Inbaeng Thrives Despite Loan Regulations... Kebaeng & Kabang Strong Q3 Performance (Comprehensive)

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

[Asia Economy Reporter Sung Ki-ho] 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 provisional net income 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 first quarter loss of 12.3 billion KRW, K-Bank succeeded in turning its cumulative annual net income positive by the third quarter. Accordingly, expectations are growing for the first annual profit since its launch in April 2017.

KakaoBank also recorded a net income of 52 billion KRW in the third quarter. Following 46.7 billion KRW in the first quarter and 69.3 billion KRW in the second quarter, this net income brought the cumulative annual net income to 168 billion KRW, a 95.6% increase compared to the same period last year. As a result, the cumulative net income has already surpassed last year's annual net income of 113.6 billion KRW.

The strong performance of the two internet banks is attributed to the increase in the number of customers. In particular, KakaoBank has established itself as the banking app used by 6 out of 10 economically active people. As of the end of the third quarter, KakaoBank had 17.4 million customers, and its monthly active users (MAU) exceeded 14.7 million, maintaining its position as the number one financial app. It was also found that over 40% of teenagers use KakaoBank's 'KakaoBank mini,' and about 60% of newly acquired customers from January to September this year were aged 40 or older. K-Bank's customer base reached 6.6 million by the end of the third quarter, tripling compared to 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 stood at 25.0385 trillion KRW, and K-Bank's at 6.18 trillion KRW, both showing increases. Furthermore, with loan interest rates rising more steeply than deposit rates due to interest rate hikes, profitability improved.

However, there are concerns that soundness management remains a pending task. Researcher Park Hye-jin of 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, loan loss costs are rising due to mid-interest loans, making delinquency rates and soundness management critical points."

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