Toss Bank has become the only one among the three internet banks to reduce the scale of private mid-interest rate loans primarily used by ordinary citizens in the second quarter of this year. It is analyzed that the bank has entered into soundness management as the rate of arrears continues to rise.
According to the Korea Federation of Banks on the 7th, Toss Bank's private mid-interest rate loan amount (based on new transactions) in the second quarter of this year was 291.1 billion won, a decrease of 35.4% compared to the same period last year (450.5 billion won). In contrast, during the same period, KakaoBank's private mid-interest rate loan amount increased by 33.1% to 434.5 billion won, while Kbank saw an increase of 16% to 205.6 billion won.
Private mid-interest rate loans are a system operated since 2016 by financial authorities to smoothly supply funds to individuals with low to medium credit scores. They are provided to individuals in the bottom 50% of credit scores, with a maximum interest rate of 8.16% (based on internet banks). Some of the private mid-interest rate loans are included in the loans for medium and low-credit, which internet banks must fill with 30% of their total loans each quarter.
Private mid-interest rate loans have a larger supply scale than policy financial products such as the Sunshine Loan and Saitdol Loan, serving as a vital source of quick funds for many ordinary citizens. The government has requested that the financial sector expand the supply of private mid-interest rate loans from 33 trillion won last year to 36.8 trillion won this year, with the scale of policy support for ordinary financial services set at 11.8 trillion won.
The three internet banks, which must comply with the financial authorities' mandate of a 30% ratio of medium to low-credit loans, play a key role as core suppliers of private mid-interest rate loans. According to the Korea Federation of Banks, internet banks accounted for 33.8% of the total amount of private mid-interest rate loans among 19 banks in the second quarter of this year.
Toss Bank seems to be adjusting its private mid-interest rate loans in response to the rising rate of arrears. The arrears rate for Toss Bank was 0.72% in 2022, but it increased to 1.19% last year, marking the highest level among the three banks. During the same period, KakaoBank increased from 0.49% to 0.52%, and Kbank from 0.85% to 0.90%.
A Toss Bank official noted, "We have adjusted the scale of private mid-interest rate loans for soundness management," adding, "If the arrears rate rises, it may become difficult to handle other loan products, so we are reviewing the portfolio comprehensively."