1. What’s Happening with Korea Capital?

Korea Capital’s Q2 2025 earnings decreased compared to the previous quarter but maintained a solid trend compared to the second half of 2024. In particular, operating profit and net profit margins improved. However, intensifying competition and a slowing real economy could put pressure on continued profitability improvement.

2. Why is this happening?

The lease financing market is facing increased competition, and installment financing also faces potential profit deterioration due to its high reliance on auto installment financing. While new technology business financing offers high growth potential, managing profit volatility due to stock market conditions is crucial. Although the trend of interest rate cuts is positive, persistently high rates can burden investment sentiment. The possibility of an economic slowdown and intensifying competition within the financial sector could impact Korea Capital’s profitability and asset soundness.

3. So, What Should We Do?

  • Strengthen Risk Management: Increased allowance for bad debts and strengthened management of non-performing loans are necessary to prepare for the economic slowdown.
  • Defend Profitability and Find New Revenue Streams: Developing high-interest products, efficient asset management strategies, and accelerating growth in the new technology business financing sector are needed.
  • Improve Financial Structure: Reduce reliance on bonds and borrowing from financial institutions, and strengthen financial stability by increasing equity capital.
  • Accelerate Digital Transformation: Enhance digital channels and expand non-face-to-face services to improve customer accessibility.
  • Substantialize ESG Management: Strengthen ESG management to enhance corporate value and secure investor confidence.

4. Investor Action Plan

Korea Capital has a stable majority shareholder (Military Mutual Aid Association) and a diversified business portfolio. The changing interest rate environment is also positive. However, pressure on profitability, high dependence on borrowing, and the need for asset soundness management are risk factors. Therefore, investors should make investment decisions considering the strategies presented above and continuously monitor the situation.