K Bank Achieves Annual Cumulative Profit Turnaround... Q3 Net Income of 16.8 Billion KRW

Seo Hoseong, CEO of K Bank

[Asia Economy Reporter Kiho Sung] Internet-only bank K-Bank succeeded in achieving its first quarterly profit in the second quarter and further increased its profit scale in the third quarter, marking its first-ever annual cumulative profit turnaround. This achievement was made possible through the expansion of loans and deposits and the stabilization of the interest margin structure. As a result, expectations for the first annual profit since its launch in April 2017 are growing.

K-Bank announced on the 2nd that it recorded a provisional net profit of approximately 16.8 billion KRW in the third quarter of this year. Considering the losses and profits of the first quarter (-12.3 billion KRW) and the second quarter (3.9 billion KRW), the cumulative profit for the year up to the third quarter reached 8.4 billion KRW, marking the first annual cumulative profit turnaround in over four years since its launch.

The reason for the expanded profit margin is that the revenue base was solidified due to the increase in loans and deposits and the expansion of the interest margin. The number of K-Bank customers, which was 2.19 million at the end of last year, increased by 4.41 million to 6.6 million as of the end of the third quarter. The increase in customers led to an expansion of deposits and loans. As of the end of September, deposits and loans stood at 12.31 trillion KRW and 6.18 trillion KRW, respectively, increasing by 8.51 trillion KRW and 3.19 trillion KRW compared to the end of last year.

With the increase in customers, both low-cost deposits and loans grew, stabilizing the interest margin structure. K-Bank's interest margin has been on the rise every month since the beginning of the year. The interest margin in the third quarter increased by 0.24% compared to the first quarter. Accordingly, the net interest income in the third quarter was 50.2 billion KRW, about five times that of the same period last year (10.3 billion KRW), and increased by 23% compared to the previous quarter. In the financial sector, it is evaluated that the stable interest margin structure, emphasized as the top priority by President Ho-sung Seo since his inauguration at the beginning of the year, is being successfully established.

Non-interest income also recorded 8.5 billion KRW in the third quarter due to the expansion of partnerships, including Upbit. This figure increased by 11.1 billion KRW from a loss of 2.6 billion KRW in the same period last year, showing stability despite fluctuations in virtual asset prices during this period.

Thanks to the stable interest margin structure, net interest income steadily increased every month during the third quarter, raising the possibility of K-Bank's first annual profit turnaround. K-Bank is advancing the sophistication of its interest margin structure and transitioning into a platform business operator. In August, K-Bank added to its loan portfolio by launching jeonse loans and Saetdol loans, and last month, it raised deposit interest rates by 0.1 percentage points, offering an annual interest rate of 1.5%. Starting from the 1st, it increased the interest rate of the 'Plus Box,' which offers the highest financial sector rate of 0.5% for deposits up to 300 million KRW even for just one day, by 0.3 percentage points to 0.8%.

Ho-sung Seo, President of K-Bank, said, "We will further sophisticate the interest margin structure through diversification of deposit and loan products and actively expand the 'fee business' to fully transition into a digital financial platform operator. Additionally, we will actively expand loans to low- and medium-credit borrowers and fulfill our responsibilities and roles as Korea's first internet bank."

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