Hyundai Card Hyundai Card is...Investor Presentation Hyundai Card 2013

DisclaimerThese presentation materials have been prepared by Hyundai Card Co., Ltd. (“HCC or the Company”), solely for the use atthis presentation and have not been independently verified. No representations or warranties, express or implied, are madeas to, and no reliance should be placed on, the accuracy, fairness or completeness of the information presented or containedin this presentation. Neither the Company nor any of its affiliates, advisers or representatives accepts any responsibilitywhatsoever for any loss or damage arising from any information presented or contained in this presentation. The informationpresented or contained in this presentation is current as of the date hereof and is subject to change without notice and its accuracy is not guaranteed.Neither the Company nor any of its affiliates, advisers or representatives make any undertaking to update any such information subsequent to thedate hereof. This presentation should not be construed as legal, tax, investment or other advice.

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1

Key Highlights 2013

• Stable profitability : Operating profit of KRW 220 billion and ROA of 1.7%

• Effective marketing : Highest average monthly spending (KRW 800k/month)

among peers as a result of unique marketing efforts

• Excellent asset quality : 0.8% delinquency rate (30 days +)

• Sound capital structure : Leverage of 4.9x and a capital adequacy ratio of 19.4%

• Strong liquidity : Short term debt coverage ratio of 87.5%

• Chapter 2, turn the page : Simplified brand portfolio, M and X card

Shareholder Financial & Operational Support

Relationship with Shareholders GE Capital’s Financial Support

2

2013201320132013 - Total Investment to date : U$650mm(As of 2013 end)

- Innovative “Point Programs”

- Stable & solid operational base

- Extensive sales network 54.0% - GE Capital provides U$200mm back-up

credit-line 2010201020102010

- 2006 ~ 2008 Exercising of Warrants(Additional equity investment)

2008200820082008

- GE Capital increases paid in capital by KRW 165bn

2006200620062006

- Extensive sales network

- Powerful financing arm

- Effective marketing tool

- Most successful joint venture

- Sole consumer finance window in Korea

43.3%

- GE Capital acquires KRW 313bn equity interest in HCC

- Establishment of joint venturewith GE Capital

2005200520052005

- GE Capital purchases KRW 200bn subordinated bond

- Advanced knowledge of risk management

- Financial support

- Active involvement in management and daily operations

3

GDP Growth Rate & Unemployment Rate

2010 2011 2012 2013

GDP Growth Rate 6.1% 3.6% 2.0% 2.8%

Resilient GDP Growth and Increasing Credit Card Usage

Key Highlights

� GDP growth remains near 2% for two consecutive yearsGDP growth remains near 2% for two consecutive yearsGDP growth remains near 2% for two consecutive yearsGDP growth remains near 2% for two consecutive years

- Slow recovery, albeit government expenditure increase

451.2

56.8% 59.6%66.3%

61.0%

Source: Bank of Korea

GDP Growth Rate 6.1% 3.6% 2.0% 2.8%

Unemployment (yr.) 3.7% 3.4% 3.2% 3.1%

Credit Card Spending* & Usage Rate

Credit Card Spending (KRW Tn) Credit card spending/Total private consumption

� VolumeVolumeVolumeVolume growth stagnantgrowth stagnantgrowth stagnantgrowth stagnant

- Matured market and regulation leads to stagnant

market growth

� Continuous GDP growth backed by the strong government Continuous GDP growth backed by the strong government Continuous GDP growth backed by the strong government Continuous GDP growth backed by the strong government

stimulationstimulationstimulationstimulation350.7

390.2 451.2

405.0

2010 2011 2012 3Q13

* Excludes cash advance and corporate purchase cards

Source: Credit Finance Association

stimulationstimulationstimulationstimulation

- Monitor the impact of weak JPY and household debt

� Countermeasure against regulation on credit card Countermeasure against regulation on credit card Countermeasure against regulation on credit card Countermeasure against regulation on credit card

companiescompaniescompaniescompanies

- Minimize the impact via enhanced products and

channels

4

Receivables Breakdown by Product

Balanced-risk Asset Portfolio and Consistent Market Share

Card Loan

Others 0.6%

Key Highlights and Strategy

� Balance between profitability and stability

by maintaining credit purchase account over 60%

Lump Sum 42.8%

Installments 21.5%

Cash Advance 8.5%

Card Loan 26.6%

Market Share

• Total Financial Receivables :KRW 9.9 Tn

•% credit purchase : 64.3%

Credit Purchase* Market

� Marginal M/S decrease, as refrained from volume

growth

- Reduce benefits for Cherry Picking customers

- Increase benefits for Loyal customers

15.7% 15.5% 15.5%14.9%

14.1% 14.3% 14.5%13.9%

2010 2011 2012 9M13

Total Credit Card Market (credit purchase*+ financial products)

* Excludes corporate accountsSource: FISIS

� Qualitative growth based on loyal customers

- Reform product service/card plates to simplify

and reinforce card portfolio

� Increase finance volume without deteriorating

asset quality

5

2010 2011 2012 2013 YoY

Operating Revenue* 2,260 2,370 2,460 2,503 1.8%

Operating Expenses* 1,890 2,045 2,223 2,283 2.7%

Income Statement (KRW Bn)

Good Profitability, albeit Slow Economy

Key Highlights and Strategy

� Weaker operating revenue growth

- Decrease in card income : MDR regulation impacts etc.

Operating Expenses* 1,890 2,045 2,223 2,283 2.7%

Bad debt expense 185 200 203 248 22.1%

Operating income 371 323 237 220 -7.3%

Net Income 278 239 194 163 -16.0%

* Excluding FX effect

ROAROA

- Increase in income from financial products : Card loans

and revolving loans

� Increase in operating expenses

- Increase in bad debt expenses due to the unfavorable economic conditions and regulations

- Transform to efficient cost structure with service reduction

3.5%2.6%

2.0% 1.7%

2010 2011 2012 2013

ROA

� Reinforce profitability to set base for a turnaround

- Diversify product portfolio

- Optimize the cost structure through reducing point expenses, etc.

6

Excellent Asset Quality and Conservative Reserve Policy

30+ Day Delinquency Rate (%)

0.4%0.6% 0.7% 0.8%

Key Highlights and Strategy

� Delinquency edged up, but stable since 1Q13

- Impact from macro: slow economy and higher

2010 2011 2012 2013

2010 2011 2012 2013

Total Reserve (KRW Bn)

household debt

- Delinquency rate maintained with conservative

underwriting policy

� Total reserve increased

(over 100% vs. FSS regulatory requirement)

2010 2011 2012 2013

Total Reserve* 189 378 544 594

Regulatory coverage** 128% 199% 157% 144%

% of Asset 2.1% 4.0% 5.5% 5.7%

* Reserve under accounting principles + supplemental reserve** Total Reserve/ Regulatory Requirement

� Maintain tightened underwriting process and Maintain tightened underwriting process and Maintain tightened underwriting process and Maintain tightened underwriting process and

employ more efficient collection strategy to enhance employ more efficient collection strategy to enhance employ more efficient collection strategy to enhance employ more efficient collection strategy to enhance

asset qualityasset qualityasset qualityasset quality

7

Leverage and Capital Adequacy Soundly Managed

6.0x

Leverage Trend (KRW Bn)

Total Asset / total Shareholder’s EquityTotal Equity

Leverage Regulation < 6X

Key Highlights and Strategy

�

1,737 2,008

2,197 2,367

6.0x5.4x 5.1x 4.9x

2010 2011 2012 2013

Capital Adequacy Ratio

� Earnings retained for conservative leverage

Capital Adequacy Ratio

2010 2011 2012 2013

Capital Adequacy Ratio 18.7% 19.6% 18.7% 19.4%

* FSS guideline: 8.0%

� Maintain dividend payout policy within 6.0X

in line with FSS guideline

8

Funding Portfolio by Product

ABS

Well Diversified, Stable Funding Portfolio

Key Highlights and Strategy

� Strategic Funding based on market condition

- Exploit tightening spread in longer tenor

Bonds 86.7%

Loans 2.9%

10.3% - Exploit tightening spread in longer tenor

- Bond proportion increased to accommodate

low interest environment

• Balance : KRW 7.2 Tn

• Long term : 74.0%

� Establish funding portfolio with

ABS under 20%, CP under 10%

1,584 1,514 1,646

9

Strong Liquidity Position and Well-Spread Debt Maturity

36.7%

79.0%65.5%

87.5%Credit LineCash Short-term Debt Coverage Ratio*

Liquidity Profile (Unit: KRW Bn) Key Highlights and Strategy

� More Cash for Liquidity Reinforcement

650 743 690 780

498

841 824866

1,148

1,584 1,514 1,646

2010 2011 2012 2013* Short-term Debt Coverage Ratio

= (Cash + Unused committed credit line)/ Short-term debt balance

Liabilities (Debt) (Unit: KRW Bn)

� ALM based funding: only 26% matures in 1st year

1,111 770

1,933 1,450

1,068 911

15.3%10.6%

26.7%

20.0%14.7% 12.6%

1H14 2H14 2015 2016 2017 2018~

Liabilities (Debt) (Unit: KRW Bn)

� Keep duration of liability > asset : ALM over140%

� Maintain short-term debt coverage ratio over 60%

Appendix

10

The Premier Korean Credit Card Company

• Strongest brand power in industry

• Strong asset quality and high brand loyalty- Excellent asset quality with the industry’s lowest delinquency rate of only 0.8%- Excellent asset quality with the industry’s lowest delinquency rate of only 0.8%

- Highest monthly average spending in industry per customer : KRW 800k

• Marketing innovations differentiate brand and drive growth- Strategic marketing program with Hyundai Motor Group

- Leadership position in super premium segment

• Successful partnership between Hyundai Motor Group and GE Capital - Strong governance with GE Capital's active involvement in management & daily operations

- Joint promotions with Hyundai Motor Group

• Strong credit profile based on robust fundamentals- International : Fitch (BBB) / S&P (BBB)

- Domestic : AA+

11

Committed to Transparent Corporate Governance

Board of DirectorsBoard of DirectorsBoard of DirectorsBoard of Directors

• HMC 5 : GECC 4 : Outside directors 3

• GECC has veto rights

Risk Control CommitteeRisk Control CommitteeRisk Control CommitteeRisk Control Committee

• Member : 5 from HMC, 5 from GECC

• Frequency : Monthly

• Function

-Determination of risk indicator levels and appropriate course of actions in

Executive Finance CommitteeExecutive Finance CommitteeExecutive Finance CommitteeExecutive Finance Committee

• Member : 4 from HMC, 3 from GECC

• Frequency : Monthly

• Function

-Approval of various operating expenses, Capex, business and

Compliance Review BoardCompliance Review BoardCompliance Review BoardCompliance Review Board

• Member : 9 from HMC, 7 from GECC

• Frequency : Quarterly

• Function

-Formulation and execution of compliance strategy, schemes, and and appropriate course of actions in

respect thereofexpenses, Capex, business and funding plans

compliance strategy, schemes, and improvements

• C-Suite executives: Vice President, Deputy CFO, Deputy CRO, Deputy CMO, Controller

•Working level : GE employees also involved in day-to-day operations

• Transfer of advanced knowledge in various functions through best practice sharing program

GEPresence

12

Product Overview & Market Share

Market Share Trend

Total Credit Card Market (credit purchase*+ financial products)

Credit Purchase* Market*Business Area Features

11.8%

12.8%

13.8%

15.7% 15.7% 15.5% 15.5%14.9%

10.1%

11.2%

13.1%

14.1% 14.3% 14.5%13.9%

Credit Purchase

Lump sum• Single-payment purchases

• Repaid on a monthly billing cycle

Installment• Multiple-payment purchases

• Payment period of 2-12 months

Card loan• Unsecured loans to cardholders

8.8%

10.1%

2006 2007 2008 2009 2010 2011 2012 3Q13

Financial Products

Card loan• 3 – 36 month maturity

Cash advance• Cash withdrawal

• Lump sum or installment payback

* Excludes corporate accountsSource: FISIS

13

One of Korea’s Most Well Recognized & Respected Brands

Strong Brand Drives Higher Customer Loyalty Innovative Branding Activities

Strategy:

InnovativeInnovativeInnovativeInnovative ExperienceExperienceExperienceExperience

- Design Library

- Various culture projects - My Taxi

- Super event series

EmotionalEmotionalEmotionalEmotionalCommunicationCommunicationCommunicationCommunication

• Design library, specializing in design related publications

InnovativeInnovativeInnovativeInnovative ExperienceExperienceExperienceExperience

ClassicClassicClassicClassic DynamicDynamicDynamicDynamic

• Super concert

*88.1% (Source: TNS RI Research 2011)

• My Taxi, concept car, in collaboration with KMC

• Unique culture projects of Hyundai card

Result:

- Well respected, trendsetting image with high customer awareness*

- Higher customer loyalty & spending, evidenced through average card usage per customer

14

Chapter 2 : For the Next New 10 years

Two Track Brand Portfolio Two Key Benefit

Point • Simple Card Product- Simplified Product portfolio

Cash Back

- Simplified Product portfolio- Concentrate on saving Point

• Service Differentiation- Selecting card product by usage

amount (M1~M3)

• Discount through cash-back systemCash Back • Discount through cash-back system- Cash-back from every merchandise

• Service Differentiation- Selecting card product by usage

amount (X1~X2)

Key Indicators

(Unit : KRW Bn, %) 2006 2007 2008 2009 2010 2011 2012 2013

MarketShare

Credit Purchase 11.8% 12.8% 13.8% 15.7% 15.7% 15.5% 15.5% 14.5%

Total Market 8.8% 10.1% 11.2% 13.1% 14.1% 14.3% 14.5% 13.8%

Total 3,508 4,507 5,616 7,136 9,186 9,563 9,898 9,947

Credit Purchase 77.6% 74.1% 72.9% 74.3% 65.7% 68.1% 66.7% 64.3%

15

Asset PortfolioCredit Purchase 77.6% 74.1% 72.9% 74.3% 65.7% 68.1% 66.7% 64.3%

Financial 19.8% 25.8% 27.1% 25.7% 34.3% 31.7% 32.9% 35.1%

Others 2.6% 0.1% 0.0% 0.0% 0.1% 0.2% 0.4% 0.6%

Profit Operating Income 111 73 258 286 371 324 237 220

Asset Quality

30+ Delinquency 2.2% 0.4% 0.7% 0.3% 0.4% 0.6% 0.7% 0.8%

Allowance for Loan Loss 158 104 135 142 189 174 181 205

Total Reserve** 158 104 135 142 189 378 544 594

Capital AdequacyCapital Adequacy Ratio 31.3% 28.4% 23.6% 22.5% 18.7% 19.6% 18.7% 19.4%

Asset Leverage 4.1X 4.1X 4.6X 4.9X 6.0X 5.4X 5.1X 4.9X

Total 2,199 2,933 3,980 5,165 7,197 7,068 7,073 7,243

Funding Portfolio

Total 2,199 2,933 3,980 5,165 7,197 7,068 7,073 7,243

Bond 68.5% 66.8% 64.6% 72.8% 73.6% 85.3% 80.4% 86.7%

Bank Loans 6.3% 4.7% 3.0% 2.0% 10.1% 1.4% 1.0% 2.9%

CP 9.3% 14.8% 14.1% 11.0% 9.1% 6.9% 4.9% -

ABS 15.9% 13.6% 18.3% 14.1% 7.2% 6.3% 12.7% 10.3%

Liquidity

Cash 143 149 360 391 650 743 690 780

Credit Line - 150 120 20 498 841 824 866

S-T Debt coverage 13.1% 27.3% 32.7% 18.6% 36.7% 79.0% 65.5% 87.5%

* Including supplemental reserve

Good Profitability, albeit Slow Economy

2008 2009 2010 2011 2012 2013 YoY

KKKK----IFRSIFRSIFRSIFRSKKKK----GAAPGAAPGAAPGAAP

Income Statement (KRW Bn)

16

Operating Revenues 1,594 1,841 2,337 2,408 2,526 2,528 0.1%

(excl. FX effect) 1,444 1,795 2,260 2,370 2,460 2,503 1.8%

Operating Expenses 1,337 1,555 1,966 2,084 2,292 2,308 0.7%

(excl. FX effect) 1,186 1,509 1,890 2,045 2,223 2,283 2.5%

Card expenses 506 730 863 924 1,044 1,028 -1.5%

Interest expenses 187 221 319 357 343 313 -8.9%

SG&A Expenses 367 398 484 538 606 637 5.0%

PPOP 357 441 570 525 440 469 6.5%

Bad Debt expenses 103 113 185 200 203 248 22.0%

Provision for unused Credit Line

-3 42 14 1 0 1 -

Operating Income 258 286 371 324 237 220 -7.3%

Income before Tax 272 295 371 324 236 219 -7.4%

Net Income 202 213 278 239 194 163 -16.0%

ROA 3.9% 3.5% 3.5% 2.6% 2.0% 1.7%

ROE 16.7% 15.1% 17.6% 12.6% 9.2% 7.1%

Korean Credit Card Market Features17

• Conservative lending environment - Low usage of revolving credit card products, as full payment of monthly balance

preferredpreferred

• Strong credit infrastructure - Well developed credit bureau system to check credit based transactions

- Credit card company’s own credit scoring system for further credit assessment

• Cash-less society

- Credit card available for the payment in all private sectors, thus accounts 61% of

all private sector expense

• Strict government oversight- Regulations governing new origination practices and customer cash advance limits

18

Korea Credit Card Industry: Then & Now

Combined Asset portfolio Total Asset Quality (30+ Day Delinquency Rate)

Credit Purchase Financial Products

Capital Adequacy Ratio Regulatory & Infrastructure Changes:

- Credit bureau system established

35.1%65.2%

64.9%34.8%

2003 3Q13

28.3%

2.0%

2003 3Q13

Source: FSS

- Credit bureau system established

- Reinforced standard on new credit card issuance

- Companies must maintain capital adequacy ratio of above 8% -5.5%

27.9%

2003 3Q13

Investor Relations Contacts

Jungsang Kim, Head of Investor RelationsPhone +82 2 2167 7034jungsang.kim@hyundaicard.com

Suh ye Choi, Manager of Investor RelationsPhone +82 2 2167 7541sychoi@hyundaicard.com

Justin Lee, Manager of Investor RelationsPhone +82 2 2167 8082

Jay Moon, Assistant Manager of Investor RelationsPhone +82 2 2167 5312

http://ir.hyundaicard.com/

Phone +82 2 2167 8082justin.j.lee@hyundaicard.com

Phone +82 2 2167 5312jaymoon@hyundaicapital.com

Hyunyoung Jang, Assistant Manager of Investor RelationsPhone +82 2 2167 6955hyunyoung.jang@hyundaicard.com