Kakao Bank Surpasses 30% Share of Credit Loans to Mid- and Low-Credit Borrowers Last Year

Supply Planned to Exceed 5 Trillion Won Over the Next 3 Years

KakaoBank's proportion of credit loans to middle- and low-credit borrowers surpassed 30% last year.

KakaoBank announced on the 2nd that as of the end of December last year, the proportion of credit loans to middle- and low-credit borrowers was 30.4%, with a balance of approximately 4.3 trillion KRW. This represents an increase of 20.2 percentage points in proportion and about 2.9 trillion KRW in balance compared to the end of 2020, three years ago.

[Image source=Yonhap News]

Despite the rapid increase in supply scale, the bank explained that the soundness indicators have remained stable. KakaoBank's total loan delinquency rate was 0.49% as of the third quarter of last year. This marks two consecutive quarters of improvement since the second quarter (0.52%), which improved by 0.06 percentage points compared to the previous quarter.

For credit loans, the delinquency rate as of the third quarter last year was 0.70%. Even though the supply of credit loans to middle- and low-credit borrowers expanded amid rising interest rates, this rate is similar to the overall delinquency rate of credit loans at domestic banks (0.71%) as of October. The delinquency rate for credit loans to middle- and low-credit borrowers also remained relatively stable in the mid-to-high 1% range as of November last year.

KakaoBank attributes the stable delinquency rate despite the expansion of loan assets to its data analysis capabilities. Since its launch, KakaoBank has developed risk management capabilities based on the analysis of 33 million credit loan application data points (cumulative, including duplicates) up to the third quarter of last year. In particular, KakaoBank has been adjusting its policies according to changes in internal and external conditions and the characteristics of incoming customers. These policy changes have been made more than 15 times annually on average since KakaoBank's inception.

The bank plans to continue leading inclusive finance supply. First, it aims to expand the balance of credit loans to middle- and low-credit borrowers to over 5 trillion KRW in the next three years. At the same time, it will strengthen soundness management. KakaoBank plans to maintain a policy of setting aside provisions approximately 2.5 to 3 times higher than non-performing loans for credit loans to middle- and low-credit borrowers.

A KakaoBank official said, "The secret to increasing the supply of credit loans to middle- and low-credit borrowers to an all-time high without a sharp rise in delinquency rates lies in our unique risk management capabilities." He added, "We will continue to expand data utilization and firmly manage fundamentals such as soundness to practice healthy and sustainable inclusive finance."

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