Internet banks are experiencing a rapid increase in interest profits, driven primarily by their handling of housing loans. Tosbank, the newest player in the internet banking sector, is showing meaningful growth, while K-Bank is making strides to catch up.

Tosbank’s Extraordinary Growth

Tosbank has demonstrated considerable financial growth. According to a Hana Financial Holdings report released May 21, Tosbank achieved a net profit of ₩18.7 billion in the first quarter of this year. This represents a 26.3% increase compared to the ₩14.8 billion recorded during the same period last year. This marks the seventh consecutive quarter of growth since the bank turned a profit last year.

Kakao Bank’s Stable Profits

Kakao Bank also reported stable net profits. In the first quarter, Kakao Bank’s net profit reached ₩137.4 billion, a 23.6% increase from the ₩11.1 billion recorded in the same period last year.

K-bank’s performance

In contrast to Tosbank and Kakao Bank, K-Bank experienced a 70% drop in net profit compared to the same period last year.

Platform Loans: Tosbank’s Advantage

Tosbank, despite being the youngest platform, has surpassed K-Bank in key metrics.

• Customer Base: Tosbank boasts 11.78 million customers.
• Monthly Active Users (MAU): tosbank has 8.8 million MAU, representing customers who use the app for 30 days each month.

A larger and more active user base allows banks to increase average deposits, even wiht low interest rates. This influx of low-cost deposits enables banks to provide loans at lower interest rates, attracting more customers and increasing interest income.

Tosbank’s interest income last year was ₩1.38 trillion, a 20% increase from the ₩1.14 trillion recorded the previous year.Loan bond interest increased by 35% to ₩1.46 trillion over the same period.

K-Bank’s Customer Base and MAU

K-Bank’s customer base reached 12.74 million by the end of last year, an increase of 3.21 million from the previous year. Though, its monthly active users (MAU) stand at 4 million, half of Tosbank’s figure.

K-Bank’s interest income last year was ₩1.30 trillion, an 18% increase from the ₩87.41 billion recorded the previous year. Loan bond interest increased by 15% to ₩892.7 billion.

Non-Interest Business Competition

K-Bank’s deposit fee arrangement with the virtual asset exchange Upbeat has contributed to its slowdown.

In the first quarter of this year, K-Bank’s balance of receiving was ₩27.80 trillion, with deposits paid to Upbeat amounting to ₩5.36 trillion (19%). Since July of last year, K-Bank has been providing Upbeat with an annual amount of 2.1%, which Upbeat then distributes to its customers as a deposit fee.

The implementation of the Virtual Asset User Protection Act in July of last year allowed investors to receive interest income on deposits. K-Bank later increased the usage rate from 0.1% to 2.1% per year, increasing its financing costs 21-fold.

The Need for Diversification

Analysts suggest that K-Bank needs to strengthen its platform competitiveness and expand its non-interest business. While the company has grown around housing loans,it needs to identify projects that can secure profits,especially as financial authorities have tightened regulations on household loans.

As the critical view of interest income increases, it is forced to expand its non -interest profits.

An internet bank official stated that to achieve further growth, companies will need to increase their non-interest sector business through the platform and provide a variety of services to serve as a catalyst in the market.