South Korean credit card companies saw their first-half earnings inch down from a year earlier due mainly to a cut in their fee rates imposed on member stores, the financial watchdog said Wednesday.

The combined net income of eight stand-alone card firms stood at 1.05 trillion won ($960 million) in the January-June period, down 0.88 percent from a year earlier, according to the Financial Supervisory Service.

The slight drop was attributed to the fee-rate cut conducted in late January. The card issuers lowered the rate to 0.8 percent for mom-and-pop stores whose annual sales came to less than 200 million won. The rate was also slashed to 1.3 percent to members with annual sales between 200 million won and 300 million won.

The credit card industry had expected their fee income to shrink by 670 billion won annually due to the lower card fees they receive from member stores.

By company, Shinhan Card Co. logged the largest net profit of 355.2 billion won in the first half, up 0.96 percent from the same period a year earlier.

KB Kookmin Card Co. came in second with a net income of 154.6 billion won, followed by Samsung Card Co. and Hyundai Card Co. with 185.8 billion won and 94.9 billion won each.

Lotte Card Co. recorded the biggest 21.8 percent drop in first-half earnings, with its bottom line falling to 70.6 billion won from 90.3 billion won a year earlier.

Despite the fee reduction, industry watchers said, card issuers' earnings fell at a lower-than-expected rate in the first half as they were reluctant to cut lending rates amid declining funding costs. (Yonhap)