Under challenging circumstances such as tightened household loan rules that limited credit card loans, increasing interest expenses, and lower merchant commission rates, the annual net profits of South Korea’s four largest card companies—Samsung, Shinhan, Hyundai, and KB Kookmin—fell by about 8% in the past year compared to the prior year.
As per the card industry report released on the 11th, the total net profit of these four card companies last year amounted to 1.8031 trillion South Korean won, representing a 7.8% decline from 1.9558 trillion won in the previous year. Following a 5.9% rise in 2024, profits took a turn for the worse. This figure also failed to meet the 1.8462 trillion won recorded in 2023, when profitability deteriorated due to rising market interest rates after the “Lego Land incident.”
The decrease in merchant commission fees, which took effect in February of the previous year, along with the government’s mortgage rules issued on June 27, which limited credit loan amounts to 100% of annual income, including card loans, led to a drop in profits. Korea Ratings projected that the seven specialized card companies lost 260 billion won in merchant commission income last year.
Higher market interest rates led to increased interest expenses. The combined interest costs of the four major credit card companies last year amounted to 3.2352 trillion won, representing a 4.8% rise compared to the previous year.
Last year, Samsung Card continued to lead in earnings with a net profit of 645.9 billion won, although this marked a 2.8% drop compared to the prior year. Shinhan Card, ranking second, recorded a net profit of 476.7 billion won, reflecting a 16.7% decline over the same period. The difference between Samsung and Shinhan increased from 925 billion won in 2024 to 1,692 billion won last year.
In the meantime, Hyundai Card reported a 10.7% rise in net profit, reaching 350.3 billion won, surpassing KB Kookmin Card to claim third position. KB Kookmin Card’s net profit declined by 18% to 330.2 billion won.
Due to declining performance, credit card companies are reducing employee pay. Shinhan Card chose to provide a settlement payment equal to 100% of monthly wages rather than performance-based incentives last year. In times of good performance, the company used to give bonuses ranging from 200–300% of the base salary.
Hana Card, which reported a 1.8% drop in net profit to 217.7 billion won, is also facing labor conflicts regarding performance bonuses. The union is seeking 300% of the base salary, matching the previous year’s amount, while management is only willing to offer 100%.
Shinhan Card, having dropped from the leading position to second place behind Samsung Card and encountering competition from Hyundai Card, is undergoing staff restructuring. The company received applications for early retirement from employees with more than 15 years of service, irrespective of their position or age, at the end of last month. This comes after a similar voluntary retirement initiative launched in June of the previous year, just seven months earlier.
A source from Shinhan Card” said, “The percentage of elderly and senior employees is the highest in the sector, requiring a reorganization of the workforce. We are carrying out self-rescue initiatives, such as modifying business portfolios and reforming organizational structures, to tackle declining profitability.
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