hcs 1 q13_ir_eng
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Hyundai Capital Hyundai Capital is...Hyundai Capital Investor Presentation 1Q13
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 1Q13
• Strong Fundamentals- Good profitability: Operating income of KRW 119 billion and an ROA of 3.0%
- Solid asset quality: 30+ day delinquency rate of 2.7%
- Strong capital structure: Leverage of 6.8x and capital adequacy ratio of 15.1%
1
- Strong capital structure: Leverage of 6.8x and capital adequacy ratio of 15.1%
• Committed & Capable Shareholder Support- HMC showed resilient performance with global sales up 7.9% (YoY)
- GE Capital continues to provide committed financial and operations support
• Solid Credit Profiles - Global Ratings: S&P (BBB+), Moody's (Baa1), Fitch (BBB+)
- Niche Markets: RAM (AAA), JCR (A+)- Niche Markets: RAM (AAA), JCR (A+)
- Domestic Ratings: AA+
• New Growth Engine: Global Expansion- Successful launching in China and UK, Record-high performance in the USA
- True captive financing arm covering from the domestic market to global markets
Resilient Economic Growth and Steady Demand for New Cars
GDP Growth Rate & Unemployment Rate Domestic Auto Sales (‘000s)
GDP Growth Rate Unemployment Rate
2
� Despite of slower GDP growth, unemployment rate has been stabilized
� Sales slightly downed due to the sluggish consumption but, HMG’s M/S trended up with superior brand power
HMC HMC+KMC Market ShareKMC Others
6.1%
3.6%
3.6% 3.5%
3.0%3.2%
3.4%
GDP Growth Rate Unemployment Rate
413 485 493 482
279321 297
261
80.1%78.2%
79.9%81.5% 81.8% 81.1%81.1%81.1%81.1%
1,3941,465 1,475
HMC HMC+KMC Market ShareKMC Others
1,411
0.2%
3.6%
2.0%1.5%
2009 2010 2011 2012 1Q13
Source: Bank of Korea
703 660 684 668
155 154
116 10960 61
2009 2010 2011 2012 1Q12 1Q13
324324324324
263 263 263 263 (HMG)(HMG)(HMG)(HMG)
271 271 271 271 (HMG)(HMG)(HMG)(HMG)
331
8.8%8.8%8.8%8.8%
9.6%9.6%9.6%9.6%
19,80619,80619,80619,806 20,28620,28620,28620,286 20,21420,21420,21420,214
Receivables Breakdown by Product (KRW Bn)
Low Risk-focused Product Portfolio3
� Maintain auto asset to non-auto asset in the proportion of 80:20 ⇒ balance btw stability & Profitability
� Over 90% of the total receivables have underlying assets such as vehicles or real estate
55558888.1%.1%.1%.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% 53.2%53.2%53.2%53.2%
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% 19.1%19.1%19.1%19.1%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% 6.9%6.9%6.9%6.9%9.9%9.9%9.9%9.9%
8.7%8.7%8.7%8.7%9.1%9.1%9.1%9.1% 9.7%9.7%9.7%9.7%
1111.7%.7%.7%.7%
10.9%10.9%10.9%10.9%
9.9%9.9%9.9%9.9%8.8%8.8%8.8%8.8%
9.7%9.7%9.7%9.7%
8.1%8.1%8.1%8.1%7.4%7.4%7.4%7.4%8.8%8.8%8.8%8.8%
7.4%7.4%7.4%7.4%
16,48016,48016,48016,480
18,78818,78818,78818,78819,80619,80619,80619,806 20,28620,28620,28620,286 20,21420,21420,21420,214
8.6%8.6%8.6%8.6%1.5%1.5%1.5%1.5%
8888
2009200920092009 2010201020102010 2011201120112011 2012201220122012 1Q131Q131Q131Q13
New Car Financing Auto Lease Used Car Financing Personal Loan Mortgage GECK Others
81.1%81.1%81.1%81.1% 81.9%81.9%81.9%81.9% 82.8%82.8%82.8%82.8%AutoAutoAutoAuto----related related related related AssetsAssetsAssetsAssets (New Car, Auto Lease,
Used Car)
ProductsProductsProductsProducts79.9%79.9%79.9%79.9% 79.2%79.2%79.2%79.2%
2010 2011 2012 1Q12 1Q131Q131Q131Q13 YoY
Income Statement (KRW Bn)
Good Profitability Underscores Strong Fundamentals
Return on Equity & Return on Assets
ROE ROA
4
� Even in 2013, operating income decreased due to slower new car sales & bigger bad debt expense
� Return on assets increased up to 3.0% with one-time effect such as the disposal of office building
21.3%22.0%
20.3% 20.0%19.1% 19.7%19.7%19.7%19.7%
2010 2011 2012 1Q12 1Q131Q131Q131Q13 YoY
Operating Revenues 3,274 3,331 3,542 916 921 0.5%
(Excluding FX effect) 2,889 3,125 3,071 769 722 -6.1%
Operating expenses 2,644 2,672 2,953 735 802 9.2%
(Excluding FX effect) 2,259 2,466 2,483 588 603 2.6%
ROE ROA
2.6%2.8%
2.6%2.2%
2.6%3.0%3.0%3.0%3.0%
2009 2010 2011 2012 1Q12 1Q13
Bad debt expense 145 354 377 83 101 21.6%
Operating income 630 659 589 181 119 -34.5%
Net Income 489 507 432 129 153 18.4%
Excellent Asset Quality and Conservative Reserve Policy
30+ Day Delinquency Rate (%) Total Reserve VS Regulatory Requirement (KRW Bn)
5
� 30+ Delinquency rate has been slightly increased due to the slowdown in the macro economy
� Maintained conservative reserve policy which is always higher than regulatory requirement
280 265
153.3%
118.0% 117.1% 108.8% 101.5%
1.8%1.6%
2.0%
2.5%2.7%
610665
Total 30+ delinquency rate New Car 30+ delinquency rate Regulatory Requirement Reserve under Accounting Principles
Supplemental Reserve Total Reserve/ Regulatory Requirement
K-IFRSK-GAAP
ExceptionalPeriod*
664
****
288401
521 611 654
442 474345
385399
265 280 265
0.7%0.6%
0.8%
1.0% 1.1%
2009 2010 2011 2012 1Q13 2009 2010 2011 2012
EL MethodEL MethodEL MethodEL Method
* After global financial crisis, applied too tighten underwriting policy
1Q13
** Included NPL asset acquired from a commercial bank in 4Q12
Sound Capital Structure Maintained
Leverage Trend Capital Adequacy Ratio (KRW Bn)
6
� Leverage was controlled below conservative internal ceiling of 8X while following leverage regulation of 10X
� Capital adequacy ratio has been well controlling above the regulatory guideline of 7%
2,432 2,375
2,622 2,954 3,071
15.7%
13.7%13.0%
14.5%15.1%
Shareholders' Equity Adjusted Capital CAR
15,854
20,749 21,919 21,885 21,625
7.4X
9.3X
8.3X
7.2X6.8X
Total asset Total Assets / Total Shareholders' Equity
Leverage Regulation < 10X
FSS Guide Line > 7.0%
2,156 2,216 2,656
3,031 3,162
2009 2010 2011 2012 1Q13
15,854
2009 2010 2011 2012 1Q13
Diversified Funding by Type, Duration & Region
� In order to reduce risk of wholesale funding, maintain long-term funding > 65%� Furthermore, funding sources are diversified into global markets as well as niche markets
Funding Portfolio by Product Funding Strategies in 2013
Loans CP
7
Ⅰ.Ⅰ.Ⅰ.Ⅰ. More Weight on LongMore Weight on LongMore Weight on LongMore Weight on Long----term Fundingterm Fundingterm Fundingterm Funding
• Long-term funding: 70% from 65%
• ALM Target: 140%
Ⅱ.Ⅱ.Ⅱ.Ⅱ. Expanding Alternative Funding Expanding Alternative Funding Expanding Alternative Funding Expanding Alternative Funding
• Structure finance : Auto lease ABS
• Retail Bond, Bond with optionFunding Portfolio by Currency
Bonds76.1%
ABS 12.0%
Loans 8.6%
CP 3.3%
• Balance : KRW 16,943Bn
• Long-term funding: 69.9%
• Overseas funding: 37.0%
Key Issuance since 2012• 144/RegS: 5.5yrs, $500M
• Dimsum: 1.5yrs, RMB500M
• Samurai: 1.5yrs/2yrs, JPY20Bn/8Bn
• ABS: $500M
• Kangaroo: AU$ 250M
Ⅲ.Ⅲ.Ⅲ.Ⅲ. Strengthening Overseas Funding CapabilityStrengthening Overseas Funding CapabilityStrengthening Overseas Funding CapabilityStrengthening Overseas Funding Capability
• Product & Regional diversification
• Target # of accessible markets : 7 global markets
Funding Portfolio by Currency
0.5%
1.8%
2.2%
2.8%
5.8%
23.9%
63.0%
CNY
AUD
JPY
MYR
CHF
USD
KRW
Cash Credit Line
Strong Liquidity Position
� Financial Receivables
� Liquidity coverage was extended to 6M from 3M in 2011 and since that, well-achieving the target
� ALM policy : Funding duration > asset duration
Liquidity Profile (Unit: KRW Bn) Cash Flow Profile (KRW Bn)
Short-term Debt Coverage Ratio*
8
2,511 2,365
3,808 3,580
3,388
Cash Credit Line � Financial Receivables
� Liabilities (Debt)36.0%39.1%
63.5%69.2%
66.4%
Short-term Debt Coverage Ratio*
6M Coverage
10,560
5,6952,502
726 226 505
~1Y 1-2Y 2-3Y 3-4Y 4-5Y Over 5Y
5,106 3,959 3,335
2,277 1,611 655
739 1,027
1,297 1,100 1,010
1,367 1,338
2,511 2,480
2,378 2,106
2,365
2009 2010 2011 2012 1Q13
� Net Cash Flow
* Short-term Debt Coverage Ratio= (Cash + Unused committed credit line)/ Short-term debt balance
~1Y 1-2Y 2-3Y 3-4Y 4-5Y Over 5Y
5,454
1,736 -834 -1,551 -1,384-150
~1Y 1-2Y 2-3Y 3-4Y 4-5Y Over 5Y
Why Global Business? Current Overseas Operations
Ⅰ. New Growth Engine
Office/Corporation without funding
Corporate with Direct Funding
Global Expansion to Support HMG’s Sales and to Find New Growth9
• Limited growth within the domestic auto financing market
• HMG's solid performance
Ⅱ. Request from HMG
• Needs of captive finance companies to support global sales
Hyundai Capital AmericaEstablished : Sep.1989
Capital : USD 1.6Bn
Stake : HMA 85%, KMA 15%
UK JV
Established : Dec 2011
Capital : ￡ 20mm
Stake : HCS 29.99%
Hyundai Capital Europe
Established : May 2010
Capital : € 2.8mm
Stake : HCS 100%
China JV
Established : Jun 2012
Capital : RMB 500 mm
Stake : HCS 46%
Hyundai Capital IndiaAdvisory Branch
Established : Nov 2012
Hyundai Capital RussiaEstablished : May 2011
Capital : 290,000€
Stake : HCE 100%
Local (Financial) Institution and the form of JVs
• Alliance with the local financial institutions to lessen entry risk
Hyundai Capital Germany
Established : Sept 2009Capital : € 2mm
Stake : HCS 30.01%
Established : Nov 2012
Australia Post
Representatives dispatched
Brazil Post
Representatives dispatched
10
Business Strategy & Global Vision
Business Strategy
StepⅠ.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
StablizationStablizationStablizationStablizationFinancing within the Captive Markets
• Acquiring Market Knowledge
financing
• 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
1,4501,470
1,403
HMG TotalHMG Total
2012 2017(E)
Asset • 20Trn • 50Trn50Trn50Trn50Trn
USA UK China W-Europe India Brazil Russia Korea
204 203
364294
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
11
HCS' Strategy & Commitment
• New Car/Auto lease : Shifting a paradigm into
marketing driven market and holding above 80%
market share
Commitment to InvestorsStrategy in 2013
• Moderate asset growth targeting 80% for Moderate asset growth targeting 80% for Moderate asset growth targeting 80% for Moderate asset growth targeting 80% for
auto assets and 20% for nonauto assets and 20% for nonauto assets and 20% for nonauto assets and 20% for non----auto assetsauto assetsauto assetsauto assetsProduct
Risk
market share
• Used Car : Utilizing our market position for future
growth under new regulation
• Non-Auto : Taking advantage of X-sell
• Implementing effective collection strategy
• Focusing on improving collection rate of early
delinquent assets
• Maintaining our current conservative treasury policy
auto assets and 20% for nonauto assets and 20% for nonauto assets and 20% for nonauto assets and 20% for non----auto assetsauto assetsauto assetsauto assets
• IdealIdealIdealIdeal----balance between profitability and balance between profitability and balance between profitability and balance between profitability and
solid asset qualitysolid asset qualitysolid asset qualitysolid asset quality
• Strengthening financial stability by putting Strengthening financial stability by putting Strengthening financial stability by putting Strengthening financial stability by putting
more focus on longmore focus on longmore focus on longmore focus on long----term funding ( >70%) term funding ( >70%) term funding ( >70%) term funding ( >70%)
• Entering new markets and products to Entering new markets and products to Entering new markets and products to Entering new markets and products to
Treasury
Global Business
• Maintaining our current conservative treasury policy
- 6M liquidity coverage
- ALM-based funding
- Diversification of funding resources
• Germany : Preparing set-up for a captive financing arm
• Brazil : Establishing a financial consulting firm
complete diversification strategycomplete diversification strategycomplete diversification strategycomplete diversification strategy
• Expanding global business while Expanding global business while Expanding global business while Expanding global business while
simultaneously stabilizing existing global simultaneously stabilizing existing global simultaneously stabilizing existing global simultaneously stabilizing existing global
operationsoperationsoperationsoperations
Hyundai Capital Hyundai Capital Company OverviewHyundai Capital Investor Presentation 1Q13
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
12
2013201320132013 -GE Capital total investment as of 1Q13 (US$ 1.6bn)
- 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
2012201220122012 - GE Capital extends credit line(Total investment as of 2012: US$ 1.9bn)
- GE Capital acquires 38% equity interest in HCS
- GE Capital increases its holdings to 43.3%
- GE Capital provides US$ 600mmback-up credit line
finance business in Korea
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 3.682.75
Key rate(%) 3Y KTB(%)
15
6.1%
3.6%
33.8% 33.4% 34.0%
3.00 2.00 2.50 3.25
2.68
2.75
Consumer Confidence Index & Unemployment Rate
Germany102
104
2009 2010 2011 1Q132008
* As of May 23th 2013, HCS’ bond rate with 3 year maturity is 2.61%
0.2%
2.0%1.5%
2009 2010 2011 2012 1Q13
KoreaKoreaKoreaKorea
Japan U.KU.S.A
Australia
CanadaFrance
Germany
94
96
98
100
102
0% 2% 4% 6% 8% 10% 12%
Unemployment rate
CC
I
Source: Bank of KoreaSource: OECD* CCI: Consumer confidence index / Unemployment rate (as of FY2012)
73.1% 73.6%
76.9%
80.1%78.2%
79.9% 81.5% 81.8% 81.1%
Domestic Auto Market
Domestic Auto Sales (‘000s)
HMC HMC+KMC Market ShareKMC Others
16
252 271272 316
413 485 493 482320 313
322 267
278320 296
2611,1431,1431,1431,143 1,1651,1651,1651,165
1,2191,2191,2191,2191,1541,1541,1541,154
1,3941,3941,3941,3941,4651,4651,4651,465 1,4741,4741,4741,474
1,4111,4111,4111,411
72.0% 73.1% 73.6%
571 581 625 571 703 660 684 668
155 154
252
116 10960 61
331331331331 324324324324
2005200520052005 2006200620062006 2007200720072007 2008200820082008 2009200920092009 2010201020102010 2011201120112011 2012201220122012 1Q121Q121Q121Q12 1Q131Q131Q131Q13
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 45,307 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% 9.9%
2008 2009 2010 2011 2012
KRW 45,307 bn
• Industry Net Income
OthersOthersOthersOthers20.720.720.720.7%%%%
0000 0000
Total Industry Net Income Size:
• Asset Quality: 30+Day Delinquency Rate
3.2% 3.2%
* Source: Financial Statistics Information System
20.720.720.720.7%%%%
HCSHCSHCSHCS79.379.379.379.3%%%%
Total Industry Net Income Size:
KRW 552.1 bn
* Source: Financial Statistics Information System, at end of 2012** Installment Finance Industry
2.3%
1.8%1.6%
2.0%
2.5%
3.0% 3.2% 3.2%
2.8%
3.2%
2008 2009 2010 2011 2012
III. Asset Portfolio & Financial Performance
New Car Financing Auto Lease Used Car Financing Personal Loan Mortgage GECK Others
7.4%7.4%7.4%7.4% 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
8.6%8.6%8.6%8.6%
1.7%1.7%1.7%1.7%18,78818,78818,78818,788
19,80619,80619,80619,80620,28620,28620,28620,286 20,21420,21420,21420,214
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%
8.8%8.8%8.8%8.8%
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%
53.2%53.2%53.2%53.2%
19.1%19.1%19.1%19.1%
6.9%6.9%6.9%6.9%
9.7%9.7%9.7%9.7%
8.6%8.6%8.6%8.6%
120,49120,49120,49120,49
13,47213,47213,47213,472
15,13015,13015,13015,13016,03016,03016,03016,030
16,48016,48016,48016,480
2005200520052005 2006200620062006 2007200720072007 2008200820082008 2009200920092009 2010201020102010 2011201120112011 2012201220122012 1Q131Q131Q131Q13
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%
AutoAutoAutoAutorelatedrelatedrelatedrelated 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% 79.2%79.2%79.2%79.2%
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
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%
2.5%2.7%
1.5%1.2%
1.0%1.3%
0.7% 0.6%0.8%
1.0% 1.1%
2005200520052005 2006200620062006 2007200720072007 2008200820082008 2009200920092009 2010201020102010 2011201120112011 2012201220122012 1Q131Q131Q131Q13
2008 2009 2010 2011 2012 1Q12 1Q131Q131Q131Q13 YoY
Solid Profit Underscores Strong Fundamentals
Income Statement (KRW Bn)
KKKK----IFRSIFRSIFRSIFRSKKKK----GAAPGAAPGAAPGAAP
22
Operating Revenues 4,330 2,989 3,274 3,331 3,542 916 921921921921 0.5%
(excl. FX effect) 2,384 2,485 2,889 3,126 3,071 769 722 -6.1%
Operating Expenses 3,824 2,448 2,642 2,672 2,953 735 802802802802 9.2%
(excl. FX effect) 1,879 1,944 2,259 2,466 2,483 588 603 2.6%
Interest expenses 674 679 890 956 895 229 204 -11.1%
Lease expenses 587 550 557 505 517 124 128 3.1%
SG&A Expenses 498 496 586 603 637 136 154 13.3%
PPOP 600 717 778 1,014 966 264 220 220 220 220 -16.9%
Bad Debt expenses 95 176 145 354 377 83 101 21.6%
Operating Income 505 541 630 659 589 181 119 119 119 119 -34.5%
Income before Tax 518 538 639 663 584 184 206 12.4%
Net Income 377 411 489 507 432 129 153 153 153 153 18.4%
ROA 2.4% 2.6% 2.8% 2.6% 2.2% 2.2% 3.0%
ROE 25.1% 21.3% 22.0% 20.3% 20.0% 20.0% 19.7%
195.4%164.0% 158.5% 151.6% 153.3%
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
521 611 654
265 280 265
151.6% 153.3%118.0% 117.1% 108.8% 101.5%
664610
665
240 222 241 279 288
401
521 469
364 382423
442 474
345 385 399
2009200920092009 2010201020102010 2011201120112011 201220122012201220082008200820082005200520052005 2006200620062006 2007200720072007
K-IFRS
1Q131Q131Q131Q13
K-GAAP
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
10.3x 7.4x8.3x
7.2x 6.8x9.5x8.7x
6.7x7.5x
6.5x5.7x 5.4x
2004200420042004 2005200520052005 2006200620062006 2007200720072007 2008200820082008 2009200920092009 2010201020102010 2011201120112011 2012201220122012 1Q131Q131Q131Q13
15.7%
14.5%15.1%
Historical Capital Structure
Capital Adequacy Ratio (KRW Bn)
Adjusted Capital CAR
25
2,432 2,375 2,622
2,954 3,071
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 1Q131Q131Q131Q13
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 16,943 16,943 16,943 16,943 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%
3.4%3.4%3.4%3.4%
8.5%8.5%8.5%8.5%
8.6%8.6%8.6%8.6%3.3%3.3%3.3%3.3%
28.1%28.1%28.1%28.1%
2004200420042004 2005200520052005 2006200620062006 2007200720072007 2008200820082008 2009200920092009 2010201020102010 2011201120112011 2012201220122012 1Q131Q131Q131Q13
%%%% 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% 69.9%69.9%69.9%69.9%
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%
47.9%47.9%47.9%47.9%
Funding by Currency & Outstanding Global Bonds
Funding Portfolio by Currency Outstanding Global Bonds*
Issue Date Maturity Amount
144A/Reg S
Nov.’09 5.5 years USD 500m
Jan.’11 5.5 years USD 700m
27
MYR 2.9%MYR 2.9%MYR 2.9%MYR 2.9%
JPY 2.2%JPY 2.2%JPY 2.2%JPY 2.2%
AUD 1.8%AUD 1.8%AUD 1.8%AUD 1.8%
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
KRWKRWKRWKRW63.0%63.0%63.0%63.0%
USDUSDUSDUSD23.9%23.9%23.9%23.9%
CHF 5.8%CHF 5.8%CHF 5.8%CHF 5.8%
MYR 2.9%MYR 2.9%MYR 2.9%MYR 2.9%
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 Mar, 2013)
• Funding Balance: KRW 16,943 Bn
• Foreign Exchange Risk:
-100% of foreign currency exposure is hedged
through swap transactions entered into at the
time of bond issuance.
28
Liquidity Profile (Unit: KRW Bn)
Cash Short-term Debt Coverage Ratio*
Historical Liquidity Position
63.5%69.2% 66.4%
Credit Line
1,3671,338
2,5112,480
2,378
1,332 1,336
1,789
2,1062,365
3,8083,580
3,388
4.6%
16.0%
25.0% 23.7%30.4%
36.0% 39.1%
63.5% 66.4%
370 405 401 398707 739
1,0271,297 1,100 1,010
652931 938
1,0821,367
370
10571,332 1,336
2004200420042004 2005200520052005 2006200620062006 2007200720072007 2008200820082008 2009200920092009 2010201020102010 2011201120112011 2012201220122012 1Q131Q131Q131Q13
* 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 Mar, 2013)
30
Performance of Hyundai Motor Company
Strength Performance
Product Mix61%
Total Sales (‘000s)
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
1,072 1,172
2010 2011 2012 1Q12 1Q13
8.8%10.4% 10.0% 10.4%
8.7%
2010 2011 2012 1Q12 1Q13Korea 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)
2010 2011 2012 1Q12 1Q13
6,001 8,105
9,056
2,453 2,088
2010 2011 2012 1Q12 1Q13
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]
Suh ye Choi, Manager of Investor RelationsPhone +82 2 2167 7541
Justin Lee, Manager of Investor RelationsPhone +82 2 2167 8082Phone +82 2 2167 7541
http://ir.hyundaicapital.com/
Phone +82 2 2167 [email protected]
Jay Moon, Assistant Manager of Investor RelationsPhone +82 2 2167 [email protected]
Hyunyoung Jang, Assistant Manager of Investor RelationsPhone +82 2 2167 [email protected]