KakaoBank 1Q Mid-to-Low Credit Loans 625.3 Billion KRW... 11.6 Times Increase YoY

Since November Last Year, New Credit Loans Supplied Only to Low-to-Medium Credit Customers
Low-to-Medium Credit Customers Account for 20% of Credit Loans
Loan Policy Focused on Low-to-Medium Credit Customers to Continue in 2Q

[Asia Economy Reporter Minwoo Lee] In the first quarter of this year, KakaoBank's unsecured credit loans to middle- and low-credit borrowers exceeded 600 billion KRW. This represents an 11.6-fold increase compared to the first quarter of last year. By advancing its Credit Scoring System (CSS), KakaoBank plans to maintain a lending policy focused on middle- and low-credit borrowers in the second quarter as well.

On the 7th, KakaoBank announced that the amount of unsecured credit loans supplied to middle- and low-credit customers, defined as those with KCB credit scores in the lower 50% (820 points or below) in the first quarter of this year, totaled 625.3 billion KRW. This is an 11.6-fold increase compared to 53.8 billion KRW in the first quarter of last year. This increase is attributed to the complete suspension of loans to high-credit customers since November last year and the exclusive provision of new credit loans to middle- and low-credit customers. The average interest rate for middle- and low-credit products, excluding the mid-credit plus loans, was in the low 6% range during the first quarter.

As of the end of last month, the balance of unsecured loans to middle- and low-credit borrowers stood at 2.6912 trillion KRW, an increase of 226.9 billion KRW compared to the end of the previous year. The proportion of middle- and low-credit loans rose by 3 percentage points (P), from 17% at the end of last year to 20% as of the 5th of this month. The 'first month interest support' event held last month and the reduction of the maximum additional interest rate by 0.5%P on mid-credit loan products on the 24th of last month were considered effective. Through these efforts, the proportion of loans to middle- and low-credit borrowers, which was in the high 18% range at the end of February, rose to 20% by the end of last month.

KakaoBank plans to maintain its lending policy focused on middle- and low-credit borrowers in the second quarter of this year as well. To enhance discrimination among middle- and low-credit customers, it is advancing its Credit Scoring System (CSS). To expand the use of alternative information, Kakao affiliates are collaborating on data with Kyobo Group as well. Additionally, since the KCB credit score threshold for the lower 50% was raised to 850 points starting this month, the volume of loans to middle- and low-credit borrowers is expected to increase further. It is also anticipated that the target proportion of 25% for middle- and low-credit loans relative to household credit loans this year will be fully achievable.

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