Anna Jiwon Park has been covering the politics at The Korea Times since the summer of 2024, when she joined the press pool for the Office of the President in Korea. Prior to that, she spent about five years reporting extensively on financial markets, regulatory authorities and the financial industry. She joined The Korea Times in 2019 after spending eight years as a broadcast journalist at Arirang TV, Korea’s leading global broadcaster, covering politics, defense and culture.
KB Kookmin in dilemma over KakaoBank's exponential growth
KakaoBank / Courtesy of KakaoBank
By Anna J. Park
Successful equity investment, yet dilemma lies in KakaoBank's rapid growth
By Anna J. Park
As KakaoBank's scheduled initial public offering (IPO) gets closer, KB is expected to garner more than 1 trillion won ($882.71 million) in profits from its early investment into the internet-only bank.
KakaoBank passed a preliminary review by the Korea Exchange (KRX) for the IPO, the listing of Kakao's mobile banking affiliate on the benchmark KOSPI is slated for July or August.
The bank's private shares are traded at around 95,000 won each, making the firm's market cap on the over-the-counter market stand at nearly 39 trillion won.
KB made an early investment, acquiring a significant portion of KakaoBank ― even some of its employees were dispatched to the mobile bank to help it take firm root in the banking industry.
Now KB is KakaoBank's third-largest shareholder with 9.35 percent, following only Kakao, which holds 31.78 percent, and Korea Investment Value Asset Management at 27.1 percent.
Even if KakaoBank's current market cap of 38 trillion won on the OTC market is somewhat exaggerated, market analysts view that the bank's corporate value could be as much as 20 trillion won. This means KB could reap at least 1 trillion won from its investment. Even when the corporate value was estimated to be 8.5 trillion won, KB's profit was already estimated at over 732 billion won.
However, a dilemma lies ahead for KB. From an investment perspective, it was a huge success, yet in turn it helped the exponential growth of the mobile-based bank, that has now become a game changer in the digital banking industry.
In Korea's limited banking market, KakaoBank is now a potential competitor, overshadowing KB's further growth, not only in the digital fintech area, but also in more traditional banking sectors such as retail loans and mortgages.
While the aggregate of major banks' household loans stands at around 270 trillion won, KakaoBank's still lags behind at 21.6 trillion won. Yet its growth rate is fast overtaking the market, and watchers expect the internet bank's entire loans could exceed 50 trillion won in five years.