Kbank to submit preliminary review for IPO this week

Kbank headquarters in central Seoul / Courtesy of Kbank

Kbank, Korea's very first internet-only bank launched in 2017, is expected to apply for a preliminary listing review to the Korea Exchange (KRX) later this week, aiming to complete the bank's long-anticipated initial public offering process by the end of this year.

According to financial industry sources Tuesday, Kbank's public offering procedures will be managed by three lead underwriters — NH Investment & Securities, KB Securities and Bank of America.

When the KRX, Korea's bourse market operator, grants the green light to the preliminary listing examination, the mobile bank's listing on the Korean stock markets can mostly be finalized within six months.

It is the digital bank's second official trial of launching the listing procedures.

Kbank applied for a preliminary listing review in 2022 and received swift approval from the stock exchange. While the mobile bank had to withdraw from the procedure due to deteriorated stock market conditions back then, it is now considered that a listing will go smoothly this time around.

Compared to two years ago, the bank's external size and internal profitability have improved.

The bank's return on equity, a measure of financial performance calculated by dividing annual net income by a company's net worth, stood at 10.77 percent, as of the end of the first quarter this year. It is the highest among Korea's internet-only banks, including KakaoBank's 7.33 percent and Toss Bank's 3.93 percent.

Kbank's cost-income ratio (CIR), another key figure showing the profitability of a bank, stood at 29 percent, which is the lowest level among Korean banks, including both commercial and digital. The lower a bank's cost-to-income ratio, the more efficiently it operates.

"One noteworthy aspect of Kbank is that it is the only bank in Korea with a CIR that has entered the 20 percent range. The reason this ratio level can be maintained is that the bank's IT infrastructure development and staffing have both been completed and are now solidly operated," Park Hye-jin, an analyst at Daishin Securities, pointed out.

The bank's corporate value is currently estimated at 5 trillion won ($3.6 billion) to 6 trillion won. Its over-the-counter stocks were traded at about 5.6 trillion won as of Monday.

Yet, some market watchers view the bank's value could be lowered to around 3 trillion won to 4 trillion won, considering the latest bearish moves by the shares of KakaoBank, Kbank's main rival.

Regarding such pessimism, Kbank underscored that it is following a differentiated growth path from that of KakaoBank.

In its recent overseas non-deal roadshow (NDR), Kbank boasted of its stable governance structure with dispersed ownership, a cost-efficient platform, as well as convenient loan services. Additionally, Kbank is now actively pursuing various strategic partnerships, offering investment opportunities such as fractional art investment and virtual asset trading.

"Kbank has well proven the advantages of internet-only banks — cost efficiency and productivity. The bank will strive to demonstrate its distinctive value through rigorous IPO preparation," a Kbank official said.