Last year, it was revealed that the three internet specialized banks earned a net profit of approximately 600 billion won. This is the largest size ever. The internet banks succeeded in the loan refinancing competition in the first half of last year, significantly increasing household loans, especially focused on mortgage loans.
According to the financial sector on the 14th, Toss Bank recorded a net profit of 43.2 billion won (provisional) last year, marking its first annual surplus. Toss Bank, which was launched in October 2021, reported net losses of 264.4 billion won and 17.5 billion won in 2022 and 2023, respectively. KakaoBank and Kbank also posted record results. KakaoBank's net profit last year was 440.1 billion won, a 24% increase compared to the previous year. This surpasses the net profit of BNK Busan Bank, the top regional bank, which was 410.6 billion won. Kbank also saw its net profit increase tenfold from 12.8 billion won to 128.1 billion won during the same period.
The prolonged high-interest-rate trend and the significant increase in loan demand among households last year led to an increase in interest income. Internet banks greatly increased their mortgage loans through loan refinancing in the first half of last year. KakaoBank's outstanding mortgage loan balance surged 39% from 12.7 trillion won at the end of last year to 91 trillion won at the end of 2023. This is considerable compared to a 4.2% increase in credit loans and a 5.7% decrease in jeonse loans during the same period. Meanwhile, the five major banks, including KB Kookmin, Shinhan, Hana, Woori, and NH Nonghyup, increased their mortgage loan balances by 6% (about 42 trillion won).
This year, internet banks are expected to continue their strong performance by increasing household loans, primarily focusing on mortgage loans. The three internet banks submitted a management goal of 4.77% for the increase in household loans to financial authorities this year, equivalent to a size of 3.3 trillion won. KakaoBank announced plans to increase by 1.5574 trillion won, Kbank by 1.0615 trillion won, and Toss Bank by 699.4 billion won. This is more than double the target increase rate for commercial banks (1-2%).
However, regulations on loans for medium and low-credit borrowers have been tightened, increasing the burden of soundness management. Internet banks must now fill 'more than 30% of new loan transactions' with credit loans for medium and low-credit borrowers in the bottom 50% of credit ratings. Previously, they only needed to maintain an average balance of over 30%. This regulation is aimed at preventing arbitrary reductions in loans to medium and low-credit borrowers based on economic conditions, making soundness management more challenging for internet banks.
The non-performing loans (NPL) of internet banks are already rapidly increasing. As of the end of last year, KakaoBank's NPL balance was 204 billion won, more than a 20% increase compared to 16.8 billion won at the end of 2023. Kbank's NPL balance at the end of the third quarter of last year stood at 207.2 billion won, a 29% increase during the same period. The delinquency rates are also higher compared to commercial banks. As of the end of last year, the delinquency rates of KakaoBank and Kbank were 0.52% and 0.9%, respectively, exceeding the average delinquency rate of the five major banks (0.35%). An official from the internet bank noted, 'This year, we plan to focus on soundness management due to concerns about the economic downturn.'