hcs 4 q12_eng
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Hyundai Capital Hyundai Capital is...Hyundai Capital Investor Presentation 2012
DisclaimerThese presentation materials have been prepared by Hyundai Capital Services., Inc. (“HCS or the Company”), solely for the use at this presentation andhave not been independently verified. No representations or warranties, express or implied, are made as to, and no reliance should be placed on, theaccuracy, fairness or completeness of the information presented or contained in this presentation. Neither the Company nor any of its affiliates,advisers or representatives accepts any responsibility whatsoever for any loss or damage arising from any information presented or contained in thispresentation. The information presented or contained in this presentation is current as of the date hereof and is subject to change without notice andits accuracy is not guaranteed. Neither the Company nor any of its affiliates, advisers or representatives make any undertaking to update any suchits accuracy is not guaranteed. Neither the Company nor any of its affiliates, advisers or representatives make any undertaking to update any suchinformation subsequent to the date hereof. This presentation should not be construed as legal, tax, investment or other advice.
Certain information and statements made in this presentation contain “forward-looking statements.” Such forward-looking statements canbe identified by the use of forward-looking terminology such as “anticipate,” “believe,” “considering,” “depends,” “estimate,” “expect,” “intend,” “plan,”“planning,”“planned,” “project,”“trend,” and similar expressions. All forward-looking statements are the Company’s current expectation of futureevents and are subject to a number of factors that could cause actual results to differ materially from those described in the forward-lookingstatements. Caution should be taken with respect to such statements and you should not place undue reliance on any such forward-lookingstatements.
Certain industry and market data in this presentation was obtained from various trade associations, and the Company have not verified such data withindependent sources. Accordingly, the Company make no representations as to the accuracy or completeness of that data, and such data involves risksand uncertainties and is subject to change based on various factors.
This presentation does not constitute an offer or invitation to purchase or subscribe for any shares or other securities of the Company and neither anypart of this presentation nor any information or statement contained therein shall form the basis of or be relied upon in connection with any contract orcommitment whatsoever. Any decision to purchase shares in any offering of shares of the Company should be made solely on the basis of theinformation contained in the offering document which may be published or distributed in due course in connection with any offering of shares of theCompany, if any.
The contents of this presentation may not be reproduced, redistributed or passed on, directly or indirectly, to any other person or published, in wholeor in part, for any purpose.
Key Highlights 2012
• Strong Fundamentals- Good profitability: Operating income of KRW 589 billion and an ROA of 2.2%
- Excellent asset quality: 30+ day delinquency rate of 2.3%
1
- Excellent asset quality: 30+ day delinquency rate of 2.3%
- Sound capital structure: Leverage of 7.2x and capital adequacy ratio of 14.5%
• Committed & Capable Shareholder Support- HMC showed resilient performance with global sales up 7.1% (YoY)
- GE Capital continues to provide committed financial and operations support
• Solid Credit Profiles • Solid Credit Profiles - Global Ratings: S&P-BBB+, Moody's-Baa1, Fitch-BBB+
- Niche Markets: RAM-AAA, JCR-A+
- Domestic Ratings: AA+
81.5%
Resilient Economic Growth and Steady Demand for New Cars
GDP Growth Rate & Unemployment Rate
3.6%
Domestic Auto Sales (‘000s)
GDP Growth Rate Unemployment Rate HMC HMC+KMC Market ShareKMC Others
2
316
413 485 493 482267
279321 297
261
76.9%
80.1%
78.2%79.9%
81.5%
6.1%
3.6%
3.2%
3.6% 3.5%
3.0% 2.9%
1,3941,465 1,474 1,411
1,154
571 703 660 684 668
2008 2009 2010 2011 2012
2.2%
0.2%
2.0%
2008 2009 2010 2011 2012
Source: Bank of Korea Source: KAMA
9.1%9.1%9.1%9.1%
1.5%1.5%1.5%1.5%8.8%8.8%8.8%8.8%
7.4%7.4%7.4%7.4%9.6%9.6%9.6%9.6%
7.4%7.4%7.4%7.4%8.8%8.8%8.8%8.8%
18,78818,78818,78818,78819,80619,80619,80619,806
20,28620,28620,28620,286
8.1%8.1%8.1%8.1%
Receivables Breakdown by Product (KRW Bn)
Low Risk-focused Product Portfolio3
56.8%56.8%56.8%56.8% 58.1%58.1%58.1%58.1%57.2%57.2%57.2%57.2% 57.6%57.6%57.6%57.6% 54.2%54.2%54.2%54.2%
14.8%14.8%14.8%14.8%15.8%15.8%15.8%15.8%
16.3%16.3%16.3%16.3%17.3%17.3%17.3%17.3% 18.8%18.8%18.8%18.8%
8.0%8.0%8.0%8.0%7.2%7.2%7.2%7.2%
8.4%8.4%8.4%8.4%7.9%7.9%7.9%7.9% 6.9%6.9%6.9%6.9%
10.9%10.9%10.9%10.9%7.4%7.4%7.4%7.4%
8.7%8.7%8.7%8.7%9.1%9.1%9.1%9.1%
10.9%10.9%10.9%10.9% 9.9%9.9%9.9%9.9% 9.7%9.7%9.7%9.7%8.8%8.8%8.8%8.8%
9.9%9.9%9.9%9.9%
7.8%7.8%7.8%7.8%
16,03016,03016,03016,030 16,48016,48016,48016,480
56.8%56.8%56.8%56.8% 58.1%58.1%58.1%58.1%
2008200820082008 2009200920092009 2010201020102010 2011201120112011 2012201220122012
New Car Financing Auto Lease Used Car Financing Personal Loan Mortgage GECK Others
25.1%
21.3% 22.0%20.3% 20.0%
2009 2010 2011 2012 YoY
Income Statement (KRW Bn)
Good Profitability Underscores Strong Fundamentals
Return on Equity & Return on Assets
ROE ROA
4
20.3% 20.0%
2.4% 2.6% 2.8% 2.6%2.2%
2008 2009 2010 2011 2012
Operating Revenues 2,989 3,274 3,331 3,542 6.3%
(Excluding FX effect) 2,485 2,889 3,125 3,071 -1.7%
Operating expenses 2,448 2,644 2,672 2,953 10.5%
(Excluding FX effect) 1,944 2,259 2,466 2,483 0.7%
Key HighlightsBad debt expense 176 145 354 377 6.4%
Operating income 541 630 659 589 -10.7%
Net Income 411 489 507 432 -14.9%
Key Highlights
� Operating income decreased YoY due to:
- Slower new car sales in 2012 year to date
- Decrease in one-time effect in the corresponding period last year
- Increased Bad Debt Expenses
� Return on assets (ROA) maintained at high level of 2.2%
152.7% 153.3%
Excellent Asset Quality and Conservative Reserve Policy
30+ Day Delinquency Rate (%) Total Reserve VS Regulatory Requirement (KRW Bn)
Total 30+ delinquency rate New Car 30+ delinquency rate Regulatory Requirement Reserve under Accounting Principles
Supplemental Reserve Total Reserve/ Regulatory Requirement
5
521 611
208
265 280
152.7% 153.3%
118.0% 117.1%108.8%
2.3%
1.8%1.6%
2.0%
2.3%
1.4%
474
610665
279 288
401
521 426 442
265
345 3850.7%0.6%
0.8%1.0%
2008 2009 2010 2011 2012 2009 2010 2011 20122008
15.7%
14.5%
Sound Capital Structure Maintained
Leverage Trend Capital Adequacy Ratio (KRW Bn)
Total Assets / Total Shareholders' Equity
Managed Borrowings / Total Shareholders' Equity
Adjusted Capital CAR
6
9.7x
7.4x
9.3x
8.3x
7.2x8.7x
7.5x1,825
2,432 2,375 2,622
2,954
11.5%
13.7%13.0%
14.5%
6.7x6.5x
5.7x
2008 2009 2010 2011 2012
1,825
2008 2009 2010 2011 2012
Diversified Funding by Type, Duration & Region
Funding Portfolio by Product Funding Portfolio by Currency
CP 3.4%CP 3.4%CP 3.4%CP 3.4%ABSABSABSABS
13.0%13.0%13.0%13.0%
7
21.7%21.7%21.7%21.7%
65.5%65.5%65.5%65.5%
USD
KRW
BondsBondsBondsBonds74.2%74.2%74.2%74.2%
Loans, Loans, Loans, Loans, 9.4%9.4%9.4%9.4%
CP 3.4%CP 3.4%CP 3.4%CP 3.4% 13.0%13.0%13.0%13.0%
0.3%0.3%0.3%0.3%
0.5%0.5%0.5%0.5%
1.5%1.5%1.5%1.5%
1.6%1.6%1.6%1.6%
2.9%2.9%2.9%2.9%
5.9%5.9%5.9%5.9%
21.7%21.7%21.7%21.7%
Other
CNY
AUD
JPY
MYR
CHF
USD
• Funding Balance: KRW 17,338 Bn
• Long-term funding: 70.1%
• Issuances for 2012
-144/RegS: 5.5yrs, USD 500m
-Dimsum: 1.5yrs, RMB 500m
-Samurai: 1.5yrs/2yrs , JPY 20Bn/8Bn
-ABS: USD 500m
Strengthened Liquidity Position
Liquidity Profile (Unit: KRW Bn)
63.5% 69.2%
Credit LineCash Short-term Debt Coverage Ratio*
8
Cash Flow Profile (KRW Bn)
10,734
Financial Receivables
1,367
1,338
2,511 2,480
1,789
2,106 2,365
3,808 3,580
30.4% 36.0% 39.1%10,734
5,6902,475
707 219 460
~1Y 1-2Y 2-3Y 3-4Y 4-5Y Over 5Y
Liabilities (Debt)
5,175 4,241 3,807 2,041 1,618
455
~1Y 1-2Y 2-3Y 3-4Y 4-5Y Over 5Y
Net Cash Flow
707 739 1,027
1,297 1,100
1,082 1,367
2008 2009 2010 2011 2012
* Short-term Debt Coverage Ratio= (Cash + Unused committed credit line)/ Short-term debt balance
Net Cash Flow
5,559
1,449 -1,332 -1,334 -1,399
5
~1Y 1-2Y 2-3Y 3-4Y 4-5Y Over 5Y
9
HCS’Global Expansion
The Necessity for Global Biz and Strategies
Overview of our current oversea branches
Ⅰ.Ⅰ.Ⅰ.Ⅰ. New Growth EngineNew Growth EngineNew Growth EngineNew Growth EngineUK JV
Office/Corporation without funding
Corporates with Direct Funding
• Limited growth within the Domestic Auto Financing Market
• HMG's Solid Performance
Ⅱ.Ⅱ.Ⅱ.Ⅱ. Request from HMGRequest from HMGRequest from HMGRequest from HMG
• Needs of Captive Finance Companies to support global sales
Hyundai Capital America
Established : 1989년 9월Capital : USD 1.6BnStake : HMA 85%, KMA 15%
UK JV
Established : Dec 2012Capital : ￡ 20mmStake : HCS 29.99%
Hyundai Capital Europe
Established : May 2010Capital : ￡ 280mmStake : HCS 100%
China JV
Established : Jun 2012Capital : RMB 500 mmStake : HCS 46%
Hyundai Capital India
Advisory Branch
Hyundai Capital Russia
Established : May 2011
Capital : 29만€Stake : HCE 100%
LocalLocalLocalLocal (Financial) Institution (Financial) Institution (Financial) Institution (Financial) Institution and the form of JVsand the form of JVsand the form of JVsand the form of JVs
• Alliance with the local financial institutions to lessen entry risk
Stake : HCS 100%
Hyundai Capital Germany
Established : Sept 2009Capital : € 2mmStake : HCS 30.01%
Advisory Branch
Established : Nov 2012
Australia Post
Representatives dispatched
Brazil Post
Representatives dispatched
10
Business Strategy & Global Vision
Business StrategyStepⅠ.StepⅠ.StepⅠ.StepⅠ. Captive finance focusingCaptive finance focusingCaptive finance focusingCaptive finance focusing
• Operating Business, focusing on New Car
Financing within the Captive Markets
Step Ⅱ.Step Ⅱ.Step Ⅱ.Step Ⅱ. Diversifying Product LineDiversifying Product LineDiversifying Product LineDiversifying Product Line----up up up up
• Diversifying product line-up including
used-car financing
• Diversifying sources of profit based on
StablizationStablizationStablizationStablization
• Acquiring Market Knowledge• Diversifying sources of profit based on
Auto financing
Global Auto Sales Volume (As of year 2012, Unit : 00000) Global Vision
Corps • 3 Corps. • 7 Corps.7 Corps.7 Corps.7 Corps.
Next step
1,450
364294
1,470
1,403
HMG TotalHMG Total 2012 2017(E)
PTR :PTR :PTR :PTR : 44% 49% 8% - - (16%) (33%) 45%
* Russia, Brazil PTR : PTR through partnerships with local financial institutions
Asset • 20Trn • 50Trn50Trn50Trn50Trn
USA UK China W-Europe India Brazil Russia Korea
204 203
126 126 126 126 (8.7%)
135 135 135 135 (9.1%)39 39 39 39 (19.2%)15 15 15 15 (4.0%) 36 36 36 36 (12.3%)14 14 14 14 (6.9%)
14181 81 81 81 (5.8%)
115 115 115 115 (81.5%)
Op Profit • 320Bn • 850Bn850Bn850Bn850Bn
Hyundai Capital Hyundai Capital Company OverviewHyundai Capital Investor Presentation 2012
I. Who is Hyundai Capital?
No.1 Consumer Finance Company
• Leading auto financier in Korea with dominant market share
• Eight-year-long partnership between two global leaders;
11
• Eight-year-long partnership between two global leaders;
Hyundai Motor and GE Capital - Jointly formed boards ensure active oversight
- GE Capital appoints key executives in risk management & finance
• Increasingly profitable since the establishment of the joint venture
• Captive finance company for Hyundai Motor Group in Korea, and
’GE Capital’s only operating platform in Korea
• Excellent credit ratings based on strong fundamentals- Fitch: BBB+(S) / S&P: BBB+(S) / Moody’s: Baa1(S) / Domestic: AA+(S)
- Leading auto maker in Korea
with approximately 80% market share
- Stable & solid operational base
Committed Shareholder Financial & Operational Support
Relationship with Shareholders GE Capital’s Financial Support
2012201220122012 -GE Capital extends credit line(Total investment as of 2012: US$ 1.9bn)
12
- GE Capital provides US$ 600mm
- HCS is GE Capital’s sole consumer finance business in Korea
- GE Capital provides US$ 871mm in direct funding
- GE Capital increases its back-up credit Line to US$ 1 bn
56.5%- Stable & solid operational base
- Extensive sales network
- Powerful financing arm
- Effective marketing tool
- Most successful joint venture
- Sole consumer finance window in Korea
2009200920092009
2007200720072007
2006200620062006
- GE Capital acquires 38% equity interest in HCS
- GE Capital increases its holdings to 43.3%
back-up credit line
43.3% - Advanced knowledge on risk management
- Financial support
- Active involvement in dailyoperations as well as management
2005200520052005
2004200420042004
• Maintain leadership in auto financing while operating in non-auto financing sector to diversify business portfolio
Strategy : Capitalize on Our Leading Position13
• Use innovative marketing to attract customers and keep them satisfied
• Expand internationally through providing financing services to HMC/KMC’s global customers’
• Place top priority on stringent risk management
Committed to Transparent Corporate Governance
Board of DirectorsBoard of DirectorsBoard of DirectorsBoard of Directors
• Members : 4 from HMC, 3 from GECCGECC’s veto right
14
GECC’s veto right
Risk Control CommitteeRisk Control CommitteeRisk Control CommitteeRisk Control Committee
• Member : 5 from HMC, 5 from GECC
• Frequency : Monthly
• Function
-Determination of risk indicator levels and appropriate course of actions in
Executive Finance CommitteeExecutive Finance CommitteeExecutive Finance CommitteeExecutive Finance Committee
• Member : 4 from HMC, 3 from GECC
• Frequency : Monthly
• Function
-Approval of various operating expenses, Capex, business and
Compliance Review BoardCompliance Review BoardCompliance Review BoardCompliance Review Board
• Member : 9 from HMC, 7 from GECC
• Frequency : Quarterly
• Function
-Formulation and execution of compliance strategy, schemes, and and appropriate course of actions in
respect thereofexpenses, Capex, business and funding plans
compliance strategy, schemes, and improvements
• C-Suite executives: Vice President, Deputy CFO, Deputy CRO, Deputy CMO, Controller
• Working level : GE employees also involved in day-to-day operations
• Transfer of advanced knowledge in various functions through best practice sharing program
GEPresence
II. Macro Environment
Korea’s Macro Environment
GDP Growth Rate & Government Debt to GDP ratio
Key Interest Rate & 3Y KTB Rate
37.9%GDP Growth Rate Government Debt to GDP
5.323.89
3.74 3.68
Key rate(%) 3Y KTB(%)
15
6.1%
3.6%
30.1%
33.8% 33.4% 34.0%
3.00 2.00 2.50 3.25
2.82
3.74 3.682.75
Consumer Confidence Index & Unemployment Rate
Australia
Germany
100
101 102
103
2009 2010 2011 20122008
2.2%
0.2%
2.0%
2008 2009 2010 2011 2012
KoreaKoreaKoreaKorea
Japan U.KU.S.A
Australia
Canada
France
95
96 97 98
99 100
0% 2% 4% 6% 8% 10% 12%
Unemployment rate
CC
I
Source: Bank of KoreaSource: OECD* CCI: Consumer confidence index / Unemployment rate (as of FY2011)
73.3% 73.1% 73.6%
76.9%80.0%
78.1%79.8% 81.5%
Domestic Auto Market
Domestic Auto Sales (‘000s)
HMC HMC+KMC Market ShareKMC Others
16
252 252 271272 316
413 485 493 482292 320 313322 267
279321 297
261
1,0941,0941,0941,0941,1431,1431,1431,143 1,1651,1651,1651,165
1,2191,2191,2191,2191,1541,1541,1541,154
1,3951,3951,3951,3951,4661,4661,4661,466 1,4751,4751,4751,475
1,4111,4111,4111,411
73.3%72.0% 73.1% 73.6%
550 571 581 625 571 703 660 684 668
252 252
2004200420042004 2005200520052005 2006200620062006 2007200720072007 2008200820082008 2009200920092009 2010201020102010 2011201120112011 2012201220122012
Source: KAMA
Korean Consumer Finance Market’s Unique Features
• Conservative lending environment- Average auto loan life of 1.5Y (notional life of 36M + amortization structure)
- Average down-payment for a car is approximately 30%
17
- Average down-payment for a car is approximately 30%
- Low usage of revolving credit card products
• Favorable market environment for captive finance companies- New car dealerships exclusively managed by automakers
- Stable second-hand car market: high residual value of used cars
• Strong credit infrastructure’- Government’s strict regulation on LTV & DTI Ratios
· Average LTV ratio for mortgages is less than 50% (Commercial Banks)
-Well developed credit bureau system
• Industry Assets
Hyundai Capital's Position in the Industry
Dominant Position in Industry** Incomparably Profitable and Sound
Total Industry Asset Size :
KRW 44,154 bn
• Profitability: ROE (Net Income/Equity)
OthersHCS
18
OthersOthersOthersOthers51.3%51.3%51.3%51.3%
HCSHCSHCSHCS48.7%48.7%48.7%48.7%
25.1%21.3% 22.0%
20.3% 20.0%
6.0% 5.8% 5.5%
11.3%9.2%
2008 2009 2010 2011 3Q12
KRW 44,154 bn
• Industry Net Income
OthersOthersOthersOthersTotal Industry Net Income Size:
• Asset Quality: 30+Day Delinquency Rate
3.2%
* Source: Financial Statistics Information System
OthersOthersOthersOthers34.2%34.2%34.2%34.2%
HCSHCSHCSHCS65.8%65.8%65.8%65.8%
Total Industry Net Income Size:
KRW 539.7 bn
* Source: Financial Statistics Information System, at end of 3Q12** Installment Finance Industry
2.3%
1.8%1.6%
2.0%2.3%
3.0% 3.2% 3.2%
2.8%3.1%
2008 2009 2010 2011 3Q12
III. Asset Portfolio & Financial Performance
16,48016,48016,48016,480
18,788 18,788 18,788 18,788 19,806 19,806 19,806 19,806 20,286 20,286 20,286 20,286 New Car Financing Auto Lease Used Car Financing Personal Loan Mortgage GECK Others
8.8%8.8%8.8%8.8%9.1%9.1%9.1%9.1%
7.4%7.4%7.4%7.4%
9.7%9.7%9.7%9.7%
8.1%8.1%8.1%8.1%
1.5%1.5%1.5%1.5%
Historical Asset Portfolio Breakdown
Receivables Breakdown by Product (KRW Bn)
19
NonNonNonNon----AutoAutoAutoAuto
11,179 11,179 11,179 11,179 12,049 12,049 12,049 12,049
13,47213,47213,47213,472
15,13015,13015,13015,13016,03016,03016,03016,030
16,48016,48016,48016,480
8.7%8.7%8.7%8.7%5.6%5.6%5.6%5.6%4.9%4.9%4.9%4.9%
12.6%12.6%12.6%12.6%
8.1%8.1%8.1%8.1%6.9%6.9%6.9%6.9%
14.4%14.4%14.4%14.4%
9.4%9.4%9.4%9.4%
4.0%4.0%4.0%4.0%
59.9%59.9%59.9%59.9%
14.3%14.3%14.3%14.3%
8.0%8.0%8.0%8.0%
7.8%7.8%7.8%7.8%7.4%7.4%7.4%7.4%
7.7%7.7%7.7%7.7%
56.8%56.8%56.8%56.8%
14.8%14.8%14.8%14.8%
8.0%8.0%8.0%8.0%
7.8%7.8%7.8%7.8%
10.9%10.9%10.9%10.9%
58.1%58.1%58.1%58.1%
15.8%15.8%15.8%15.8%
7.2%7.2%7.2%7.2%
7.4%7.4%7.4%7.4%
9.9%9.9%9.9%9.9%
57.2%57.2%57.2%57.2%
16.3%16.3%16.3%16.3%
8.4%8.4%8.4%8.4%
8.7%8.7%8.7%8.7%
57.6%57.6%57.6%57.6%
17.3%17.3%17.3%17.3%
7.9%7.9%7.9%7.9%
9.1%9.1%9.1%9.1%
54.2%54.2%54.2%54.2%
18.8%18.8%18.8%18.8%
6.9%6.9%6.9%6.9%
9.7%9.7%9.7%9.7%NonNonNonNon----AutoAutoAutoAuto
20%20%20%20%
AutoAutoAutoAuto80%80%80%80%
2004200420042004 2005200520052005 2006200620062006 2007200720072007 2008200820082008 2009200920092009 2010201020102010 2011201120112011 2012201220122012
71.7%71.7%71.7%71.7% 68.0%68.0%68.0%68.0% 63.3%63.3%63.3%63.3% 59.9%59.9%59.9%59.9% 56.8%56.8%56.8%56.8% 58.1%58.1%58.1%58.1%
AutoAutoAutoAutorelatedrelatedrelatedrelated 86.0%86.0%86.0%86.0% 88.7%88.7%88.7%88.7% 87.1%87.1%87.1%87.1% 82.3%82.3%82.3%82.3% 79.5%79.5%79.5%79.5% 81.1%81.1%81.1%81.1% 81.9%81.9%81.9%81.9% 82.8%82.8%82.8%82.8% 79.9%79.9%79.9%79.9%
Best in Class Risk Management
Strong governance for risk monitoring Examples of pre-emptive risk management
Category Actions taken Details
Asset slowdown• Limited funding during global
financial crisis
• Risk Control Committee (RCC)
– Decision making for most supreme risk– Review portfolio risk performance
20
Strategy Asset slowdown(Y2008)
financial crisis
• Reduce non-core businesses to focus on new car financing
New car Risk-basedpricing
• Lower pricing for customers with better credit profile
Used car Policy tightening(Y2010)
• Tightened underwriting policy preemptively
• Sacrificed market share due to focus on asset quality
– Review portfolio risk performance
• Systematic New Product Risk Analysis
- Two-stage RCC approval process - Pre-launch new product introduction and credit review
point assessment
• Risk Appetite Management
– Establish guidelines for portfolio / asset quality – Determine risk management strategy per product
P-loan Cross-sell• More weight on cross-selling
channels to new car customers
Mortgage Residual valueinsurance
• Reflecting volatile housing market conditions
• Only company insured in Korea
• Portfolio Quality Review
– Monitoring of main risk indices– Follow-up on effects of credit policy changes
• Stress Test & Contingency Planning
– Scenario analysis based on economic forecasting– Prepare action plans per contingency stage
5.2%
Historical Asset Quality
30+ Day Delinquency Rate (%)
Total 30+ delinquency rate New Car 30+ delinquency rate
21
3.5%
1.7% 1.6%
2.3%
1.8%1.6%
2.0%2.3%
2.7%
1.5%1.2%
1.0%1.3%
0.7% 0.6%0.8%
1.0%
2004200420042004 2005200520052005 2006200620062006 2007200720072007 2008200820082008 2009200920092009 2010201020102010 2011201120112011 2012201220122012
2007 2008 2009 2010 2011 2012201220122012 YoY
Solid Profit Underscores Strong Fundamentals
Income Statement (KRW Bn)
KKKK----IFRSIFRSIFRSIFRSKKKK----GAAPGAAPGAAPGAAP
22
Operating Revenues 2,245 4,330 2,989 3,274 3,331 3,542 6.3%
(excl. FX effect) 2,045 2,384 2,485 2,889 3,126 3,071 -1.7%
Operating Expenses 1,770 3,824 2,448 2,642 2,672 2,953 10.5%
(excl. FX effect) 1,569 1,879 1,944 2,259 2,466 2,483 0.7%
Interest expenses 561 674 679 890 956 895 -6.3%
Lease expenses 507 587 550 557 505 517 2.3%
SG&A Expenses 439 498 496 586 603 637 5.6%
PPOP 533 600 717 778 1,014 966 -4.7%
Bad Debt expenses 58 95 176 145 354 377 6.4%
Operating Income 476 505 541 630 659 589 -10.7%
Income before Tax 475 518 538 639 663 584 -12.0%
Net Income 333 377 411 489 507 432 -14.9%
ROA 2.3% 2.4% 2.6% 2.8% 2.6% 2.2%
ROE 24.4% 25.1% 21.3% 22.0% 20.3% 20.0%
239.9%
195.4%
Historical Reserve & FSS Requirement Coverage Ratio
Total Reserve VS Regulatory Requirement (KRW Bn)
Regulatory Requirement Reserve under Accounting Principles Supplemental Reserve Total Reserve/ Regulatory Requirement
23
521 611
511
208
265 280
164.0% 158.5% 151.6% 153.3%
118.0% 117.1% 108.8%
474
610
665
213 240 222 241 279 288
401
521 511 469364
382 423 442
265345 385
2009200920092009 2010201020102010 2011201120112011 20122012201220122008200820082008
K-GAAP
2005200520052005 2006200620062006 20072007200720072004200420042004
K-IFRS
22.0x
Historical Leverage Trend
Leverage Trend
Total Assets / Total Shareholders' Equity Managed Borrowings / Total Shareholders' Equity
24
16.0x
12.6x 9.7x 9.7x 9.3x
14.6x
10.7x
10.3x7.4x 8.3x
7.2x9.5x
8.7x
6.7x
7.5x6.5x
5.7x
2004200420042004 2005200520052005 2006200620062006 2007200720072007 2008200820082008 2009200920092009 2010201020102010 2011201120112011 2012201220122012
15.7%
14.5%
Historical Capital Structure
Capital Adequacy Ratio (KRW Bn)
Adjusted Capital CAR
25
2,432 2,375 2,622
2,954
11.3%
12.7% 12.8%11.7% 11.5%
13.7%13.0%
14.5%
1,033 1,337 1,540 1,591
1,825 2,432 2,375 2,622
2004200420042004 2005200520052005 2006200620062006 2007200720072007 2008200820082008 2009200920092009 2010201020102010 2011201120112011 2012201220122012
IV. Funding & Liquidity
Diversification of Funding Portfolio Over Time
Managed Borrowings (KRW Bn)
26
• Maintain ABS under 20%, CP under 10%
• Diversify funding portfolio in terms of currency, region and product
• Maintain the average liability to asset maturity ratio above 100%
Funding Principles
13,213 13,213 13,213 13,213 12,597 12,597 12,597 12,597 12,568 12,568 12,568 12,568
13,412 13,412 13,412 13,412 14,335 14,335 14,335 14,335 14,378 14,378 14,378 14,378
16,560 16,560 16,560 16,560 17,330 17,330 17,330 17,330 17,338 17,338 17,338 17,338
Bond-domestic Bond-overseas ABS-domestic
ABS-overseas Bank loans CP
Total
Managed Borrowings (KRW Bn)
31.0%31.0%31.0%31.0%
17.7%17.7%17.7%17.7%
11.5%11.5%11.5%11.5%
14.2%14.2%14.2%14.2%
17.2%17.2%17.2%17.2%
18.3%18.3%18.3%18.3%
12.9%12.9%12.9%12.9%
13.3%13.3%13.3%13.3%
5.7%5.7%5.7%5.7%
11.9%11.9%11.9%11.9%
8.3%8.3%8.3%8.3%9.9%9.9%9.9%9.9%
16.9%16.9%16.9%16.9%
8.7%8.7%8.7%8.7%
10.4%10.4%10.4%10.4%
10.3%10.3%10.3%10.3%
10.6%10.6%10.6%10.6%
10.7%10.7%10.7%10.7%
8.7%8.7%8.7%8.7%
8.2%8.2%8.2%8.2%6.8%6.8%6.8%6.8%
6.7%6.7%6.7%6.7%
9.8%9.8%9.8%9.8%
7.4%7.4%7.4%7.4%
8.5%8.5%8.5%8.5%
5.9%5.9%5.9%5.9%
9.1%9.1%9.1%9.1%
8.7%8.7%8.7%8.7%
4.3%4.3%4.3%4.3%
3.9%3.9%3.9%3.9%
9.1%9.1%9.1%9.1%
9.4%9.4%9.4%9.4%3.4%3.4%3.4%3.4%
6.9%6.9%6.9%6.9% 9.1%9.1%9.1%9.1%
7.1%7.1%7.1%7.1%
31.0%31.0%31.0%31.0%
29.3%29.3%29.3%29.3%26.5%26.5%26.5%26.5%
25.7%25.7%25.7%25.7%29.1%29.1%29.1%29.1%
27.5%27.5%27.5%27.5%
2004200420042004 2005200520052005 2006200620062006 2007200720072007 2008200820082008 2009200920092009 2010201020102010 2011201120112011 2012201220122012
%%%% of LT of LT of LT of LT FundingFundingFundingFunding 39.1%39.1%39.1%39.1% 47.6%47.6%47.6%47.6% 57.5%57.5%57.5%57.5% 57.9%57.9%57.9%57.9% 59.0%59.0%59.0%59.0% 59.3%59.3%59.3%59.3% 63.5%63.5%63.5%63.5% 65.4%65.4%65.4%65.4% 70.1%70.1%70.1%70.1%
36.9%36.9%36.9%36.9%
2.9%2.9%2.9%2.9%
34.0%34.0%34.0%34.0%38.4%38.4%38.4%38.4%
18.3%18.3%18.3%18.3%
26.3%26.3%26.3%26.3% 30.7%30.7%30.7%30.7%39.1%39.1%39.1%39.1%
41.9%41.9%41.9%41.9% 42.9%42.9%42.9%42.9%46.7%46.7%46.7%46.7%
14.1%14.1%14.1%14.1% 31.0%31.0%31.0%31.0%
Funding by Currency & Outstanding Global Bonds
Funding Portfolio by Currency Outstanding Global Bonds*
MYR 2.9%MYR 2.9%MYR 2.9%MYR 2.9%
JPY 1.6%JPY 1.6%JPY 1.6%JPY 1.6%
AUD 1.5%AUD 1.5%AUD 1.5%AUD 1.5% Issue Date Maturity Amount
144A/Reg S
Nov.’09 5.5 years USD 500m
Jan.’11 5.5 years USD 700m
27
KRWKRWKRWKRW65.5%65.5%65.5%65.5%
USDUSDUSDUSD21.7%21.7%21.7%21.7%
CHF 5.9%CHF 5.9%CHF 5.9%CHF 5.9%
MYR 2.9%MYR 2.9%MYR 2.9%MYR 2.9%144A/Reg S Jan.’11 5.5 years USD 700m
Mar.’12 5.5 years USD 500m
SamuraiNov. ‘12 1.5 years JPY 20,000m
Nov. ‘12 2 years JPY 8,000m
Swiss Franc
Jul. ’10 5 years CHF 150m
Oct. ’10 4 years CHF 200m
May ’11 2.5 years CHF 150m
May’11 5 years CHF 150m
Feb.’12 5 years CHF 200m
• Funding Balance: KRW 17,338 Bn
• Foreign Exchange Risk:
-100% of foreign currency exposure is hedged
through swap transactions entered into at the
time of bond issuance.
Feb.’12 5 years CHF 200m
Malaysian Ringgit
May ’11 2.5 years MYR 650m
Feb.’12 5 years MYR 320m
May ’12 3 years MYR 370m
Australian Dollar Jun. ’12 3 years AUD 175m
Dim Sum Sep. ‘12 1.5 years RMB 500m
(*As of Dec. 31, 2012)
28
Liquidity Profile (Unit: KRW Bn)
Cash Short-term Debt Coverage Ratio*
Historical Liquidity Position
63.5%69.2%
Credit Line
1,3671,338
2,5112,480
1,332 1,336
1,789
2,1062,365
3,8083,580
4.6%
16.0%
25.0% 23.7%30.4%
36.0% 39.1%
63.5%
370 405 401 398707 739
1,0271,297 1,100
652931 938
1,0821,367
370
10571,332 1,336
2004200420042004 2005200520052005 2006200620062006 2007200720072007 2008200820082008 2009200920092009 2010201020102010 2011201120112011 2012201220122012
* Short-term Debt Coverage Ratio = (Cash + Unused committed credit line)/ Short-term debt balance
V. Others
29
Credit Ratings & Rationale
HCS’ Global Credit Ratings* Credit Rating Rationale
A+(S)AAA
• Strong Standalone Profile
– Sustainable track record of strong profit performance and robust credit fundamentals
Baa1(S) BBB+(S) BBB+(S)
Moody's S&P Fitch JCR RAM
HCS & Competitors’ Domestic Credit Ratings
performance and robust credit fundamentals
– Low risk-focused product portfolio and prudent risk management
– Adequate liquidity and sound capitalization
– Strong market position as HMC's key captive financing arm
• Capable & Willing Shareholder Support
- Solid backup line provided by GE Capital through
AA+
- Solid backup line provided by GE Capital throughits capital and managerial support
- Strong likelihood of HMC’s assistance in contingency given its strong relationship with the parent evident in its capital contribution, board members and business base.
A+ A+ A+
A
Hyundai Capital
W Financial A Capital W Capital N Capital
(*As of Dec. 31, 2012)
30
Performance of Hyundai Motor Company
Strength Performance
Product Mix61%
Total Sales (‘000s)
3,106 3,612
4,059 4,392
17% 16%6%
Compact Mid & Large RV Commercial
Market Diversification
15.2% 16.0%10.1%
19.3%
39.4%
Korea US Europe China Others
OP Margin
2009 2010 2011 2012
7.0%8.8%
10.4% 10.0%
2009 2010 2011 2012Korea US Europe China Others
Brand Value
• Increase in residual value of vehicles due to strengthened brand awareness
• Boost in luxury car sales has increased the average selling price
Net Profit (KRW Bn)
2009 2010 2011 2012
2,962
6,001
8,105
2009 2010 2011 2012
9,056
Investor Relations Contacts
Jungsang Kim, Head of Investor RelationsPhone +82 2 2167 [email protected]
Minchul Seo, Deputy General Manager of Investor RelationsPhone +82 2 2167 [email protected]
Jay Moon, Manager of Investor RelationsPhone +82 2 2167 [email protected]
http://ir.hyundaicapital.com/