KakaoBank outperforms commercial banks in productivity

KakaoBank's headquarters in Seongnam, Gyeonggi Province, is seen in this August file photo. Yonhap

By Park Jae-hyuk

KakaoBank's profit per employee during the first three quarters of this year reached 280 million won ($236,000), while the average for that at the nation's five largest commercial banks during the same period stood at 187 million won, their regulatory filings showed Sunday.

Profit per employee has been widely used to measure labor productivity in the banking industry. Some market insiders therefore are interpreting the result as proof that the internet-only bank's employees are more productive than workers at Korea's top five commercial banks ― KB Kookmin, Shinhan, Hana, Woori and NongHyup.

By bank, Hana's profit per employee was 207 million won, followed by Shinhan at 190 million won, KB with 183 million won, Woori at 179 million won and NongHyup, 176 million won.

Until the first three quarters of last year, their average profit per employee was 171 million won, higher than that of the internet-only bank's 163 million won. Back then, Woori was the only domestic commercial bank that showed a lower figure than KakaoBank.

After KakaoBank finished its early-stage investments and hiring procedure in the fourth quarter of last year, however, it eventually overtook the commercial banks in this measure of productivity.

The internet-only bank has widened the gap with the five commercial banks throughout this year, taking advantage of its lack of branch offices and small number of employees. As of the end of September, the number of KakaoBank employees was 964, while the five commercial banks had 13,836 workers each on average.

It has become more difficult for the five to catch up with the internet-only bank, as the financial authorities have tightened regulations on the closure of bank branches and reductions in workforces.

Some analysts, however, expect the growth of KakaoBank's profit per employee to slow, as financial regulators have restricted internet-only banks from extending household loans, while asking them to lend money to borrowers with lower credit ratings.