K bank, South Korea’s first internet-only bank, announced Tuesday that the company saw a quarterly profit for the first time since its launch four years ago.
The net profit in the second quarter came to 3.9 billion won ($3.39 million) on the back of an increase in both interest and noninterest incomes, the company said.
Combined with the first quarter’s loss of 12.3 billion won, the loss in the first half of the year stood at 8.4 billion won, a dramatic decrease from last year’s 44.9 billion won.
K bank attributed this turnaround to a diversified portfolio which includes an interest margin that grew 3.8 times in the past year and a noninterest profit totaling 13.7 billion won.
As of the end of June, K bank had 6.19 million customers, adding a whopping 4 million in the first six months of 2021 thanks to its partnership with Upbit, the country’s largest cryptocurrency exchange.
Amid a spike in virtual asset transactions, the partnership led to an increased use of deposit and withdrawal accounts linked to the crypto exchange contributing to its noninterest profit of 8.5 billion won in the first half of the year, compared to a loss of 5.2 billion won from the same period last year. A growth in linked loans with the secondary financial institutions also contributed to the profit boost from noninterest services, the company said.
The company said it achieved a meaningful improvement in indicators that shows the bank’s financial stability, including the delinquency rate, which dropped to 0.38 percent at the end of June from as high as 2.36 percent recorded in the previous year.
“Based on its steep external growth, K bank achieved diversification of its profit portfolio that encompasses interest and noninterest sectors and showed significant improvements in fundamentals, finally achieving its first-quarter surplus since its launch,” said K bank CEO Suh Ho-sung.
Suh added that the company is planning a series of collaborations with KT Group and BC Card.
“In the second half of this year, we intend to continue to grow through our ties to KT Group and expand loans for medium-sized credit holders through a renewed credit scoring system,” Suh said. BC Card, owned by telecom giant KT Group, is the largest shareholder of K bank with a 34 percent stake.
As of July 31, K bank had 6.28 million users, 10.62 trillion won in deposits and 5.51 trillion won in loans.
Meanwhile, K bank’s rival, KakaoBank, is slated to go public on Thursday in one of the most anticipated IPOs this year despite controversy over its high valuation. KakaoBank has more than 16 million registered users as of the end of June. K bank has upped its efforts to keep pace with not only KakaoBank but also other emerging fintech companies such as Toss. Toss is launching the country’s third internet-only bank next month, adding on to the competition.
By Park Ga-young (email@example.com