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1 q19 hcs_presentation_web_eng_190529.vf

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Hyundai Finance

- HCS reported solid growth in auto assets from new models, while maintaining stable financial quality through conservative risk management. - Net income increased 21.7% YoY for 1Q19 due to growth and cost reductions, despite rising bad debt expenses. - HCS aims to continue stable growth globally while diversifying products and funding structures in strategic markets like the US, China, and Germany.

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2019 1Q Earnings Release
These presentation materials have been prepared by Hyundai Capital Services, Inc. (“HCS” or “the Company”), solely for the use at this presentation. This presentation material may not be reproduced, redistributed or passed on, directly or indirectly, to any other person or published, in whole or in part, for any purpose. The Company has not taken measures to independently verify data contained in this material. No representations or warranties, express or implied, are made as to, and no reliance should be placed on, the accuracy, fairness or completeness of the information presented or contained in this presentation. This presentation should not be construed as legal, tax, investment or other advice. Financial statements in this document have been prepared in accordance with K-IFRS. Other additional market information has been sourced from the Company or from other external institutions. The information presented 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. Certain information and statements made in this presentation contain “forward-looking statements.” Caution should be taken with respect to such statements and you should not place undue reliance on any such forward-looking statements. Disclaimer
12.0 13.0 13.4 4.2 4.5 4.6 1.4 1.6 1.617.7TN 19.1TN 19.6TN 2017 2018 1Q19 Auto portfolio 1 New Car Lease/Rent Used Car Auto Portfolio Continuous Auto Asset Growth through OEM-Finance Synergy Captive Market  Sales improved from continued momentum from HMC/KMC new model releases - ’17.12 Grandeur, ’18.3 Santa Fe, ‘18.12 Palisade +2.7%  Improved position thru continuous Captive marketing  Greater UW efficiency and process competitiveness via digitalization 43.2% 46.5% 46.8% 2017 2018 1Q19 Captive pen rate① 284 221 207 43.2% 75.4% 72.5% 2017 2018 1Q19 Digital usage% UW headcount ① # of cars booked with HCS New Car∙Lease/Rent / # of new cars feasible to book HMG sales (M/S) 1.21MM (67.5%) 1.25MM (69.2%) 0.30MM (72.4%)
2.05% 2.10% 2.13% 2.20% 2.11% 2.02% 4Q17 1Q18 2Q18 3Q18 4Q18 1Q19 80.7% 81.6% 85.6% 2.4 2.7 2.7 3.0 3.7 3.8 1.4 1.4 1.4 6.8TN 7.9TN 7.9TN 2017 2018 1Q19  P-Loan focused on X-sell to prime Auto customers  Hedging risk of market price drop thru Mortgage RVI (residual value insurance) coverage 2 Personal Loan  Stabilized delinquency thru preemptive cut-off and tightened collection  Improved Non-Auto portfolio focusing on prime① Mortgage Corporate, etc. Non-Auto Portfolio Stabilized Non-Auto Asset Quality with Tighter Risk Management 30+% Risk Management 44.7% 51.4% 53.5% 2017 2018 1Q19 Apr, detected ext/internal abnormal symptoms Aug, declared entry to credit crisis ① Customers with NICE CB grades 1~4 Prime mix Non-Auto portfolio X-sell mix
3  Solid growth centering on Auto Finance - Volume increases in New Car Installment and Lease/Rent fueled by releases of Palisade/G90  Bad debt expense continues to rise from overall weakening of industry quality - Reduced Non-Auto assets (P-Loan, Mortgage) by tightening risk management - Plan to maintain the conservative risk stance set in ‘18 2H throughout the year  Despite asset growth, controlled SG&A by enhancing cost efficiency  Decrease of equity method income due to declined car sales in China (excluding one-off effect) - BHAF 9.2BN (39%↓ YoY), HCUK 3.2BN (7%↑ YoY) Summary of Financial Statement Stable Income from Growth and Cost Reduction (BN KRW) 2017 2018 1Q18 1Q19 YoY Assets 24.5TN 27.0TN 25.2TN 27.5TN 9.5% Op. revenue① 2,634.1 2,821.8 686.8 730.4 6.3% Op. expense② 2,306.2 2,476.1 598.0 638.1 6.7% Bad debt expense 317.5 392.9 101.5 113.1 11.5% SG&A 752.2 768.0 180.6 174.1 -3.6% Op. income 323.6 347.4 88.6 93.1 5.1% Non-op. income 77.3 68.0 20.4 37.8 85.8% Equity method income 68.9 60.8 18.5 33.6③ 81.3% IBT 400.9 415.5 109.0 131.0 20.2% Net income 299.9 311.3 81.5 99.2 21.7% ROA④ 1.3% 1.2% 1.3% 1.5% 0.2%p ①, ② Excluding FX and derivatives effect ③ One-off effect of sales of HCBE shares ④ Net income / average balance of assets
Stable Financial Quality ①, ② 외환 및 파생효과 제외 ③, ④ ’18년 4분기부터 IFRS15 시행에 따라 할인/판촉비를 순액 인식 ⑤ 당기순이익 / 상품자산 평잔 4 Capital Adequacy  Regular dividend paid out in Feb’19 (87.3BN KRW, payout ratio 30.9%)  Long/short-term stress test result applied  Lengthen liabilities maturity aligned with longer asset maturity 15.2% 14.3% 13.9% 2017 2018 1Q19 154.2% 134.8% 128.7% 2017 2018 1Q19 2.0 1.7 1.8 3.3 3.5 3.6 5.3TN 5.2TN 5.4TN 2017 2018 1Q19 Adjusted capital ratio Cash Credit line ALM Provision Liquidity Maturity  Industry highest provision based on conservative policy 139.1% 119.2% 127.9% 2017 2018 1Q19 Substandard and below asset coverage
US HCA China BHAF Canada HCCA Germany HCBE ’19 Strategy • Reduce Lease mix • Stabilize delinquency • Diversify financial support • Diversify funding structure • Continue stable growth • Diversify product (Used/Rent) • Diversify product • Improve pen rate • Completed JV conversion (Mar28) • Stabilize operations Product Assets (BN) [USD] [RMB] [GBP] [CAD] [EUR] IBT (MM) 31.4 30.6 30.2 2017 2018 1Q19 24.3 23.7 24.5 2017 2018 1Q19 1.8 2.1 2.2 2017 2018 1Q19 1.5 1.6 1.7 2017 2018 1Q19 UK HCUK 0.3 0.6 0.7 2017 2018 1Q19 102 141 90 2017 2018 1Q19 965 742 218 2017 2018 1Q19 35 40 9 2017 2018 1Q19 10 3 2017 2018 1Q19 2017 2018 1Q19 - Newly established Brazil JV entity with Santander in April’19 (Banco Hyundai Capital Brazil) 5Global Hyundai Capital: Coverage Expansion focused on HMG’s Strategically Important Markets -18 -3-3 -23
Appendix
1. Financial Statement ①, ② Excluding FX and derivatives effect 6 Consolidated Income Statement Consolidated Statement of Financial Position (BN KRW) 2016 2017 2018 1Q18 1Q19 Op. revenue① 2,586.0 2,634.1 2,821.8 686.8 730.4 Loan income 944.3 940.0 981.6 250.3 229.6 Installment income 487.9 479.2 528.3 126.1 143.5 Lease income 873.0 933.6 1,004.3 244.2 268.8 Gain on sale of loan receivables 105.9 96.3 101.0 16.0 39.3 Op. expense② 2,243.5 2,306.2 2,476.1 598.0 638.1 Interest expense 585.8 539.5 573.7 135.6 149.2 Lease expense 554.1 601.1 641.1 152.8 171.2 Bad debt expense 295.4 317.5 392.9 101.5 113.1 Loss on sale of loan receivables - 7.1 11.9 3.1 2.1 SG&A 726.5 752.2 768.0 180.6 174.1 Op. income 343.3 323.6 347.4 88.6 93.1 Non-op. income 60.2 77.3 68.0 20.4 37.8 Equity method income 55.8 68.9 60.8 18.5 33.6 IBT 403.5 400.9 415.5 109.0 131.0 Net income 300.7 299.9 311.3 81.5 99.2 (BN KRW) 2016 2017 2018 1Q19 Assets 25,157.4 27,608.1 30,528.3 30,619.4 Cash and deposits 1,469.6 2,131.8 1,731.1 1,769.5 Securities 525.5 600.1 671.6 847.3 Loan receivables 8,689.4 9,656.9 9,777.5 9,737.1 Installment assets 9,296.5 10,040.9 12,081.9 12,602.7 Lease receivables 2,384.0 2,423.4 2,578.1 2,619.1 Lease assets 1,773.1 1,899.8 2,012.6 2,052.4 Tangible assets 270.5 260.8 242.7 236.0 Liabilities 21,371.8 23,538.7 26,371.5 26,470.0 Borrowings 20,077.6 22,015.0 24,288.3 25,106.4 Other liabilities 1,294.2 1,523.7 1,363.8 1,363.5 Equity 3,785.6 4,069.5 4,156.9 4,149.4 Capital 496.5 496.5 496.5 496.5 Capital surplus 406.3 408.3 408.3 388.6 Accumulated other comprehensive income -61.1 -38.2 -146.6 -112.9 Retained earnings 2,936.3 3,164.1 3,364.9 3,377.2 Non-controlling interests 7.6 38.8 32.6 0.0
2. Key Figures 7 (BN KRW/MM in local currency of global entity) 2016 2017 2018 1Q19 Product assets 22,568.0 24,491.1 27,035.8 27,547.5 Auto 16,948.2 17,676.0 19,120.0 19,642.0 New Car 11,563.6 12,039.4 12,981.0 13,414.8 Lease/Rent 4,041.6 4,230.4 4,543.2 4,635.9 Used Car① 1,343.0 1,406.3 1,595.8 1,591.3 Non-Auto 5,619.8 6,815.0 7,915.7 7,905.5 Personal Loan 2,094.5 2,407.4 2,736.0 2,682.4 Mortgage 2,457.4 3,045.6 3,739.7 3,839.4 Corporate 813.1 1,017.6 1,046.8 1,004.3 Other 254.7 344.5 393.3 379.5 Product assets (global) US (HCA) 31,316.0 31,440.1 30,606.6 30,175.0 China (BHAF) 25,406.7 24,319.0 23,737.3 24,498.3 UK (HCUK) 1,622.7 1,849.7 2,089.4 2,185.8 Canada (HCCA) 1,164.1 1,499.9 1,631.7 1,677.1 Germany (HCBE) - 261.8 566.2 678.2 (BN KRW) 2016 2017 2018 1Q19 Quality 30+% 2.06% 2.05% 2.11% 2.02% Substandard and below asset ratio 2.7% 2.3% 2.8% 2.5% Total provision /30+ receivables 158.2% 155.6% 157.7% 161.2% Leverage② 6.7x 7.0x 7.4x 7.5x Total assets 25,048.6 27,136.5 29,634.6 30,440.7 Total capital (previous quarter) 3,724.5 3,890.4 3,990.6 4,035.4 Funding③ 19,942.5 22,076.8 24,446.7 25,154.7 Domestic 14,323.8 16,220.5 18,657.7 19,221.8 Offshore 5,618.7 5,856.3 5,789.0 5,932.8 Maturity 134.9% 154.2% 134.8% 128.7% Liability maturity 2.0Y 2.3Y 2.2Y 2.3Y Asset maturity 1.5Y 1.5Y 1.7Y 1.8Y Liquidity④ 4,543.2 5,341.1 5,191.9 5,393.3 Cash 1,339.0 2,016.1 1,710.4 1,750.8 Credit line 3,204.2 3,325.0 3,481.5 3,642.5 ② Based on separate financial statement ③, ④ Managed basis ① Purchasing funds only (total used car assets including lease and secured loan is 2.4TN as of ‘19)

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1 q19 hcs_presentation_web_eng_190529.vf

  • 2. These presentation materials have been prepared by Hyundai Capital Services, Inc. (“HCS” or “the Company”), solely for the use at this presentation. This presentation material may not be reproduced, redistributed or passed on, directly or indirectly, to any other person or published, in whole or in part, for any purpose. The Company has not taken measures to independently verify data contained in this material. No representations or warranties, express or implied, are made as to, and no reliance should be placed on, the accuracy, fairness or completeness of the information presented or contained in this presentation. This presentation should not be construed as legal, tax, investment or other advice. Financial statements in this document have been prepared in accordance with K-IFRS. Other additional market information has been sourced from the Company or from other external institutions. The information presented 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. Certain information and statements made in this presentation contain “forward-looking statements.” Caution should be taken with respect to such statements and you should not place undue reliance on any such forward-looking statements. Disclaimer
  • 3. 12.0 13.0 13.4 4.2 4.5 4.6 1.4 1.6 1.617.7TN 19.1TN 19.6TN 2017 2018 1Q19 Auto portfolio 1 New Car Lease/Rent Used Car Auto Portfolio Continuous Auto Asset Growth through OEM-Finance Synergy Captive Market  Sales improved from continued momentum from HMC/KMC new model releases - ’17.12 Grandeur, ’18.3 Santa Fe, ‘18.12 Palisade +2.7%  Improved position thru continuous Captive marketing  Greater UW efficiency and process competitiveness via digitalization 43.2% 46.5% 46.8% 2017 2018 1Q19 Captive pen rate① 284 221 207 43.2% 75.4% 72.5% 2017 2018 1Q19 Digital usage% UW headcount ① # of cars booked with HCS New Car∙Lease/Rent / # of new cars feasible to book HMG sales (M/S) 1.21MM (67.5%) 1.25MM (69.2%) 0.30MM (72.4%)
  • 4. 2.05% 2.10% 2.13% 2.20% 2.11% 2.02% 4Q17 1Q18 2Q18 3Q18 4Q18 1Q19 80.7% 81.6% 85.6% 2.4 2.7 2.7 3.0 3.7 3.8 1.4 1.4 1.4 6.8TN 7.9TN 7.9TN 2017 2018 1Q19  P-Loan focused on X-sell to prime Auto customers  Hedging risk of market price drop thru Mortgage RVI (residual value insurance) coverage 2 Personal Loan  Stabilized delinquency thru preemptive cut-off and tightened collection  Improved Non-Auto portfolio focusing on prime① Mortgage Corporate, etc. Non-Auto Portfolio Stabilized Non-Auto Asset Quality with Tighter Risk Management 30+% Risk Management 44.7% 51.4% 53.5% 2017 2018 1Q19 Apr, detected ext/internal abnormal symptoms Aug, declared entry to credit crisis ① Customers with NICE CB grades 1~4 Prime mix Non-Auto portfolio X-sell mix
  • 5. 3  Solid growth centering on Auto Finance - Volume increases in New Car Installment and Lease/Rent fueled by releases of Palisade/G90  Bad debt expense continues to rise from overall weakening of industry quality - Reduced Non-Auto assets (P-Loan, Mortgage) by tightening risk management - Plan to maintain the conservative risk stance set in ‘18 2H throughout the year  Despite asset growth, controlled SG&A by enhancing cost efficiency  Decrease of equity method income due to declined car sales in China (excluding one-off effect) - BHAF 9.2BN (39%↓ YoY), HCUK 3.2BN (7%↑ YoY) Summary of Financial Statement Stable Income from Growth and Cost Reduction (BN KRW) 2017 2018 1Q18 1Q19 YoY Assets 24.5TN 27.0TN 25.2TN 27.5TN 9.5% Op. revenue① 2,634.1 2,821.8 686.8 730.4 6.3% Op. expense② 2,306.2 2,476.1 598.0 638.1 6.7% Bad debt expense 317.5 392.9 101.5 113.1 11.5% SG&A 752.2 768.0 180.6 174.1 -3.6% Op. income 323.6 347.4 88.6 93.1 5.1% Non-op. income 77.3 68.0 20.4 37.8 85.8% Equity method income 68.9 60.8 18.5 33.6③ 81.3% IBT 400.9 415.5 109.0 131.0 20.2% Net income 299.9 311.3 81.5 99.2 21.7% ROA④ 1.3% 1.2% 1.3% 1.5% 0.2%p ①, ② Excluding FX and derivatives effect ③ One-off effect of sales of HCBE shares ④ Net income / average balance of assets
  • 6. Stable Financial Quality ①, ② 외환 및 파생효과 제외 ③, ④ ’18년 4분기부터 IFRS15 시행에 따라 할인/판촉비를 순액 인식 ⑤ 당기순이익 / 상품자산 평잔 4 Capital Adequacy  Regular dividend paid out in Feb’19 (87.3BN KRW, payout ratio 30.9%)  Long/short-term stress test result applied  Lengthen liabilities maturity aligned with longer asset maturity 15.2% 14.3% 13.9% 2017 2018 1Q19 154.2% 134.8% 128.7% 2017 2018 1Q19 2.0 1.7 1.8 3.3 3.5 3.6 5.3TN 5.2TN 5.4TN 2017 2018 1Q19 Adjusted capital ratio Cash Credit line ALM Provision Liquidity Maturity  Industry highest provision based on conservative policy 139.1% 119.2% 127.9% 2017 2018 1Q19 Substandard and below asset coverage
  • 7. US HCA China BHAF Canada HCCA Germany HCBE ’19 Strategy • Reduce Lease mix • Stabilize delinquency • Diversify financial support • Diversify funding structure • Continue stable growth • Diversify product (Used/Rent) • Diversify product • Improve pen rate • Completed JV conversion (Mar28) • Stabilize operations Product Assets (BN) [USD] [RMB] [GBP] [CAD] [EUR] IBT (MM) 31.4 30.6 30.2 2017 2018 1Q19 24.3 23.7 24.5 2017 2018 1Q19 1.8 2.1 2.2 2017 2018 1Q19 1.5 1.6 1.7 2017 2018 1Q19 UK HCUK 0.3 0.6 0.7 2017 2018 1Q19 102 141 90 2017 2018 1Q19 965 742 218 2017 2018 1Q19 35 40 9 2017 2018 1Q19 10 3 2017 2018 1Q19 2017 2018 1Q19 - Newly established Brazil JV entity with Santander in April’19 (Banco Hyundai Capital Brazil) 5Global Hyundai Capital: Coverage Expansion focused on HMG’s Strategically Important Markets -18 -3-3 -23
  • 9. 1. Financial Statement ①, ② Excluding FX and derivatives effect 6 Consolidated Income Statement Consolidated Statement of Financial Position (BN KRW) 2016 2017 2018 1Q18 1Q19 Op. revenue① 2,586.0 2,634.1 2,821.8 686.8 730.4 Loan income 944.3 940.0 981.6 250.3 229.6 Installment income 487.9 479.2 528.3 126.1 143.5 Lease income 873.0 933.6 1,004.3 244.2 268.8 Gain on sale of loan receivables 105.9 96.3 101.0 16.0 39.3 Op. expense② 2,243.5 2,306.2 2,476.1 598.0 638.1 Interest expense 585.8 539.5 573.7 135.6 149.2 Lease expense 554.1 601.1 641.1 152.8 171.2 Bad debt expense 295.4 317.5 392.9 101.5 113.1 Loss on sale of loan receivables - 7.1 11.9 3.1 2.1 SG&A 726.5 752.2 768.0 180.6 174.1 Op. income 343.3 323.6 347.4 88.6 93.1 Non-op. income 60.2 77.3 68.0 20.4 37.8 Equity method income 55.8 68.9 60.8 18.5 33.6 IBT 403.5 400.9 415.5 109.0 131.0 Net income 300.7 299.9 311.3 81.5 99.2 (BN KRW) 2016 2017 2018 1Q19 Assets 25,157.4 27,608.1 30,528.3 30,619.4 Cash and deposits 1,469.6 2,131.8 1,731.1 1,769.5 Securities 525.5 600.1 671.6 847.3 Loan receivables 8,689.4 9,656.9 9,777.5 9,737.1 Installment assets 9,296.5 10,040.9 12,081.9 12,602.7 Lease receivables 2,384.0 2,423.4 2,578.1 2,619.1 Lease assets 1,773.1 1,899.8 2,012.6 2,052.4 Tangible assets 270.5 260.8 242.7 236.0 Liabilities 21,371.8 23,538.7 26,371.5 26,470.0 Borrowings 20,077.6 22,015.0 24,288.3 25,106.4 Other liabilities 1,294.2 1,523.7 1,363.8 1,363.5 Equity 3,785.6 4,069.5 4,156.9 4,149.4 Capital 496.5 496.5 496.5 496.5 Capital surplus 406.3 408.3 408.3 388.6 Accumulated other comprehensive income -61.1 -38.2 -146.6 -112.9 Retained earnings 2,936.3 3,164.1 3,364.9 3,377.2 Non-controlling interests 7.6 38.8 32.6 0.0
  • 10. 2. Key Figures 7 (BN KRW/MM in local currency of global entity) 2016 2017 2018 1Q19 Product assets 22,568.0 24,491.1 27,035.8 27,547.5 Auto 16,948.2 17,676.0 19,120.0 19,642.0 New Car 11,563.6 12,039.4 12,981.0 13,414.8 Lease/Rent 4,041.6 4,230.4 4,543.2 4,635.9 Used Car① 1,343.0 1,406.3 1,595.8 1,591.3 Non-Auto 5,619.8 6,815.0 7,915.7 7,905.5 Personal Loan 2,094.5 2,407.4 2,736.0 2,682.4 Mortgage 2,457.4 3,045.6 3,739.7 3,839.4 Corporate 813.1 1,017.6 1,046.8 1,004.3 Other 254.7 344.5 393.3 379.5 Product assets (global) US (HCA) 31,316.0 31,440.1 30,606.6 30,175.0 China (BHAF) 25,406.7 24,319.0 23,737.3 24,498.3 UK (HCUK) 1,622.7 1,849.7 2,089.4 2,185.8 Canada (HCCA) 1,164.1 1,499.9 1,631.7 1,677.1 Germany (HCBE) - 261.8 566.2 678.2 (BN KRW) 2016 2017 2018 1Q19 Quality 30+% 2.06% 2.05% 2.11% 2.02% Substandard and below asset ratio 2.7% 2.3% 2.8% 2.5% Total provision /30+ receivables 158.2% 155.6% 157.7% 161.2% Leverage② 6.7x 7.0x 7.4x 7.5x Total assets 25,048.6 27,136.5 29,634.6 30,440.7 Total capital (previous quarter) 3,724.5 3,890.4 3,990.6 4,035.4 Funding③ 19,942.5 22,076.8 24,446.7 25,154.7 Domestic 14,323.8 16,220.5 18,657.7 19,221.8 Offshore 5,618.7 5,856.3 5,789.0 5,932.8 Maturity 134.9% 154.2% 134.8% 128.7% Liability maturity 2.0Y 2.3Y 2.2Y 2.3Y Asset maturity 1.5Y 1.5Y 1.7Y 1.8Y Liquidity④ 4,543.2 5,341.1 5,191.9 5,393.3 Cash 1,339.0 2,016.1 1,710.4 1,750.8 Credit line 3,204.2 3,325.0 3,481.5 3,642.5 ② Based on separate financial statement ③, ④ Managed basis ① Purchasing funds only (total used car assets including lease and secured loan is 2.4TN as of ‘19)