Mid-to-Low Credit Borrower Loan Share Rises for Kakaobank and K Bank, Falls for Toss Bank

Internet Banks 3 Companies Accelerate Efforts to Reach Year-End Targets

The proportion of loans to middle- and low-credit borrowers at KakaoBank and K Bank expanded compared to the previous quarter (end of June), while Toss Bank's proportion declined for the second consecutive quarter.

According to the Bankers Association disclosure on the 24th, as of the end of September, the proportion of loans to middle- and low-credit borrowers at KakaoBank and K Bank stood at 28.7% and 26.5%, respectively, rising by 1 percentage point and 2.5 percentage points compared to the end of June. This figure represents the share of loans to borrowers in the lower 50% credit score bracket based on KCB standards within each internet-only bank's total household credit loans.

In the case of Toss Bank, the proportion recorded 34.46% as of the end of September, down 4.04 percentage points from 38.5% at the end of June. Toss Bank's proportion of loans to middle- and low-credit borrowers has been declining for two consecutive quarters since March (42.06%). However, looking at the figures alone, Toss Bank still has the highest proportion of middle- and low-credit borrowers among the three internet banks. A Toss Bank representative explained, "The timing of repayments by middle- and low-credit borrowers coincided with the implementation of the loan transfer system, which led to an influx of high-credit borrowers."

Regarding the scale of supply, KakaoBank reported that the amount of credit loans supplied to middle- and low-credit borrowers reached 2.4549 trillion KRW as of September. This represents a 28.1% increase compared to last year. Since its launch in July 2017, KakaoBank's cumulative credit loans supplied to middle- and low-credit borrowers have totaled 9.8141 trillion KRW through October this year, with the cumulative supply expected to surpass 10 trillion KRW within this month.

For K Bank, the amount of credit loans supplied to middle- and low-credit borrowers up to the third quarter of this year was 810 billion KRW, and the cumulative supply since its launch in April 2017 reached 4.8921 trillion KRW. Toss Bank has supplied a total of 5.16 trillion KRW in middle- and low-credit loans over two years up to the third quarter of this year since its launch.

Each bank is accelerating efforts such as lowering interest rates to achieve year-end targets. The year-end targets for KakaoBank, K Bank, and Toss Bank are approximately 30%, 32%, and 44%, respectively. KakaoBank lowered the interest rates on mid-credit loans twice last month, bringing the lowest interest rate down to 4.04% per annum as of this date. K Bank also reduced interest rates on middle- and low-credit loan products by up to 1.0 percentage point in August and September, respectively, and further lowered rates by up to 3.3 percentage points this month to expand loans to middle- and low-credit borrowers.