Is Kakao Bank and K Bank a Safe Zone? ... Continued Surge in Unsecured Loans Amid the Non-Face-to-Face Trend

Last Month's Increase Slightly Decreased but Steep Upward Trend Continues

[Asia Economy Reporter Kim Hyo-jin] Despite the tightening measures by financial authorities significantly curbing the overall increase in credit loans across the banking sector, internet banks KakaoBank and K Bank have maintained a high growth rate. This is interpreted as being influenced by the rising demand for loan transactions through non-face-to-face methods such as mobile platforms.

According to the banking sector on the 15th, KakaoBank's credit loan balance at the end of last month was approximately 15 trillion won, an increase of about 300 billion won compared to the end of August (14.7 trillion won). Although this increase is slightly lower than the 400 billion won growth in August, it is larger than the 200 billion won increase in July, indicating a continued steep upward trend.

K Bank, where credit loans constitute the majority, had a total loan balance of 2.11 trillion won at the end of last month, up 330 billion won from 1.78 trillion won at the end of August. Similar to KakaoBank, the increase was slightly less than the 350 billion won in August but nearly doubled compared to the 170 billion won in July.

The loan trends of KakaoBank and K Bank contrast with those of the five major commercial banks?KB Kookmin, Shinhan, Hana, Woori, and NH Nonghyup. The credit loan balance of these banks at the end of last month was 126.3868 trillion won, an increase of only 2.1121 trillion won compared to the end of August. This is about half the increase seen in August (4.0705 trillion won). It is also lower than the increases in June and July, indicating a clear slowdown in the surge. The overall increase in household loans also decreased somewhat, from 8.4 trillion won at the end of August to 6.6 trillion won at the end of September.

This is the result of financial authorities' policy to curb the explosive growth of credit loans driven by the craze of 'Yeongkkeul'?borrowing every possible resource to buy a home?and 'Debt Investment'?investing in stocks even by borrowing money. Banks responded by raising interest rates. Some banks also actively controlled large loans from high-income and high-credit borrowers for indirect real estate investments, which had an impact.

KakaoBank and K Bank also raised interest rates to restrain loan growth. KakaoBank increased the minimum interest rate for salaried worker credit loans by 0.15 percentage points to 2.16% last month, while K Bank raised the minimum interest rate for credit loans by 0.1 percentage points to 2.13% annually and the interest rate for overdraft accounts by 0.2 percentage points to 2.63% annually.

Steady Inflow of Non-Face-to-Face Loan Transaction Demand

Nevertheless, the relatively large increase in loans at these banks is analyzed as a result of the steady inflow of demand for convenient non-face-to-face loan transactions. In August, a total of 154,432 credit loans were executed at KB Kookmin, Shinhan, Hana, and Woori banks, of which more than half?50.9%?were conducted online through non-face-to-face channels rather than at branches.

A bank official interpreted, "The increase in customers taking loans through non-face-to-face channels means that many new customers have been attracted to KakaoBank or K Bank."

Financial authorities are also paying close attention to these two banks. At a meeting convened by the Financial Supervisory Service last month to prepare credit loan management measures, executives in charge of loans from the five major banks attended along with an executive from KakaoBank. This was effectively the first time a KakaoBank executive participated in a meeting of this nature.

A financial authority official said, "In the case of KakaoBank, the overall asset size, including loans, is rapidly increasing, so it was necessary to conduct a review," adding, "We will also closely monitor K Bank's overall soundness indicators going forward."

This content was produced with the assistance of AI translation services.