July 24, 2009
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News: Hana Financial Showing Better Than Expected
Americans are not alone in the credit card crisis; most overseas counties have been feeling the same pains of a shaky economy. One of South Korea's largest financial companies, Hana Financial Group, Inc. has had its share of credit card defaults as reported by its second quarter earnings. Profits for Hana were down 37% from same time last year as net income declined by $157 million (196.6 billion won); however, the company had reported a loss of 323 billion won in first quarter 2009. A recent increase in the Korean won against the U.S. dollar contributed to Hana Financial showing a lower than expected loss and leverage in returning a profit. Experts say the Korean won is expected to begin stabilizing soon which should release some of the pressure off the Seoul based Hana Financial. It is likely to also help other lenders in increasing profits, credit card defaults, and render higher payoffs to investors.
Hana Financial has it headaches in the liabilities sector as well. The major credit card company sold currency option contracts to Taesan LCD, a maker of computer screen back light units, which have been relinquished to creditors after defaulting on debt payment. Hana will be held liable for future losses in the deal. Hana's holdings are also suffering with losses. The Hana Bank reported a 43% decline in profits for second quarter as well. To cover credit card and loan defaults, Hana had reserved 82 billion won for second quarter which was less than the 563 billion won for the first quarter. The 82 billion was also less than the previous year of 124 billion won.
Hana Bank is hoping to seal a deal with SK Telecom Co. to launch its new card operations. SK Telecom has been working through government licensing details. Korean regulations restrict non-financial entities from owning financial units that would offer credit cards. The Korean National Assembly is looking at the possibility of easing up on the restrictions which would open the way for SK to partner with Hana Bank in offering their version of the service.