2. Disclaimer
These presentation materials have been prepared by Hyundai Capital Services., Inc. (“HCS or the Company”), solely for the use at this presentation and
have not been independently verified. 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. 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 this
presentation. 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. Neither the Company nor any of its affiliates, advisers or representatives make any undertaking to update any such
information 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 can
be 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 future
events and are subject to a number of factors that could cause actual results to differ materially from those described in the 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.
Certain industry and market data in this presentation was obtained from various trade associations, and the Company have not verified such data with
independent sources. Accordingly, the Company make no representations as to the accuracy or completeness of that data, and such data involves risks
and 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 any
part of this presentation nor any information or statement contained therein shall form the basis of or be relied upon in connection with any contract or
commitment whatsoever. Any decision to purchase shares in any offering of shares of the Company should be made solely on the basis of the
information contained in the offering document which may be published or distributed in due course in connection with any offering of shares of the
Company, 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 whole
or in part, for any purpose.
3. Key Highlights 1H 2012
3
• Strong Fundamentals
- Good profitability: Operating income of KRW 330 billion and an ROA of 2.5%
- Excellent asset quality: 30+ day delinquency rate of 2.1%
- Sound capital structure: Leverage of 5.8x and capital adequacy ratio of 14.5%
• Committed & Capable Shareholder Support
- HMC continues to show excellent performance, with global sales up 8% (YoY)
- GE Capital extended their USD 1bn committed credit line
• Continuous Credit Rating Improvement
- Moody’s : revised outlook to Baa2(P)
- Fitch : upgraded rating to BBB+(S)
4. Resilient Economic Growth and Steady Demand for New Cars
4
GDP Growth Rate & Unemployment Rate Domestic Auto Sales (‘000s)
GDP Growth Rate Unemployment Rate HMC KMC Others HMC+KMC Market Share
81.6%
3.6% 3.5% 80.1% 80.2%
79.9%
3.2% 3.2% 78.2%
3.0% 76.9%
1,465 1,474
1,394
6.1%
321 297
279
1,154
267
413 485 493
3.6% 739
695
316
2.6% 146 128
2.2%
248 239
703 660 684
571
344 328
0.2%
2008 2009 2010 2011 1H12 2008 2009 2010 2011 1H11 1H12
Source: Bank of Korea Source: KAMA
5. Low Risk-focused Product Portfolio
5
Receivables Breakdown by Product (KRW Bn)
19,806 19,744
18,788
7.4% 7.7%
8.8%
16,480 9.1% 9.6%
16,030
8.7%
9.9% 7.9% 7.3%
10.9% 8.4%
7.4%
7.8% 17.3%
7.2% 18.5%
8.0% 16.3%
15.8%
14.8%
57.2% 57.6% 56.0%
56.8% 58.1%
2008 2009 2010 2011 1H12
New Car Financing Auto Lease Used Car Financing Personal Loan Mortgage Others
6. Good Profitability Underscores Strong Fundamentals
6
Income Statement (KRW Bn) Return on Equity & Return on Assets
ROE ROA
25.1%
2009 2010 2011 1H11 1H12 YoY
21.3% 22.0%
20.3%
17.4%
Operating Revenues 2,989 3,274 3,331 1,961 1,645 -16.1%
(Excluding FX effect) 2,485 2,889 3,125 1,613 1,540 -4,5% 2.8%
2.4% 2.6% 2.6% 2.5%
Operating expenses 2,448 2,644 2,672 1,504 1,316 -12.5%
2008 2009 2010 2011 1H12
(Excluding FX effect) 1,944 2,259 2,466 1,155 1,210 4.8%
Key Highlights
Bad debt expense 176 145 354 139 180 28.9%
Operating income decreased YoY due to:
Operating income 541 630 659 458 330 -27.9% - Slower new car sales in the first half of 2012
- Greater one-time effect in the corresponding period last year
Net Income 411 489 507 354 244 -31.0% Return on assets (ROA) maintained at high level of 2.5%
7. Excellent Asset Quality and Conservative Reserve Policy
7
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
152.7% 153.3%
118.0% 117.1% 114.1%
610 625
474
2.3% 265 283
2.0% 2.1%
1.8% 208
1.6%
1.4%
521 547
426 442 345
0.8% 0.8% 401
0.7% 341
0.6% 279 288 265
2008 2009 2010 2011 1H12 2008 2009 2010 2011 1H12
8. Sound Capital Structure Maintained
8
Leverage Trend Capital Adequacy Ratio (KRW Bn)
Adjusted Capital CAR
Total Assets / Total Shareholders' Equity
Managed Borrowings / Total Shareholders' Equity 15.7%
14.5%
13.7%
13.0%
Dividend policy set: Maximum leverage limit of 8.0x
(based on managed borrowings) 11.5%
9.7x
9.3x
8.3x
8.7x 7.4x 2,913
7.3x
2,622
2,432 2,375
7.5x
6.7x 1,825
6.5x
5.8x
2008 2009 2010 2011 1H12 2008 2009 2010 2011 1H12
9. Diversified Funding by Type, Duration & Region
9
Funding Portfolio by Product Funding Portfolio by Currency
KRW 61.6%
ABS
CP 3.7% 12.5% USD 22.2%
CHF 5.9%
Loans,
MYR 4.3%
8.8%
8.8%
Euro 2.7%
Bonds
75.0% JPY 1.6%
AUD 1.5%
Other 0.3%
• Funding Balance: KRW 17,222 Bn • 1H12 Overseas Bond Issuances:
-144A/RegS: 5.5yr - USD 500 mm
• Long-term funding: 67.1%
- Malaysian Ringgit: 5yr - MYR 320 mm / 3yr – MYR 370 mm
- Swiss Franc: 5yr - CHF 200 mm
-Australian Dollar: 3yr – AUD 175 mm
13. No.1 Consumer Finance Company
13
• Leading auto financier in Korea with dominant market share
• 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 operational platform in Korea
• Excellent credit ratings based on strong fundamentals
- Fitch: BBB+(S) / S&P: BBB+ (S) / Moody’s: Baa2 (P) / Domestic: AA+(S)
14. Committed Shareholder Financial & Operational Support
14
Relationship with Shareholders GE Capital’s Financial Support
- Leading auto maker in Korea
2012 -GE Capital extends its credit line
with approximately 80% market share (Total investment as of 2Q12: US$ 2.2bn)
- Stable & solid operational base
56.5% - Extensive sales network
2009 - GE Capital increases its back-up
credit Line to US$ 1 bn
- Powerful financing arm
2007 - GE Capital provides US$ 871mm in direct
- Effective marketing tool funding
- Most successful joint venture
- Sole consumer finance window in Korea 2006 - HCS is GE Capital’s sole consumer
finance business in Korea
- GE Capital provides US$ 600mm
back-up credit line
43.3% - Advanced knowledge on risk
management 2005 - GE Capital increases its
holdings to 43.3%
- Financial support
- Active involvement in daily
operations as well as management 2004 - GE Capital acquires 38%
equity interest in HCS
15. Strategy : Capitalize on Our Leading Position
15
• Maintain leadership in auto financing while operating
in non-auto financing sector to diversify business portfolio
• 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
16. Committed to Transparent Corporate Governance
16
Board of Directors
• Members : 4 from HMC, 3 from GECC
GECC’s veto right
Risk Control Committee Executive Finance Committee Compliance Review Board
• Member : 5 from HMC, 5 from GECC • Member : 4 from HMC, 3 from GECC • Member : 9 from HMC, 7 from GECC
• Frequency : Monthly • Frequency : Monthly • Frequency : Quarterly
• Function • Function • Function
-Determination of risk indicator levels -Approval of various operating -Formulation and execution of
and appropriate course of actions in expenses, Capex, business and compliance strategy, schemes, and
respect thereof funding plans improvements
• C-Suite executives: Vice President, Deputy CFO, Deputy CRO, Deputy CMO, Controller
GE
• Working level : GE employees also involved in day-to-day operations
Presence
• Transfer of advanced knowledge in various functions through best practice sharing program
20. Korean Consumer Finance Market’s Unique Features
20
• 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%
- 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
21. Hyundai Capital's Position in the Industry
21
Dominant Position in Industry** Incomparably Profitable and Sound
• Industry Assets • Profitability: ROE (Net Income/Equity)
HCS Others
Total Industry Asset Size :
KRW 44,080 bn 25.1%
HCS Others
21.3% 22.0%
49.8% 20.3% 19.1%
50.2%
11.3%
9.5%
6.0% 5.8% 5.5%
2008 2009 2010 2011 1Q12
• Industry Net Income
• Asset Quality: 30+Day Delinquency Rate
Total Industry Net Income Size:
Others 3.2% 3.2%
KRW 199.8 bn 3.0% 3.0%
35.4% 2.8%
HCS 2.3%
2.0% 2.1%
64.6%
1.8%
1.6%
2008 2009 2010 2011 1Q12
* Source: Financial Statistics Information System, at end of 1Q12 * Source: Financial Statistics Information System
** Installment Finance Industry
23. Historical Asset Portfolio Breakdown
23
Receivables Breakdown by Product (KRW Bn)
New Car Financing Auto Lease Used Car Financing
19,806 19,744
Personal Loan Mortgage Others 18,788
7.4%
SUM 7.7%
8.8% Non-Auto
Non-
16,480 9.1% 20%
16,030 9.6%
8.7%
15,130 7.9%
9.9% 7.3%
10.9% 8.4%
13,472 7.7%
7.4%
7.8% 17.3%
11,979 12,049 4.9% 7.8% 7.2% 18.5%
7.4% 8.0% 16.3%
8.0%
9.1%
6.9% 9.4% 15.8%
4.9% 8.1% 14.8%
5.6% 14.3%
14.4%
8.7% 12.6%
Auto
80%
57.6% 56.0%
57.2%
58.1%
59.9% 56.8%
71.7% 68.0% 63.3%
2004 2005 2006 2007 2008 2009 2010 2011 1H12
Auto
86.0% 88.7% 87.1% 82.3% 79.5% 81.1% 81.9% 82.8% 81.9%
related
24. Best in Class Risk Management
24
Strong governance for risk monitoring Examples of pre-emptive risk management
Category Actions taken Details
• Risk Control Committee (RCC)
– Decision making for most supreme risk • Limited funding during global
– Review portfolio risk performance Asset slowdown financial crisis
Strategy
(Y2008) • Reduce non-core businesses
to focus on new car financing
• Systematic New Product Risk Analysis
- Two-stage RCC approval process
- Pre-launch new product introduction and credit review Risk-based • Lower pricing for customers
New car
point assessment pricing with better credit profile
• Risk Appetite Management
• Tightened underwriting policy
– Establish guidelines for portfolio / asset quality
Policy tightening preemptively
– Determine risk management strategy per product Used car
(Y2010) • Sacrificed market share due to
focus on asset quality
• Portfolio Quality Review
– Monitoring of main risk indices
• More weight on cross-selling
– Follow-up on effects of credit policy changes P-loan Cross-sell
channels to new car customers
• Stress Test & Contingency Planning
• Reflecting volatile housing
– Scenario analysis based on economic forecasting Residual value market conditions
Mortgage
insurance
– Prepare action plans per contingency stage • Only company insured in Korea
31. Diversification of Funding Portfolio Over Time
31
Funding Principles
• 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%
Managed Borrowings (KRW Bn)
17,330 17,222
Bond-domestic Bond-overseas ABS-domestic 16,560 3.7%
4.3%
ABS-overseas Bank loans CP 8.8%
8.5% 8.7%
Total 14,335 14,378
7.4% 7.5%
13,213 13,412 9.1%
6.8%
12,597 12,568 10.6% 5.0%
8.2% 9.8% 5.9%
17.7% 16.9% 10.3%
17.2% 13.3% 8.7% 6.7%
8.3% 30.6%
6.9% 9.9% 10.4% 10.7% 29.1%
9.1%
11.9% 8.7% 25.7%
12.9%
14.2% 5.7%
31.0% 7.1% 26.5%
11.5% 29.3%
18.3%
2.9% 31.0%
14.1%
44.3%
41.9% 42.9%
36.9% 38.4% 39.1%
34.0% 30.7%
26.3%
2004 2005 2006 2007 2008 2009 2010 2011 1H12
% of LT
39.1% 47.6% 57.5% 57.9% 59.0% 59.3% 63.5% 65.4% 67.1%
Funding
32. Funding by Currency & Outstanding Global Bonds
32
Funding Portfolio by Currency Outstanding Global Bonds
JPY 1.6% AUD 1.5% Issue Date Maturity Amount
Euro 2.7%
MYR 4.3% Nov.’09 5.5 years USD 500m
CHF 5.9%
144A/Reg S ’
Jan.’11 5.5 years USD 700m
Mar.’12 5.5 years USD 500m
USD
22.2% Samurai Nov.’10 2 years JPY 15,000
Jul. ’10 5 years CHF 150m
Oct. ’10 4 years CHF 200m
KRW
Swiss Franc May ’11 2.5 years CHF 150m
61.6%
May’11 5 years CHF 150m
Feb.’12 5 years CHF 200m
Sep.’10 2 years MYR 660m
• Funding Balance: KRW 17,222 Bn May ’11 2.5 years MYR 650m
Malaysian Ringgit
• Foreign Exchange Risk: Feb.’12 5 years MYR 320m
-100% of foreign currency exposure is hedged
May ’12 3 years MYR 370m
through swap transactions entered into at the
Australian Dollar Jun. ’12 3 years AUD 175m
time of bond issuance.
35. Credit Ratings & Rationale
35
HCS’ Global Credit Ratings Credit Rating Rationale
AAA
• Strong Standalone Profile
A(S) – Sustainable track record of strong profit
performance and robust credit fundamentals
BBB+(S) BBB+(S)
Baa2(P) – Low risk-focused product portfolio and prudent
risk management
– Adequate liquidity and sound capitalization
Moody's S&P Fitch JCR RAM
– Strong market position as HMC's key captive
financing arm
HCS & Competitors’ Domestic Credit Ratings
AA+
• Capable & Willing Shareholder Support
- Solid backup line provided by GE Capital through
A+ A+ A+
its capital and managerial support
A
- 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.
Hyundai W Financial A Capital W Capital N Capital
Capital
36. Performance of Hyundai Motor Company
36
Strength Performance
Product Mix Total Sales (‘000s)
4,059
59% 3,612
3,106
1,974 2,134
18% 17%
6%
Compact Mid & Large RV Commercial 2009 2010 2011 1H11 1H12
Market Diversification OP Margin
39.9%
11.4%
10.4% 10.3%
8.8%
15.4% 16.7% 17.1% 7.0%
10.9%
Korea US Europe China Others
2009 2010 2011 1H11 1H12
Brand Value Net Profit (KRW Bn)
8,105
6,001
• Increase in residual value of vehicles due to 4,998
4,184
strengthened brand awareness 2,962
• Boost in luxury car sales has increased the
average selling price
2009 2010 2011 1H11 1H12
37. Global Expansion
37
Office/Corporation without funding
UK JV
Established: Dec. 2011
Capital: £20 mm China JV
Stake: HCS 29.99%
Established: Jun. 2012(expected) Hyundai Capital America
Russia Capital: RMB 0.5 bn
Stake: HCS 46% Established: Sep. 1989
Capital: $1 bn
Stake: HMA 94%, KMA 6%
Hyundai Capital Europe
Established: May 2010 India Office
Capital: €2.8 mm Representative Office
Stake: HCS 100% Established: Jul. 2010
Hyundai Capital Germany
Established: Sep. 2009 Australia Office Brazil Office
Capital: €2mm Representatives Dispatched Representatives Dispatched
Stake: HCS 30.01%
• Support Global Sales Growth of HMG • Minimize Entry Risk
HCS’
HCS
– Provide auto financing and related services – New market entry through joint ventures with
Strategy
for HMC/KMC customers local partners
38. Investor Relations Contacts
Jungsang Kim, Head of Investor Relations Minchul Seo, Deputy General Manager of Investor Relations
Phone +82 2 2167 7034 Phone +82 2 2167 7051
jungsang.kim@hyundaicard.com mcseo@hyundaicapital.com
Brett Moffat, Manager of Investor Relations Jay Moon, Manager of Investor Relations
Phone +82 2 2167 5510 Phone +82 2 2167 5312
brett@hyundaicapital.com Jay.moon@hyundaicard.com
http://ir.hyundaicapital.com/