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The delinquency rate of credit card users soared to 1.63 percent last year, which is the highest in nine years since 2014.

According to the latest data released Monday by the Financial Supervisory Service (FSS) on earnings estimates of card companies, the rates last year increased by 0.42 percentage points from 1.21 percent in 2022. Last year's delinquency rate is the highest since 2014 when it reached 1.69 percent.

Credit card companies' delinquency rate refers to the percentage of card users' overdue payments for more than one month, including their credit card bills, installment payments, revolving credit card payments and card loans. The rate of missed payments for card loans was the highest with 3.67 percent, while the delinquency rate for card bills bonds stood at 1.73 percent.

Despite the rise in the delinquency rate, card companies are estimated to be well-prepared, with every local card company's allowance for bad debts exceeding 100 percent. On average, they are equipped with reserves for bad debt at 109.9 percent.

"Although the delinquency rate of credit card companies has risen, their coverage ratio for bad debt allowances has also improved, indicating the soundness of their ability to absorb losses," an official from the FSS said, adding that the financial watchdog agency will continue to provide guidance to enhance asset soundness in preparation for internal and external uncertainties.

However, the government's credit amnesty program, which stands to erase the loan delinquency records of around 3 million people who were unable to repay loans of up to 20 million won, may negatively affect credit card companies later.

Meanwhile, eight credit card companies' net profit estimates last year stood at 2.58 trillion won ($1.93 billion), which is a slight decrease in overall net profit from the previous year. The fall is attributed to increased interest expenses and bad debt costs, despite their annual increases in income from card and merchant fees.

As of the end of 2023, the cumulative volume of credit card issuance reached 129 million, an increase of 5.63 million cards, or 4.5 percent, compared to the previous year-end. The total amount of credit card usage also increased from 884 trillion won to 941.8 trillion won during the same period.