South Korea’s credit card companies saw their delinquency rate rise to the highest level in 9 years in 2023 as more consumers find it difficult to pay dues amid the weak economy.

According to data released by the Financial Supervisory Service on Monday, the combined net profit of eight major credit card companies totaled 2.58 trillion won ($1.93 billion) in 2023, down 0.9 percent from 2022.

The eight credit card companies are KB Kookmin Card Co., Lotte Card Co., BC Card Co., Samsung Card Co., Shinhan Card Co., Woori Card Co., Hana Card Co., and Hyundai Card Co.

Total revenue increased 3.3 trillion won in 2023 from a year ago.

Revenue from installment card fees gained 759.6 billion won, merchant fee revenue was up 596.8 billion won, and interest income increased by 252.1 billion won.

Total expenses, however, including bad debt costs (1.15 trillion won) and interest expenses (1.12 trillion won), increased by 3.35 trillion won, leading to a slight decline in net profit.

The delinquency rate for the eight card companies, in the meantime, soared to 1.63 percent in 2023, up 0.42 percentage point from the end of the previous year, marking the highest level since 2014.

The delinquency rate hit 1.43 percent in 2019 before declining to 1.09 percent in 2021 and turning upward in 2022.

The card companies’ non-performing loans (NPL) also increased.

Their NPL ratio was 1.14 percent at the end of 2023, up 0.29 percentage point from the previous year.

Asset quality is categorized into five levels (normal, cautionary, fixed, doubtful recovery, estimated loss), and the NPL ratio is the sum of loans classified as fixed, doubtful recovery, and estimated loss by total loans.

The credit card industry has been on high alert for delinquency management following the credit easing measures taken by the Financial Services Commission last week to restore credit for delinquent individuals with debts of 20 million won or less, resulting in 150,000 people seeing their credit scores rise and becoming eligible to apply for new credit cards.

By Chae Jong-won and Yoon Yeon-hae

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