Samsung Card headquarters building [Samsung Card]
Samsung Card headquarters building [Samsung Card]

Samsung Card shook off a weak first quarter to grow net profit in the second, though surging financial costs are expected to be a key variable for second-half earnings.

According to the company's regulatory filing Monday, Samsung Card posted net profit for the period of 154.2 billion won ($105 million) in the second quarter, up 3 billion won, or 2.0 percent, from 151.2 billion won in the same period last year.

Operating revenue rose 5.7 percent year-on-year to 1.1 trillion won from 1.04 trillion won. However, financial costs — the company's funding expenses — jumped 18.7 percent to 171.6 billion won from 144.6 billion won, limiting net interest income growth to 3.6 percent, at 925.3 billion won.

Cost management improved from the first quarter. Selling, general and administrative expenses rose a more modest 3.4 percent year-on-year to 525.2 billion won from 507.9 billion won. As a result, pre-provision profit climbed 3.9 percent to 400.1 billion won, and operating profit expanded 4.1 percent to 208.6 billion won — an increase of 8.2 billion won — even as credit loss provisions rose 3.8 percent to 191.5 billion won.

The net profit growth rate of 2.0 percent nonetheless trailed the operating profit growth rate of 4.1 percent, largely due to non-operating factors. Non-operating income shrank 81.3 percent to 400 million won from 2.1 billion won, while corporate tax rose 7.4 percent to 54.8 billion won, offsetting the 3.3 percent gain in pre-tax profit.

The picture looks different on a cumulative basis. Net profit for the period in the first half came to 310.5 billion won, down 25.1 billion won, or 7.5 percent, from 335.6 billion won in the same period last year.

Revenue itself grew. First-half operating revenue rose 5.6 percent year-on-year to 2.19 trillion won from 2.07 trillion won. The problem was that costs expanded faster than revenue.

Financial costs recorded the steepest increase of any line item. First-half financial costs surged 17.8 percent to 330 billion won from 280.2 billion won — a jump of 49.8 billion won — suggesting that funding conditions, including those for credit card company bonds, were less favorable than a year earlier. As a result, net interest income grew only 3.8 percent to 1.86 trillion won, an increase of 67.3 billion won.

The rise in SG&A expenses outpaced the gain in net interest income. First-half SG&A expenses climbed 8.0 percent to 1.07 trillion won from 987.3 billion won — an increase of 79.2 billion won — while net interest income grew by only 67.3 billion won. That gap pushed pre-provision profit down 1.5 percent to 792 billion won from 803.9 billion won. The increase in SG&A is attributed in part to higher marketing costs tied to the expansion of private-label credit card programs.

With credit loss provisions also rising 4.1 percent to 373.3 billion won from 358.5 billion won, operating profit contracted 6.0 percent to 418.7 billion won, a decline of 26.7 billion won. Pre-tax profit fell 6.2 percent to 421.1 billion won, down 27.8 billion won.

The first-half weakness was concentrated almost entirely in the first quarter. Samsung Card's net profit for the period in the first quarter was 156.3 billion won, down 15.2 percent from 184.4 billion won a year earlier. SG&A expenses had grown 12.9 percent in the first quarter but slowed to 3.4 percent in the second, allowing the profit trend to turn positive.

Ultimately, the key to second-half earnings will be funding costs. Analysts say that unless the double-digit rate of increase in financial costs eases, mid-single-digit revenue growth alone will be insufficient to guarantee profit improvement.

The delinquency rate for loans overdue by one month or more stood at 0.89 percent as of end-June, down 0.03 percentage points quarter-on-quarter.

"The burden of rising financial costs is expected to persist in the second half of 2026, and the operating environment for card companies will likely remain challenging," a Samsung Card official said, adding that the company plans to focus on managing asset quality and strengthening its core business while continuing efforts to build future growth foundations in AI, stablecoins and platform services.


won@heraldcorp.com