South Korean credit card companies saw their default rates increase in the first quarter from three months earlier amid falling earnings, the financial regulator said Sunday.

The average delinquency rate of seven credit card companies reached 2.09 percent as of the end of March, up 0.18 percentage point from the end of last year, according to the Financial Supervisory Service.

The watchdog said the rate rose due to an increase in fresh defaults, which was related to clear signs of the country’s economic slowdown.

Amid increased defaults, the credit card companies suffered a setback in their earnings in the January-March period. Their combined net profit tumbled 26.9 percent on-year to 340.8 billion won ($290 million) in the first quarter.

Card companies posted a weaker bottom line due to increased defaults, which dented earnings and forced them to put up more loss reserves, the watchdog said.

The average capital adequacy ratio of the seven credit card companies amounted to 26.2 percent as of the end of March.

Meanwhile, the combined assets of all credit card firms, including those affiliated with banks, reached 76.8 trillion won as of end-March, down 3.6 percent from three months earlier.

Purchases made via credit cards came to 138.6 trillion won in the first quarter, up 3.7 percent from a year earlier, according to the FSS. 

(Yonhap News)