Emergency for Internet Banks as Household Loan Volume Halves, Rushing to Diversify Portfolio

[Financial News] As the target volume of household loans in the financial sector for the second half of the year is halved, internet-only banks are on high alert. To secure profitability, they are focusing on the personal business loan market centered on medium and low credit borrowers, increasing non-interest income through fund sales, and improving their portfolios.
According to the financial sector on the 23rd, the household loan balance of the three domestic internet banks, Kakao, K-Bank, and Toss Bank, stood at 71 trillion 46.9 billion won as of the first quarter, an increase of only 4 trillion 998.5 billion won compared to the same period last year. This is a sharp decline compared to the increase of 17 trillion 836.5 billion won in the same period a year ago.
The financial authorities publicly criticized the surge in mortgage loans by internet banks since the first half of last year, and from the second half, the entire banking sector began managing the total volume of household loans, limiting the increase in mortgage loans by internet banks. In addition, the government ordered the target volume of household loans for the second half to be reduced to 50% of the previous level as part of the 6·27 household loan management plan, prompting internet banks to expand personal business loan products, expand fund brokerage, pursue joint loans with regional banks, and diversify their portfolios with new businesses such as overseas expansion.
Kakao Bank plans to strengthen its lineup of personal business loan products to increase its market share in the personal business loan market, while also expanding the number of fund types to 100 in the medium to long term to establish itself as an 'investment platform'.
To this end, since last month, the credit limit for personal business loans has been expanded to a maximum of 300 million won, and in the fourth quarter, it plans to launch non-face-to-face collateral loans for personal businesses. As Kakao Bank expands personal business loans according to the financial authorities' policy, the balance of personal business loans, which was only 950 billion won at the end of 2023, increased to 2 trillion 256 billion won at the end of the first quarter of this year. It also plans to enhance its business platform competitiveness by incorporating services necessary for personal businesses, such as integrated tax management and finding government subsidies.
K-Bank is also taking personal business loans as a new growth driver. Following the launch of the 'Boss Real Estate Collateral Loan' first and second priority products for the first time among internet banks last year, it expanded its personal business loan services with a real estate collateral second priority refinancing loan in March this year. The amount handled by the Boss Real Estate Collateral Loan reached 300 billion won in just one year, and as of the first quarter, K-Bank's personal business loan balance increased by 25.2% to 1 trillion 313.1 billion won compared to the same period last year (1 trillion 49.1 billion won).
However, the rapid rise in the delinquency rate of self-employed loans has emerged as a challenge for soundness management. As of the first quarter of this year, the delinquency rate of personal business loans at Kakao Bank was 1.32%, about twice as high as a year ago (0.64%). K-Bank also saw an increase from 1.15% to 1.38% during the same period.
Toss Bank is seeking breakthroughs through expanded collaboration on joint loans with regional banks and overseas expansion. It is also waiting for approval from the financial authorities for a financial investment business license. Toss Bank plans to kick-start its investment platform through direct fund sales using the financial investment business license as a stepping stone. With its bulk money management service, Toss Bank has already introduced over 1,400 financial products, with the cumulative linked amount exceeding 15 trillion won.
gogosing@fnnews.com Park So-hyun Reporter