Korea’s credit finance companies’ net income 20.7% lower in 2023

Total revenues rose, but so did expenses and bad loans coverage.

Net income of South Korea’s specialised credit finance companies, excluding credit card companies, came at $2.03b (KRW2.7t) in 2023, 20.7% lower than a year ago.

Data from the Financial Supervisory Service (FSS) showed that the total revenues of 163 specialised credit finance companies in South Korea expanded by $3b or almost KRW4.05t in 2023 compared to 2022. Lease income also rose by $664.43m or KRW885.1b.

This was offset by expenses rising and a higher delinquency rate from a year ago. 

Total expenses increased by $3.56b (KRW4.75t) from the previous year, with interest and bad debt expenses rising during the period.

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The delinquency rate stood at 1.88% as of end-December 2023– 0.63 percentage point (pp) higher than the 1.25% in end-2022. The ratio of loans classified as substandard or below also climbed 0.66 pp to 2.2%, from just 1.54% a year previously.

Due to this, companies also increased their NPL coverage ratio to 140% as of end-December, which is 10.6 pp higher than the 129.4% in the previous year.

There are a total of 129.8 million credit cards issued by South Korean credit card companies and banks as of end-2023, 4.5% higher than a year ago.

As for debit cards, it is estimated that there are 104.46 million in total that were active in South Korea– down 0.7% compared to 2023 levels.