SEOUL, Jul. 23 (Korea Bizwire) — Kakao Bank, South Korea’s second Internet-only bank, has posted rapid growth in its customer base and assets since its launch a year ago to overtake the country’s smallest regional lender, data showed Monday.
Kakao Bank, controlled by Kakao Corp., the operator of South Korea’s dominant messaging app KakaoTalk, started operations on July 27 last year, quickly gaining popularity among local mobile-savvy customers.
According to the data from Kakao Bank, the number of its clients stood at 6.28 million as of July 15, accounting for 22.3 percent of South Korea’s labor force tallied at 28.16 million.
Kakao Bank instantly became the talk of the town by attracting 187,000 customers on the launch date alone, with the number growing to 3.29 million about a month later. Since then, it has lured an average of 289,000 new users per month.
The lender has also seen its assets grow rapidly over the past year, outstripping those of Jeju Bank, the smallest regional bank headquartered on the country’s southernmost resort island of Jeju.
As of end-March, Kakao Bank’s assets came to 7.92 trillion won (US$6.98 billion), larger than Jeju Bank’s 5.69 trillion won and trailing 17.53 trillion won of Jeonbuk Bank based in Jeonju, about 250 kilometers south of Seoul.
Kakao Bank grew faster than South Korea’s first Internet-only lender K-Bank, which set sail about four months earlier. K-Bank, led by the biggest fixed-line Internet operator, KT Corp., had assets of only 1.54 trillion won as of end-March.
Kakao Bank’s deposits totaled 8.52 trillion won as of July 15, up 71 percent from the end of last year, with its outstanding loans jumping 50.2 percent to 6.94 trillion won.
The Internet-based lender has also seen its performance improve over the past year on the back of its growing popularity. The lender’s net loss narrowed to 5.3 billion won in the first quarter of this year from 37.6 billion won three months earlier.
Despite its rapid growth driven by convenient and innovative services, market watchers said, Kakao Bank has yet to diversify its products by increasing its capital base, which currently stands at 800 billion won.
But it may find it difficult to raise its capital base rapidly as South Korea prohibits non-financial firms from owning a larger than 10-percent stake in banks or nonbank financial institutions, they added.
South Korea gave the nod to the Internet-based lenders as part of government efforts to give a shot in the arm to the nation’s banking sector suffering from sluggish growth.