Shinhan Card is facing significant challenges in its quest to reclaim its position as the leading financial institution in South Korea, as it continues to lag behind Samsung Card in the first quarter of 2025. CEO Park Chang-hoon, who took the helm during a tumultuous period, is now tasked with restoring profitability and enhancing competitiveness in a tough market.
According to data released by Shinhan Financial Group on May 6, 2025, Shinhan Card reported a net profit of 135.7 billion won for the first quarter of this year, a stark 26.7% decline from the same period last year, when profits stood at 185.1 billion won. However, this figure represents a dramatic recovery of 598.9% from the previous quarter's profit of just 19.5 billion won, which had been impacted by one-off expenses, including voluntary retirement costs.
In contrast, Samsung Card has emerged as the industry leader, boasting a net profit of 184.4 billion won, up 3.7% from the previous year. The gap in net profit between the two companies has widened to 48.7 billion won, compared to a difference of 92.5 billion won for the entire year of 2024.
The primary factors contributing to Shinhan Card's underperformance include rising delinquency rates and increased provisions for bad debts. As of March 2025, Shinhan Card's delinquency rate rose to 1.61%, up from 1.56% a year earlier, marking its highest level since the third quarter of 2015. This increase has led to a 13.8% rise in bad debt provisions, totaling 255.7 billion won.
In contrast, Samsung Card maintained the lowest delinquency rate in the industry at 1.03%, largely due to its proactive management of bad debts and a stable capital procurement structure, which includes a significant proportion of long-term debt. Samsung Card's credit sales increased by 8.7% year-on-year to 38.699 trillion won, while Shinhan Card's sales fell by 1.4% to 796 billion won.
Shinhan Card's operational income for the first quarter was reported at 1.04754 trillion won, a slight decrease of 3.6% from the previous year. The company has attributed its struggles to external factors, including domestic demand stagnation and an economic slowdown, which have increased risks and costs. Interest expenses rose by 9% to 273.9 billion won, and sales management expenses increased by 4.5% to 193.4 billion won.
With these challenges in mind, CEO Park is focusing on diversifying Shinhan Card's portfolio to enhance profitability. In early 2025, the company launched its premium card, "The BEST-X," which offers various lifestyle discounts aimed at attracting affluent customers. This marks Shinhan Card's first foray into the premium card market since 2019.
Moreover, Shinhan Card is also expected to introduce Apple Pay soon, further expanding its digital payment capabilities. Park has emphasized the importance of innovation in payment processes and aims to eliminate even minor inconveniences for customers. "We will achieve sustainable profitability through payment process innovation and zero scandals," he stated during his inauguration speech.
Despite these efforts, Shinhan Card's position within the Shinhan Financial Group has slipped, losing its title as the top non-banking affiliate to Shinhan Life, which reported a net profit of 165.2 billion won in the first quarter of 2025.
The overall performance of the card industry has been affected by rising bad debt expenses, with the combined net profit of major card companies (Samsung, Shinhan, KB Kookmin, Hyundai, Hana, Woori) falling by 15.5% year-on-year to 553.6 billion won in the first quarter of 2025.
Experts note that the ongoing economic downturn poses significant risks for card companies, particularly as delinquency rates reach their highest levels in a decade. Professor Seo Ji-yong from Sangmyung University highlighted the need for card companies to find new sources of income, as traditional credit sales revenue declines.
In response to these market challenges, Shinhan Card is also expanding its involvement in used car financing, launching specialized products on the platform "My Car Safe" operated by Lotte Rental. This move is seen as a strategic effort to tap into a growing market, especially as new car sales have slowed due to economic conditions.
As Shinhan Card strives to improve its performance, the company is also focusing on optimizing its business portfolio and enhancing operational efficiency. The first quarter's operating income breakdown shows that 46% of Shinhan Card's income came from sectors other than credit cards, including installment finance and leasing.
Looking ahead, Shinhan Card is committed to establishing management strategies based on capital-efficient growth while navigating the uncertain domestic and international economic landscape. The company aims to enhance its competitiveness through both quantitative and qualitative innovations, with a clear focus on sustainable growth.
As the competition between Shinhan and Samsung Cards intensifies, the coming months will be crucial for Shinhan Card as it seeks to reclaim its leadership position in the financial sector.
