Kbank, which became the second internet bank to list on the stock market after KakaoBank, has seen its share price slide since its debut. Kbank, which succeeded in listing on its third attempt and lowered its offer price compared with the past, appears to reflect concerns that growth will be constrained by the nature of the banking industry, which is subject to various regulations.
Kbank shares finished trading at 6,270 won on the 27th. That is about 25% below the offer price of 8,300 won. Kbank allocated 12 million shares, or 20% of the total offering, to its employee stock ownership association, and employees subscribed for a total of 3,521,920 shares (29.34%), worth about 29.2 billion won. Kbank also lent money to allow employees to subscribe to the employee stock ownership plan.
Kbank drew attention as a "big fish" in the initial public offering (IPO) market in the first half of this year, but major financial investors (FI) sold at prices above the offer immediately after listing and exited, and now only institutionally locked-up shares and retail investors remain.
KakaoBank once walked a similar path. Listed at 39,000 won in 2021, KakaoBank at one point surged to 92,000 won, pushing its market capitalization past 33 trillion won and even overtaking KB Financial, whose asset size is 16 times larger. KakaoBank employees subscribed to the employee stock ownership plan for as much as hundreds of millions of won each, but the share price later plunged and now sits about 40% below the offer price.
A lofty valuation is cited first as a reason for internet banks' weak share prices. In preparing to list, Kbank selected overseas financial firms such as SBI Sumishin Net Bank and Bancorp as peers, boosting its valuation and sparking an overheated pricing controversy. It later adjusted the peer group and set the offer price at the bottom end, 8,300 won.
An inherent limitation is also weighing on growth: banking is a regulated industry. In line with their founding purpose, internet banks must maintain the proportion of loans to mid- to low-credit borrowers, who carry higher arrears risk, above a certain level. The financial authorities plan to raise the ratio of loans to mid- to low-credit borrowers from 30% this year to 35% by 2028.
On top of that, the policy to curb household debt has put the brakes even on mortgage loan sales and refinancing. Commercial banks can offset the impact of household lending regulations thanks to a solid corporate finance base, but internet banks, which are more dependent on household lending, are hit relatively harder by the regulations.
Internet banks are asking the government to relax the current ban on face-to-face sales, at least for small and midsize enterprises or startups. They argue that if face-to-face sales are eased, they can extend the government's push for productive finance to SMEs and startups. The government maintains that easing face-to-face sales runs counter to the founding purpose of internet banks—branchless operations and IT innovation.