K Bank Turns Profitable in First Quarter Since Launch... Four Years After Establishment

Recorded 3.9 Billion KRW Net Profit in Q2
Cumulative Loss in H1 Reduced to One-Fifth Compared to Previous Year

[Asia Economy Reporter Kiho Sung] K-Bank has achieved a quarterly turnaround to profit for the first time since its launch. This marks a milestone after more than four years since opening in April 2017.

K-Bank announced on the 3rd that it posted a preliminary net profit of 3.9 billion KRW in the second quarter of this year.

Considering the net loss of 12.3 billion KRW in the first quarter, the cumulative loss for the first half of the year stands at 8.4 billion KRW, reducing the loss scale to one-fifth compared to the same period last year (-44.9 billion KRW).

One of the fundamental reasons K-Bank was able to return to profitability in the first quarter is its external growth. In the first half of this year alone, the number of customers increased by 4 million, surpassing 6.19 million customers as of the end of June. This figure is more than 26 times the increase in the same period last year. During the same period, deposits and loans increased by 7.54 trillion KRW and 2.1 trillion KRW respectively, recording balances of 11.29 trillion KRW in deposits and 5.09 trillion KRW in loans as of the end of June.

In terms of profitability, K-Bank achieved balanced growth in both interest and non-interest income based on the increase in customers and assets. In the net interest income segment, it earned 70.9 billion KRW in profit during the first half of this year, about 3.8 times higher than the same period last year. The proportion of low-cost deposits such as demand deposits continuously increased, exceeding 80% in the second quarter, thereby reducing funding costs. Additionally, apartment mortgage loans, which emphasize 100% non-face-to-face convenience and interest rate competitiveness, saw cumulative loan amounts exceed 700 billion KRW within 10 months of launch despite daily subscription limits, leading to a sharp increase in loan assets. Furthermore, by exceeding the first half target for loans to low- and medium-credit borrowers (KCB score of 820 or below), interest income growth was driven.

Non-interest income recorded 8.5 billion KRW, supported by increased use of virtual asset exchange deposit and withdrawal account services and activation of linked loans with secondary financial institutions. This marks a turnaround from a loss of 5.2 billion KRW in the same period last year, increasing by about 13.7 billion KRW.

Key indicators for stable bank operation also improved significantly. The delinquency rate, which soared to 2.36% in the first half of last year due to the suspension of loan product sales, dropped to 0.37% as of the end of June this year through remarkable loan growth and focused risk management.

The Bank for International Settlements (BIS) total capital ratio recorded 10.9% at the end of the second quarter. However, considering the effect of the capital increase of 1.25 trillion KRW completed last month, the current capital ratio is expected to significantly exceed regulatory requirements.

Seo Hoseong, President of K-Bank, said, “Based on rapid external growth, K-Bank has diversified its revenue portfolio encompassing both interest and non-interest income and achieved a significant fundamental improvement, finally attaining its first quarterly profit since launch. In the second half, we will continue growth based on digital innovation by focusing on expanding loans to low- and medium-credit borrowers through CSS advancement, as well as strengthening synergy with the KT Group through collaborations such as ‘Smart Loan’ with KT and the PLCC ‘Simple Card’ launched with BC Card.”

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