Hyundai Capital is... Hyundai Capital Investor Presentation 1H 2012
Hyundai Capital Hyundai Capital is...Hyundai Capital Investor Presentation 1H 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.
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Key Highlights 1H 2012
• 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%
3
- 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• Continuous Credit Rating Improvement- Moody’s : revised outlook to Baa2(P)
- Fitch : upgraded rating to BBB+(S)
81.6%
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
4
316
413 485 493 267
279321 297
146 128
76.9%
80.1%
78.2%79.9% 80.2%
81.6%
6.1%
3.6%
2.6%
3.2%
3.6% 3.5%
3.0%3.2%
1,3941,465 1,474
695739
1,154
571 703 660 684
344 328
248 239
128
2008 2009 2010 2011 1H11 1H12
2.2%
0.2%
2.6%
2008 2009 2010 2011 1H12
Source: Bank of Korea Source: KAMA
9.1%9.1%9.1%9.1%8.8%8.8%8.8%8.8%
7.4%7.4%7.4%7.4% 7.7%7.7%7.7%7.7%
16,480 16,480 16,480 16,480
18,788 18,788 18,788 18,788 19,806 19,806 19,806 19,806 19,744 19,744 19,744 19,744
Receivables Breakdown by Product (KRW Bn)
Low Risk-focused Product Portfolio5
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% 56.0%56.0%56.0%56.0%
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% 18.5%18.5%18.5%18.5%
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% 7.3%7.3%7.3%7.3%
7.8%7.8%7.8%7.8%7.4%7.4%7.4%7.4%
8.7%8.7%8.7%8.7%9.1%9.1%9.1%9.1% 9.6%9.6%9.6%9.6%
10.9%10.9%10.9%10.9%9.9%9.9%9.9%9.9%
8.8%8.8%8.8%8.8%16,030 16,030 16,030 16,030 16,480 16,480 16,480 16,480
56.8%56.8%56.8%56.8% 58.1%58.1%58.1%58.1%
2008200820082008 2009200920092009 2010201020102010 2011201120112011 1H121H121H121H12
New Car Financing Auto Lease Used Car Financing Personal Loan Mortgage Others
25.1%
21.3% 22.0%20.3%
2009 2010 2011 1H11 1H12 YoY
Income Statement (KRW Bn)
Good Profitability Underscores Strong Fundamentals
Return on Equity & Return on Assets
ROE ROA
6
20.3%17.4%
2.4% 2.6% 2.8% 2.6% 2.5%
2008 2009 2010 2011 1H12
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%
Operating expenses 2,448 2,644 2,672 1,504 1,316 -12.5%
(Excluding FX effect) 1,944 2,259 2,466 1,155 1,210 4.8%
Key HighlightsBad debt expense 176 145 354 139 180 28.9%
Operating income 541 630 659 458 330 -27.9%
Net Income 411 489 507 354 244 -31.0%
Key Highlights
� Operating income decreased YoY due to:
- Slower new car sales in the first half of 2012
- Greater one-time effect in the corresponding period last year
� Return on assets (ROA) maintained at high level of 2.5%
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
7
152.7% 153.3%
2.3%
1.8%1.6%
2.0% 2.1%
1.4%
474
610 625
521 547
208
265 283
152.7% 153.3%
118.0% 117.1% 114.1%
0.7%0.6%
0.8% 0.8%
2008 2009 2010 2011 1H12 2009 2010 2011 1H122008
279 288
401
521 547
426 442
265
345 341
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
8
9.7x
7.4x
9.3x
8.3x
7.3x8.7x
7.5x1,825
2,432 2,375 2,622
2,913
11.5%
13.7%13.0%
14.5%
Dividend policy set: Maximum leverage limit of 8.0x (based on managed borrowings)
6.7x6.5x
5.8x
2008 2009 2010 2011 1H12
1,825
2008 2009 2010 2011 1H12
Diversified Funding by Type, Duration & Region
Funding Portfolio by Product Funding Portfolio by Currency
CP 3.7%CP 3.7%CP 3.7%CP 3.7%ABSABSABSABS
12.5%12.5%12.5%12.5%
9
22.2%22.2%22.2%22.2%
61.6%61.6%61.6%61.6%
USD
KRW
BondsBondsBondsBonds75.0%75.0%75.0%75.0%
Loans, Loans, Loans, Loans, 8.88.88.88.8%%%%
CP 3.7%CP 3.7%CP 3.7%CP 3.7% 12.5%12.5%12.5%12.5%
0.3%0.3%0.3%0.3%
1.5%1.5%1.5%1.5%
1.6%1.6%1.6%1.6%
2.7%2.7%2.7%2.7%
4.3%4.3%4.3%4.3%
5.9%5.9%5.9%5.9%
22.2%22.2%22.2%22.2%
Other
AUD
JPY
Euro
MYR
CHF
USD
• Funding Balance: KRW 17,222 Bn
• Long-term funding: 67.1%
• 1H12 Overseas Bond Issuances:
-144A/RegS: 5.5yr - USD 500 mm
- Malaysian Ringgit: 5yr - MYR 320 mm / 3yr –MYR 370 mm
- Swiss Franc: 5yr - CHF 200 mm
-Australian Dollar: 3yr – AUD 175 mm
Strengthened Liquidity Position
Liquidity Profile (Unit: KRW Bn)
63.5%72.2%
Credit LineCash Short-term Debt Coverage Ratio*
10
Cash Flow Profile (KRW Bn)
10,568
Financial Receivables
1,367
1,338
2,511 2,665
1,789
2,106 2,365
3,808 4,090
30.4% 36.0% 39.1%10,568
5,652 2,322639 181 383
~1Y 1-2Y 2-3Y 3-4Y 4-5Y Over 5Y
Liabilities (Debt)
5,663 3,317 3,803 1,542 1,567 1,331
~1Y 1-2Y 2-3Y 3-4Y 4-5Y Over 5Y
Net Cash Flow
707 739 1,027
1,297 1,425
1,082 1,367
2008 2009 2010 2011 1H12
* Short-term Debt Coverage Ratio= (Cash + Unused committed credit line)/ Short-term debt balance
Net Cash Flow
4,905
2,335-1,481 -903 -1,386 -948
~1Y 1-2Y 2-3Y 3-4Y 4-5Y Over 5Y
Hyundai Capital Hyundai Capital Company OverviewHyundai Capital Investor Presentation 1H 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;
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• 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)
- 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 its credit line(Total investment as of 2Q12: US$ 2.2bn)
14
- 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 Position15
• 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
16
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
GDP Growth Rate Government Debt to GDP 5.32 3.89
3.74 3.68 3.29
18
6.1%
3.6%
2.6%
30.1%
33.8% 33.4% 34.0%3.74 3.68 3.29
3.00 2.00 2.50 3.25
3.00
Consumer Confidence Index & Unemployment Rate
Australia
Germany
100
101 102
103
2009 2010 2011 1H122008
2.2%
0.2%
2.6%
2008 2009 2010 2011 1H12
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% 80.2% 81.6%
Domestic Auto Market
Domestic Auto Sales (‘000s)
HMC HMC+KMC Market ShareKMC Others
19
252 252 271272 316
413 485 493 292 320 313322 267
279321 297
146 128
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
738738738738695695695695
73.3%72.0% 73.1% 73.6%
550 571 581 625 571 703 660 684
344 328
252 252
248 239
146 128
2004200420042004 2005200520052005 2006200620062006 2007200720072007 2008200820082008 2009200920092009 2010201020102010 2011201120112011 1H111H111H111H11 1H121H121H121H12
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%
20
- 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 44,080 bn
• Profitability: ROE (Net Income/Equity)
OthersHCS
21
OthersOthersOthersOthers50.2%50.2%50.2%50.2%
HCSHCSHCSHCS49.8%49.8%49.8%49.8%
25.1%21.3% 22.0%
20.3% 19.1%
6.0% 5.8% 5.5%
11.3%9.5%
2008 2009 2010 2011 1Q12
KRW 44,080 bn
• Industry Net Income
OthersOthersOthersOthersTotal Industry Net Income Size:
• Asset Quality: 30+Day Delinquency Rate
3.2%
* Source: Financial Statistics Information System
OthersOthersOthersOthers35.4%35.4%35.4%35.4%
HCSHCSHCSHCS64.6%64.6%64.6%64.6%
Total Industry Net Income Size:
KRW 199.8 bn
* Source: Financial Statistics Information System, at end of 1Q12** Installment Finance Industry
2.3%
1.8%1.6%
2.0% 2.1%
3.0% 3.2% 3.2%
2.8%3.0%
2008 2009 2010 2011 1Q12
III. Asset Portfolio & Financial Performance
Historical Asset Portfolio Breakdown
Receivables Breakdown by Product (KRW Bn)
18,788 18,788 18,788 18,788 19,806 19,806 19,806 19,806 19,744 19,744 19,744 19,744 New Car Financing Auto Lease Used Car Financing
Personal Loan Mortgage Others
SUM8.8%8.8%8.8%8.8%
9.1%9.1%9.1%9.1%
7.4%7.4%7.4%7.4% 7.7%7.7%7.7%7.7%
23
NonNonNonNon----AutoAutoAutoAuto
11,979 11,979 11,979 11,979 12,049 12,049 12,049 12,049
13,472 13,472 13,472 13,472
15,130 15,130 15,130 15,130 16,030 16,030 16,030 16,030
16,480 16,480 16,480 16,480
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%
4.9%4.9%4.9%4.9%
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%
56.0%56.0%56.0%56.0%
18.5%18.5%18.5%18.5%
7.3%7.3%7.3%7.3%
9.6%9.6%9.6%9.6%
9.1%9.1%9.1%9.1%
NonNonNonNon----AutoAutoAutoAuto20%20%20%20%
AutoAutoAutoAuto80%80%80%80%
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% 81.9%81.9%81.9%81.9%
2004200420042004 2005200520052005 2006200620062006 2007200720072007 2008200820082008 2009200920092009 2010201020102010 2011201120112011 1H121H121H121H12
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%
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
24
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
25
3.5%
1.7% 1.6%
2.3%
1.8%1.6%
2.0% 2.1%2.7%
1.5%1.2%
1.0%1.3%
0.7% 0.6%0.8% 0.8%
2004200420042004 2005200520052005 2006200620062006 2007200720072007 2008200820082008 2009200920092009 2010201020102010 2011201120112011 1H121H121H121H12
2007 2008 2009 2010 2011 1H11 1H12 YoY
Solid Profit Underscores Strong Fundamentals
Income Statement (KRW Bn)
KKKK----IFRSIFRSIFRSIFRSKKKK----GAAPGAAPGAAPGAAP
26
Operating Revenues 2,245 4,330 2,989 3,274 3,331 1,961 1,645 -16.1%
(excl. FX effect) 2,045 2,384 2,485 2,889 3,126 1,613 1,540 -4.5%
Operating Expenses 1,770 3,824 2,448 2,642 2,672 1,504 1,316 -12.5%
(excl. FX effect) 1,569 1,879 1,944 2,259 2,466 1,155 1,210 4.8%
Interest expenses 561 674 679 890 956 478 455 -4.8%
Lease expenses 507 587 550 557 505 255 253 -1.1%
SG&A Expenses 439 498 496 586 603 261 284 8.6%
PPOP 533 600 717 778 1,014 597 510 -14.7%
Bad Debt expenses 58 95 176 145 354 139 180 28.9%
Operating Income 476 505 541 630 659 458 330 -27.9%
ROA 2.3% 2.4% 2.6% 2.8% 2.6% 3.6% 2.5% -
ROE 24.4% 25.1% 21.3% 22.0% 20.3% 29.7% 17.4% -
Income before Tax 475 518 538 639 663 463 335 -27.7%
Net Income 333 377 411 489 507 354 244 -31.0%
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
27
521 547 511
208
265 283 474
610 625
164.0% 158.5% 151.6% 153.3%
118.0% 117.1% 114.1%
213 240 222 241 279 288
401
521 547 511 469364
382 423 442
265345 341
2009200920092009 2010201020102010 2011201120112011 1H121H121H121H122008200820082008
K-GAAP
2005200520052005 2006200620062006 20072007200720072004200420042004
K-IFRS
22.0x
Historical Leverage Trend
Leverage Trend
Total Assets / Total Shareholders' Equity Managed Borrowings / Total Shareholders' Equity
28
16.0x
12.6x 9.7x 9.7x 9.3x
14.6x
10.7x
Dividend Policy set 2009: Maximum leverage limit of 8.0x (based on managed borrowings)
10.3x7.4x 8.3x
7.3x9.5x
8.7x
6.7x
7.5x6.5x
5.8x
2004200420042004 2005200520052005 2006200620062006 2007200720072007 2008200820082008 2009200920092009 2010201020102010 2011201120112011 1H121H121H121H12
15.7%
14.5%
Historical Capital Structure
Capital Adequacy Ratio (KRW Bn)
Adjusted Capital CAR
29
2,432 2,375 2,622
2,913
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 1H121H121H121H12
IV. Funding & Liquidity
Diversification of Funding Portfolio Over Time
Managed Borrowings (KRW Bn)
31
• 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 17,222 17,222 17,222 17,222
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%
5.0%5.0%5.0%5.0%
7.5%7.5%7.5%7.5%
8.8%8.8%8.8%8.8%3.7%3.7%3.7%3.7%
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%
30.6%30.6%30.6%30.6%
2004200420042004 2005200520052005 2006200620062006 2007200720072007 2008200820082008 2009200920092009 2010201020102010 2011201120112011 1H121H121H121H12
%%%% 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% 67.1%67.1%67.1%67.1%
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%44.3%44.3%44.3%44.3%
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
CHF 5.9%CHF 5.9%CHF 5.9%CHF 5.9%
MYR MYR MYR MYR 4.3%4.3%4.3%4.3%Euro Euro Euro Euro 2.7%2.7%2.7%2.7%
JPY JPY JPY JPY 1.6%1.6%1.6%1.6% AUD AUD AUD AUD 1.5%1.5%1.5%1.5% Issue Date Maturity Amount
Nov.’09 5.5 years USD 500m
’
32
KRWKRWKRWKRW61.6%61.6%61.6%61.6%
USDUSDUSDUSD22.2%22.2%22.2%22.2%
CHF 5.9%CHF 5.9%CHF 5.9%CHF 5.9%144A/Reg S Jan.’11 5.5 years USD 700m
Mar.’12 5.5 years USD 500m
Samurai Nov.’10 2 years JPY 15,000
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 17,222 Bn
• Foreign Exchange Risk:
-100% of foreign currency exposure is hedged
through swap transactions entered into at the
time of bond issuance.
Malaysian Ringgit
Sep.’10 2 years MYR 660m
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
33
Liquidity Profile (Unit: KRW Bn)
Cash Short-term Debt Coverage Ratio*
Historical Liquidity Position
63.5%72.2%
Credit Line
1,3671,338
2,5112,665
1,332 1,336
1,789
2,1062,365
3,8084,090
4.6%
16.0%
25.0% 23.7%30.4%
36.0%39.1%
370 405 401 398707 739
1,0271,297 1,425652
931 938
1,0821,367
370
10571,332 1,336
2004200420042004 2005200520052005 2006200620062006 2007200720072007 2008200820082008 2009200920092009 2010201020102010 2011201120112011 1H121H121H121H12
* Short-term Debt Coverage Ratio = (Cash + Unused committed credit line)/ Short-term debt balance
V. Others
35
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
Baa2(P)
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
36
Performance of Hyundai Motor Company
Strength Performance
Product Mix59%
Total Sales (‘000s)
3,106 3,612
4,059
1,974 2,134 18% 17%
6%
Compact Mid & Large RV Commercial
Market Diversification
15.4% 16.7%10.9%
17.1%
39.9%
Korea US Europe China Others
OP Margin
2009 2010 2011 1H11 1H12
7.0%8.8%
10.4% 10.3% 11.4%
2009 2010 2011 1H11 1H12
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 1H11 1H12
2,962
6,001
8,105
4,184 4,998
2009 2010 2011 1H11 1H12
37
Global Expansion
Office/Corporation without funding
China JV
UK JV
Established: Dec. 2011
Capital: £20 mm
Stake: HCS 29.99%Hyundai Capital America
Established: Sep. 1989Capital: $1 bnStake: HMA 94%, KMA 6%
Established: Jun. 2012(expected)Capital: RMB 0.5 bnStake: HCS 46%
Stake: HCS 29.99%
Hyundai Capital Europe
Established: May 2010Capital: €2.8 mm
Stake: HCS 100%
Hyundai Capital Germany
Established: Sep. 2009Capital: €2mmStake: HCS 30.01%
Russia
Australia Office
Representatives Dispatched
India Office
Representative Office
Established: Jul. 2010
Brazil Office
Representatives Dispatched
HCSHCSHCSHCS’StrategyStrategyStrategyStrategy
• Support Global Sales Growth of HMG
– Provide auto financing and related services for HMC/KMC customers
• Minimize Entry Risk
– New market entry through joint ventures with local partners
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]
Brett Moffat, Manager of Investor RelationsPhone +82 2 2167 [email protected]
Jay Moon, Manager of Investor RelationsPhone +82 2 2167 [email protected]
http://ir.hyundaicapital.com/