% 0.4% 0.7% 0.4% 0.6% 0.7% 0.8% 0.4% 0.3% 0.4% 2006200620062006 2007200720072007 2008200820082008 2009200920092009 2010201020102010 2011201120112011 2012201220122012 1H131H131H131H13
- 29. 22 Historical Reserve &FSS Requirement Coverage Ratio Total Reserve VS Regulatory Requirement (KRW Bn) Regulatory Requirement Reserve under Accounting Principles Supplemental Reserve Total Reserve/ Regulatory Requirement 178.1% 200.4% 199.1% 204 363 366 178.1% 143.3% 123.9% 127.7% 157.1% 155.2% 378 544 551 K-GAAP K-IFRS 89 52 94 114 148 190 346 355 158 104 135 142 189 174 181 185 2009200920092009 2010201020102010 2011201120112011 201220122012201220082008200820082006200620062006 2007200720072007 1H131H131H131H13
- 30. Sustainable Growth Basedon Strong Fundamentals 2008 2009 2010 2011 2012 1H12 1H13 YoY Income Statement (KRW Bn) 23 KKKK----IFRSIFRSIFRSIFRSKKKK----GAAPGAAPGAAPGAAP Operating Revenues 1,594 1,841 2,337 2,408 2,526 1,234 1,308 6.0% (excl. FX effect) 1,444 1,795 2,260 2,370 2,460 1,217 1,237 1.7% Operating Expenses 1,337 1,555 1,966 2,084 2,292 1,113 1,195 7.4% (excl. FX effect) 1,186 1,509 1,890 2,045 2,227 1,096 1,125 2.6% Card expenses 506 730 863 924 1,044 530 520 -1.9% Interest expenses 187 221 319 357 343 173 157 -9.4% SG&A Expenses 367 398 484 538 610 280 296 5.4% PPOP 357 441 570 525 436 221 228 3.0% Bad Debt expenses 103 113 185 200 203 98 115 16.9% Provision for unused Credit Line -3 42 14 1 0 2 0 - Operating Income 258 286 371 324 233 121 113 -6.9% ROA 3.9% 3.5% 3.5% 2.6% 2.0% 2.2% 1.8% ROE 16.7% 15.1% 17.6% 12.6% 9.0% 10.2% 7.4% Income before Tax 272 295 371 324 233 121 114 -6.4% Net Income 202 213 278 239 191 106 83 -21.5%
- 31. V. Capitalization, Funding &Liquidity
- 32. Capital Adequacy Ratio(Unit: KRW Bn) 24 Strong Capital Structure Adjusted Capital CAR 31.3% 28.4% 1,699 1,843 1,865 1,801 1,869 28.4% 23.5% 22.5% 18.7% 19.6% 18.7% 20.7% 1,080 1,306 1,406 1,865 1,801 1,869 2006200620062006 2007200720072007 2008200820082008 2009200920092009 2010201020102010 2011201120112011 2012201220122012 1H131H131H131H13
- 33. Well Controlled Leverage LeverageTrend Total Assets / Total Shareholders' Equity Managed Borrowings / Total Shareholders' Equity 25 12.3x12.3x 4.1x 4.1x 4.6x 4.9x 6.0x 5.4x 5.1x 4.7x 11.3x 4.4x 2.6x 2.6x 3.2x 3.5x 4.4x 3.5x 3.2x 2.9x 2005200520052005 2006200620062006 2007200720072007 2008200820082008 2009200920092009 2010201020102010 2011201120112011 2012201220122012 1H131H131H131H13
- 34. Diversification of FundingPortfolio over Time Managed Borrowings (KRW Bn) 26 Bond-domestic Bond-overseas ABS-domestic ABS-overseas Bank loans CP 2,199 2,933 3,980 5,165 7,197 7,067 7,073 6,586 80.2% 12.7% 1.9% 14.8% 10.1% 14.1% 8.3% 7.7% 11.0% 6.4% 11.0% 73.2% 4.6% 9.2% 10.1% 83.6% 6.9% 6.3% 4.9% 82.7% 13.6% 3.4% %%%% of LTof LTof LTof LT FundingFundingFundingFunding 50.5%50.5%50.5%50.5% 62.6%62.6%62.6%62.6% 63.1%63.1%63.1%63.1% 57.3%57.3%57.3%57.3% 56.5%56.5%56.5%56.5% 71.6%71.6%71.6%71.6% 67.3%67.3%67.3%67.3% 66.3%66.3%66.3%66.3% 2,199 2006200620062006 2007200720072007 2008200820082008 2009200920092009 2010201020102010 2011201120112011 2012201220122012 1H131H131H131H13 59.4% 15.9% 9.3% 47.3% 19.5% 14.8% 13.6% 49.6% 15.1% 61.8%
- 35. 27 Substantial Improvement inLiquidity Position Liquidity Profile (KRW Bn) Credit LineCash Short-term Debt Coverage Ratio* 79.0% 65.5% 67.7% 498 841 824 715 1,148 1,584 1,514 1,50213.1% 27.3% 32.7% 18.6% 36.7% * Short-term Debt Coverage Ratio = (Cash + Unused committed credit line)/ Short-term debt balance 143 149 360 391 650 743 690 787 150 120 20 143 299 480 411 2006 2007 2008 2009 2010 2011 2012 1H13
- 36. Investor Relations Contacts JungsangKim, Head of Investor Relations Phone +82 2 2167 7034 jungsang.kim@hyundaicard.com Minchul Seo, Deputy General Manager of Investor Relations Phone +82 2 2167 7051 mcseo@hyundaicapital.com Suh ye Choi, Manager of Investor Relations Phone +82 2 2167 7541 Justin Lee, Manager of Investor Relations Phone +82 2 2167 8082 http://ir.hyundaicard.com/ Phone +82 2 2167 7541 sychoi@hyundaicard.com 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