K bank expected to follow similar growth path as Kakao Bank

K bank logo / Courtesy of K bank

By Anna J. Park

Korea's first internet-only bank K bank finally seems to be on the right track.

A recent analysis report published by CAPE Investment & Securities said K bank is expected to follow a similar growth path as Kakao Bank. Kakao Bank is the nation's second internet-only bank, yet it overtook K bank because of its strong user platform guaranteed by the country's largest mobile messenger app Kakao Talk.

Kakao Bank has been growing fast, achieving net profit in 2019 after opening in 2017. But K bank's growth was stunted during that time due to regulatory limitations surrounding its major shareholders. That problem was finally solved with a revision to related laws in April.

According to the report, K bank is expected to experience a profit turnaround when its capital assets reach 950 billion won ($870 million). As of the third quarter this year, its total capital was about 524 billion won. It means that if the bank has a 400 billion won to 500 billion won capital increase, it could reach its break-even point.

“While the average banking sector's credit loans in Q3 this year increased by 7 percent from the end of Q1 this year, K bank logged 58 percent during the same period,” the report said. “This speedy growth rate shows a possible exponential growth in the near future. K bank is expected to follow a similar path as Kakao Bank, which recorded its first net profit in the first quarter of last year, when its total capital amounted to about 1.15 trillion won.”

Meanwhile, K bank plans to raise 400 billion won in capital, mainly from global and local private equity firms, in the first half of next year. The bank recently selected Bank of America Merrill Lynch as the management firm for attracting the investment.