K bank continues solid growth in Q1

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

By Anna J. Park

K bank, Korea's first internet-only bank, posted a quarterly net profit of 24.5 billion won ($19 million) for the first quarter, exceeding the entire annual net profit of 22.5 billion won it logged last year.

According to the bank on Monday, it has witnessed enhancement in almost every area of its business, ranging from the number of customers to management efficiency, resulting in the record-high earnings for the first quarter.

The bank attracted some 330,000 more customers in the first three months of this year, which left its total number of customers standing at 7.5 million as of the end of the quarter. The bank's loan size rose to 7.8 trillion won, which is more than a 10 percent increase, from 7.09 trillion won posted at the end of last year. Its savings and deposit size also rose to 11.54 trillion won in the first quarter, up by 220 billion won from the end of last year.

The internet-only bank attributed the increases in both loan and savings amounts to the strengthened competitiveness of its banking products. K bank has not only lowered interest rates for mortgage loans on apartments and credit loans, but also offered higher interest rates for customers' savings accounts through various products like the "challenge box."

With continuous growth trajectory in nearly every sector of its business model, the digital bank garnered 82.4 billion won in the first quarter from interest profits alone, which is an all-time-high quarterly profit in the category. It is a whopping 216-percent jump from the same period last year.

Non-interest profits, such as various forms of commission fees, also turned to a quarterly profit of 1.9 billion won from last first quarter's loss of about 100 million won. The bank has been posting quarterly profits in non-interest earnings for four consecutive quarters since the second quarter of last year.

Analysts view that the bank could see further growth from non-interest earnings, by strengthening partnerships with other businesses.

"K bank could expand the weight of non-interest earnings in its revenue further by expanding partnerships with other businesses and service offerings," said Kim Do-ha, an analyst at Hanwha Investment & Securities.

The bank's management efficiency has also risen, as seen in its cost-to-income ratio (CIR), which gauges an institution's efficiency ratios by comparing operating expenses to income. A lower CIR means a better performance. K bank's CIR dropped to about 40 percent as of the end of the first quarter, from 61 percent, gauged at the end of last year.

The bank plans to solidify its profit-generating business portfolios and strategies, while aiming to position itself as a representative digital financial platform.

"The bank plans to pursue balanced growth, aiming to strengthen its competitiveness in core banking services while also bolstering the platform side by further attracting customers and their activities at the digital bank," the bank's CEO, Suh Ho-sung, said, adding that it plans to expand loans for customers with medium or lower credit scores.

Site Map E-paper Subscribe Register LogIn
Site Map E-paper Subscribe Register LogIn