Unstoppable Popularity of In-Bank... K-Bank and KakaoBank Show Strong Q3 Performance

Driving Growth in Customer Base Expansion
Impact of Loan Regulations and Interest Rate Hikes

[Asia Economy Reporter Kiho Sung] Internet-only banks recorded strong performance in the third quarter. Although they face the "dual challenge" of not handling corporate loans and needing to increase loans to low- and medium-credit borrowers, it is analyzed that the expansion of the customer base drove the growth trend. The government's loan regulations and interest rate hikes also played a role.

According to the financial sector on the 3rd, K-Bank posted a net profit of 16.8 billion KRW in the third quarter. Following the first quarterly profit of 3.9 billion KRW in the second quarter, the profit margin widened further. Additionally, offsetting the 12.3 billion KRW loss in the first quarter, K-Bank succeeded in turning cumulative net profit positive through the third quarter. Accordingly, expectations are growing for the first annual profit since its launch in April 2017.

KakaoBank also achieved a net profit of 52 billion KRW in the third quarter. The cumulative annual net profit reached 168 billion KRW, an increase of 95.6% compared to the same period last year. It has already surpassed last year's annual net profit of 113.6 billion KRW.

The strong performance of internet banks is attributed to the increase in the number of customers. KakaoBank has become the banking application used by 6 out of 10 economically active people. As of the end of the third quarter, KakaoBank's customer base reached 17.4 million, and the app's monthly active users (MAU) exceeded 14.7 million, maintaining its position as the number one financial app. K-Bank users reached 6.6 million by the end of the third quarter, about three times more than the 2.19 million at the end of last year.

Loan regulations and interest rate hikes also contributed. As financial authorities continuously introduced strong household loan regulations, demand surged to catch the last chance for loans. KakaoBank's loan balance increased to 25.0385 trillion KRW, and K-Bank's to 6.18 trillion KRW. Furthermore, with loan interest rates rising more steeply than deposit rates due to interest rate hikes, profitability improved.

However, managing asset quality remains a pending task. Hyejin Park, a researcher at Daishin Securities, commented on KakaoBank, "Total loans increased smoothly by 8.3% compared to the previous quarter," adding, "While fees and platform revenues are also increasing, driving growth in non-interest income, the increase in loan loss costs due to mid-interest loans will make managing delinquency rates and asset quality a key focus."

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