Fintech firms' corporate value plunges amid rate hikes, recession woes

K bank's headquarters in Seoul / Courtesy of K bank

By Lee Min-hyung

Major fintech firms are grappling with their falling corporate value amid rising interest rates and fears of a recession.

According to data from Stockplus Unlisted, a Seoul-based unlisted stock trading platform, K bank's shares were traded at around 14,400 won as of Wednesday, a drop of more than 30 percent from early this year when its value hovered over 22,000 won per share.

K bank is a first-generation internet-only bank here that made its market debut in April 2017. The lender achieved sizable growth last year through its partnership with Upbit, the nation's leading crypto trading platform.

The bank accomplished a long-awaited turnaround last year and plans to go public sometime as early as this November.

However, it remains unclear as to whether the company will be able to attract success in its initial public offering (IPO) due to its nosediving pre-IPO corporate value. This fall was sparked by the overall market downturn at a time when recession woes and rapid rate hikes are putting pressure on the asset soundness of major lenders.

The recent stock fall of mobile banking industry leader KakaoBank also comes as a growing burden to K bank. KakaoBank also made its debut around the same time as K bank and has been ahead in its rivalry for the past five years.

Shares of the Kakao subsidiary reached a historic high of 94,400 won last August but were being traded at around 31,500 won on Thursday. This is a decline of more than 65 percent in less than a year.

Major brokerage houses here estimate the corporate value of K bank to be around 6 to 10 trillion won. But it appears tough for the lender to attain its target market capitalization after the IPO due to its falling stock price.

Viva Republica, the operator of the nation's most successful fintech app, Toss, is also suffering from unfavorable market conditions. According to another unlisted stock trading platform, Seoul Exchange, Viva Republica shares were valued at 129,000 won as of Jan. 9, but the price almost halved during the first half of this year, with shares being traded at 65,700 won on Wednesday.

“Internet-only lenders face similar banking regulations just like other commercial lenders, even if they look somewhat different due to their platform power,” an industry analyst said. “The pessimistic outlook across the overall banking industry will keep coming as a pressure to fintech firms operating banking businesses.”