Lotte Card's first-quarter operating profit more than doubled from a year earlier, while its membership, which had plunged following a hacking incident in the second half of last year, recovered to the 9.56 million range.
According to the financial industry on Tuesday, Lotte Card posted 41.5 billion won ($30 million) in operating profit in the first quarter, up 201.4% from 13.8 billion won in the same period a year earlier. "We were able to significantly improve operating profit by reducing bad debt expenses while generating stable revenue through a portfolio focused on prime customers," a Lotte Card official said.
Risk management indicators also improved. As of the end of the first quarter, the delinquency transition rate stood at 0.318%, rising to 0.311%, the level seen before the Legoland crisis. The delinquency transition rate refers to the ratio of normal loans that become delinquent for two months or more.
Membership, which had sharply declined due to the hacking incident, has also recovered. Lotte Card lost 160,000 members immediately after the hacking incident in August last year. The number of members stood at 9.56 million in the first quarter, recovering to the level at the end of September last year (9.57 million). Compared to the end of last year (9.53 million), a net 30,000 members were added in three months.
Lotte Card faces heavy sanctions, including a 4.5-month business suspension and a 5 billion won fine, following a decision by the Financial Supervisory Service's Sanctions Review Committee. This has raised the possibility of at least 350,000 customers leaving. "Since the final decision by the Financial Services Commission remains, we will faithfully explain our efforts to prevent damage from the incident in order to mitigate the sanctions," a Lotte Card official said.
At the same time, the company plans to steadily expand its customer base going forward. To this end, it plans to diversify sales channels and continuously launch new products. In the second half of last year, Lotte Card partnered with Travel Wallet to introduce the "Travel Wallet Hybrid Lotte Card," which offers benefits such as waived overseas transaction fees. "We will recover profitability by expanding our customer base while simultaneously pursuing soundness management, diversification of funding structures, and cost efficiency," a Lotte Card official said.
