Park Jae-hyuk is a seasoned journalist who has provided comprehensive coverage of South Korea's corporate dynamics, economic policies, industry challenges and the global positioning of Korean companies. Based on the articles he has written since joining The Korea Times in 2016, his investigative approach has helped readers understand corporate governance, economic trends and business strategies shaping South Korea’s economy.
Internet-only banks prepare for 3-way battle
From left are KakaoBank CEO Yun Ho-young, Viva Republica CEO Lee Seung-gun and K bank CEO Lee Mun-hwan. / Korea Times file
By Park Jae-hyuk
By Park Jae-hyuk
KakaoBank, Toss Bank and K bank are preparing for a fierce three-way battle to take the top spot in the nation's online banking market, as most hurdles have been cleared for them to see their earnings growth, according to industry officials, Sunday.
Amid the growing popularity of contactless transactions due to the coronavirus pandemic, the three internet-only banks are drawing attention from market observers who wonder whether they could lead the paradigm shift in the country's banking industry.
The business bellwether KakaoBank showed a 181.3 percent year-on-year growth in its first-quarter net income, raking in 18.5 billion won ($15.1 million) in a single quarter. Its yearly net profit was 13.7 billion won in 2019.
The online lender reported 84.4 billion won in its first-quarter net interest margin, up from 54.5 billion won in the previous year. It also posted a net commission loss of 3.1 billion won during the first quarter, showing an improvement from 14.8 billion won a year earlier.
Given that the Financial Services Commission (FSC) allowed Kakao to become the internet bank's largest shareholder last year and the Supreme Court acquitted Kakao Chairman Kim Beom-su of his alleged violation of the Antitrust Law in February, KakaoBank will likely show further growth this year through its collaborations with other Kakao subsidiaries.
“We are preparing to simplify the process of connecting the accounts of KakaoPay and KakaoBank,” its CEO Yun Ho-young said. ”This will become the starting point to lower the walls between Kakao units and boost connectivity.”
Toss Bank, which won the country's third internet-only bank license in December 2019, is expected to speed up efforts to launch its online banking service with a $200 million fund its operator Viva Republica is planning to raise from investors within this year.
The fundraising plan seems to be on track, as Viva Republica said it made its first “monthly” profit in April, five years after it launched the Toss mobile financial platform.
“Supporting our online banking, brokerage and payment gateway businesses with the profits made from our Toss platform, we will achieve our goal of setting up a new standard in finance,” Viva Republica CEO Lee Seung-gun said in a press release.
K bank, the nation's oldest internet-only bank, also began moves for its business normalization.
According to industry officials, BC Card recently requested the FSC review its eligibility to become the largest shareholder of K bank.
K bank initially planned to raise money, once KT became its largest shareholder. However, the plan hit a snag as the mobile carrier has been under investigation over its alleged violation of the Antitrust Law.
In response, BC Card, which is controlled by KT, is angling to become the largest shareholder of the bank.
Although the National Assembly passed a revised bill April 29 that allows KT to become K bank's largest shareholder, KT did not change its fundraising plan.
K bank, which suffered a 79.7 billion won loss in 2018 and a 100.8 billion won loss in 2019, suspended its loan service in April 2019. If BC injects money into K bank, the internet-only bank will be able to resume its loan services and normalize its business.