Earnings by credit card companies in South Korea shrank 21 percent last year from a year earlier, as households tightened their purse strings amid an economic downturn and lowered merchant fees, industry data showed Sunday.
The combined net income of seven stand-alone card firms came to
1.73 trillion won ($1.61 billion) last year, compared with 2.2 trillion won a year earlier, according to the data.
The weak bottom line came as households cut spending last year amid economic uncertainties. Also, a rise in housing rental costs prodded them to reduce spending.
Shinhan Card Co. saw its net profit decline 11.3 percent on-year to reach 658 billion won, and Hyundai Card Co. suffered a 16.4 percent decline to 160 billion won over the cited period.
Samsung Card Co. suffered a drop of 64 percent to 273 billion won over the cited period, the data showed.
In contrast, KB Kookmin Card Co. and BC Card Co. logged an increase in their net profits last year with their earnings standing at 384 billion won and 104 billion won each.
South Korean households' average consumption propensity -- the ratio of total consumption spending to disposable income -- dropped to its lowest level last year amid lingering worries over the economic slump.
The consumption propensity stood at 74.1 percent last year, down 0.7 percentage point from the previous year. This marked the third straight year that the figure has dropped on a year-on-year basis and also represented the lowest since related data started to be released in 2003.
South Korea's credit card spending grew at the slowest pace on record last year, other data showed.
Purchases made with credit cards totaled 545.2 trillion won last year, up 4.7 percent or 24.27 trillion won from the previous year, according to the Credit Finance Association.
The 2013 tally marks the slowest growth since 2005 when the association began to compile related data and a sharp turn from the previous year's 13.5 percent expansion. (Yonhap)