Credit card companies reported record performance in the third quarter of 2024, with a cumulative net profit of 2.224 trillion won, which is a 9% increase from the previous year. However, when factoring in bad debt reserves as mandated by financial authorities, the reality is less rosy. The actual net profit, after adjusting for these reserves, shows a decline of over 300 billion won compared to 2023. In 2023, credit card companies had accumulated sufficient reserves for bad debts, leading to a more favorable financial outlook. In contrast, in 2024, they fell short by 3.5 billion won, indicating a rise in insolvency and delinquency issues. This discrepancy has raised concerns about the transparency of credit card companies' financial health, as the reported profits do not reflect the necessary reserves that are crucial for assessing their soundness. Financial authorities emphasize the importance of considering bad debt reserves when evaluating the stability of these firms.
Read the full article here.