South Korea's credit card firms posted a net loss in their products aimed for rich clients in 2012, data showed Monday, raising woes ordinary clients are shouldering such shortfalls.
According to the data compiled by the Financial Supervisory Service (FSS), the six credit card firms lost a net 2.3 billion won (US$2.16 million) from their products targeting so-called "Very Very Important Persons (VVIPs)."
While the six firms raked in 12.8 billion won from such card line-ups, they spent 15.1 billion won in marketing costs and additional services, the data showed.
Market watchers said that the losses came as card firms provided VVIPs with excessive extra services, including free airplane tickets and extra discounts.
Shinhan Card Co., the country's No. 1 player, suffered a shortfall of 1.75 billion won from such VVIP cards in 2012, followed by Samsung Card Co. with 356 million won and KB Kookmin Card Co. with 210 million won in losses.
In contrast, Hyundai Card Co. and Lotte Card Co., which issued less than 100 of the VVIP cards last year, managed to post a net profit of 11 million won and 95 million won, respectively.
Earlier this year, the FSS said it will take a deeper look into the issue to prevent local firms from covering the losses with profits raked in from high-interest card loans and cash advance services targeting ordinary cardholders.
"The move comes to stop credit card firms from covering up losses from VVIP cards with earnings from other sectors," an official from the FSS said. "We will keep our eyes open on the matter and take strict actions against violations."