K bank stock price soars in OTC market

K bank's logo

By Anna J. Park

The corporate value of the country's first internet-only bank, K bank, is rising rapidly ― especially in the over-the-counter (OTC) market ― on expectations over its initial public offering (IPO), planned for 2023.

After its competitor, KakaoBank, made a successful debut on the benchmark KOSPI last month, with its market cap reaching 35 trillion won ($30 billion) as of Wednesday, K bank's privately-held shares, traded through OTC markets such as Seoul Exchange, saw a huge increase in their value recently.

According to records at Seoul Exchange, K bank's shares are being sold for 32,000 won each, a whopping 77.78 percent jump from previous trading sessions when the price was 14,000 won. At 32,000 won per share, the bank's market cap exceeds 12.2 trillion won.

At the end of August, K bank's OTC share price was around 12,000 won, but this has risen quickly in the past week.

Market watchers believe that increases in KakaoBank's stock price, rising more than 140 percent from the initial allotment price for the IPO, has produced the upward movement in K bank shares.

“With the successful listing of KakaoBank on the KOSPI, interest in K bank is increasing. Given that KakaoBank's price-to-book ratio (PBR) stood at six or seven, and if that figure applies to K bank's corporate value, the latter's expected market cap is around 10.2 trillion won,” said Choi Nam-gon, an analyst at Yuanta Securities Korea.

A recent research paper published by Morgan Stanley, which estimated K bank's market cap at 8 trillion won, also worked in favor of the bank's rise in corporate value.

However, some market watchers urge caution, as OTC market stock prices are volatile and market caps tend to be exaggerated compared to actual corporate value due to this volatility.

Others pointed to differences between K bank and KakaoBank, in that the latter has much more direct accessibility to consumers, due to its close ties with the country's largest mobile messenger platform. Increased competition with Toss Bank, the third internet-only bank here, slated to start operations later this month, is another factor that has created concerns over K bank's future success.

However, company officials stress that K bank has its own strengths, including the platform's “openness,” which allows proactive partnerships with other business entities, such as major mobile carrier KT and BC Card, both of which are major shareholders in the bank. Its close partnership with the country's largest cryptocurrency exchange, Upbit, has also contributed to the bank's popularity among Korea's younger generations.