K Bank aims to turn into AI-based investment platform: CEO

K Bank, the digital banking unit of South Korean telecom giant KT Corp., aims to turn into an AI-based investment platform after going public later this month, Chief Executive Choi Woo-hyung said on Tuesday.

The CEO said K Bank, Korea’s first internet-only bank, will heavily invest in AI-related technology and diversify its portfolio by moving away from the household loan-centric growth model and expanding into non-face-to-face personal business loans.

“Household loans have led our growth strategy. From now on, we will make corporate banking and the platform business as well as household loans our key growth drivers,” he said at a press conference to unveil the company’s business strategy ahead of its planned initial public offering.

He said K Bank will strengthen its app to become a financial platform where users can invest in various asset classes, such as stocks, virtual assets, artwork and even luxury goods.

He also said the company plans to expand loans to small and medium-sized enterprises (SMEs), self-employed individuals and small business owners to diversify its business portfolio.

In August, K Bank launched a non-face-to-face real estate-backed loan for individual entrepreneurs – the first such financial product among Korean internet banks.

The CEO said K Bank will diversify collateral options for contactless loans to individual entrepreneurs by 2026 and introduce Korea's first fully non-face-to-face loan product for SMEs by the first half of 2027.

"Recently, we’ve been receiving more than 1,000 applications daily for the property-backed SME loans. Proceeds from our IPO will mainly be used to support this new loan product,” he said.

LOW RELIANCE ON UPBIT CLIENTS

The CEO said K Bank’s reliance on Korea’s top cryptocurrency exchange UPbit for its revenue growth is low, and a negative impact of a possible withdrawal from related accounts on its business will be limited.

UPbit's deposits at K Bank accounted for 52.9% of the internet bank’s total deposits in 2021.

The ratio, however, dropped to 16.9% as of the end of June, he said.

"Not a single penny of UPbit's deposits is used as loan funds. We manage such money in highly liquid money market funds (MMFs) or government bonds. Even if UPbit's deposits were to be withdrawn all at once, there would be no liquidity problems,” he said.

K Bank has for years posted rapid growth in subscribers to its app, driven by its partnership with UPbit, riding the wave of cryptocurrency investment enthusiasm in Korea.

IPO SLATED FOR OCT. 30

K Bank attempted to debut on the main Kospi market in 2022 but withdrew its IPO plan in February 2023 amid tepid investor interest.

The internet bank is now making a second attempt to raise funds for business expansion.

K Bank has set its IPO price target between 9,500 and 12,000 won per share, aiming for a market capitalization of 4 trillion won to 5 trillion won ($2.9 billion to $3.7 billion) based on a price-to-book ratio (PBR) of 1.69 to 2.13 times.

The ratio, however, is higher than its bigger internet banking rival KakaoBank Corp.'s PBR of 1.62 times, raising doubts among some analysts about its valuation.

K Bank plans to float a total of 82 million shares for its IPO.

The final IPO price will be determined after the Oct. 10-16 demand forecast.

Retail and institutional investor subscriptions will be accepted Oct. 21-22, with the listing on the Kospi market scheduled for Oct. 30.

With its outstanding deposits and loans of 21.85 trillion won and 15.68 trillion won, respectively, as of end-June, K Bank competes with domestic online rivals KakaoBank, run by Korea’s top messenger app operator Kakao Corp., and Toss Bank, owned by Viva Republica Inc.

Bank of America Corp. is the lead manager of K Bank’s IPO.

Write to Eui-Jin Jeong at justjin@hankyung.com

In-Soo Nam edited this article.