As internet-only banks accelerate financial support for self-employed individuals and small business owners, Toss Bank is experiencing a slowdown. The bank appears to be adjusting its pace due to increased delinquency rates stemming from its aggressive expansion of credit-focused personal business loans in its early days.
According to the financial sector on July 8, the total corporate loan balance of three internet-only banks reached 7.5296 trillion won at the end of the first quarter of this year, a 50% increase compared to 5.206 trillion won in the same period last year. Currently, corporate loans from internet-only banks are primarily focused on personal business loans, which are considered a key area for inclusive finance that enhances access to financial services for self-employed individuals.
During this period, Kakao Bank's corporate loans increased by 50.9% to 3.4036 trillion won, while K Bank more than doubled its loans to 2.7529 trillion won.
In contrast, Toss Bank's corporate loans decreased by 5.4% over the past year, totaling 1.3731 trillion won. Toss Bank entered the personal business loan market as the first internet-only bank in 2022, rapidly increasing its loan balance to around 1.8 trillion won in the first half of the following year, but it has since seen a decline. Although there was a rebound at the end of last year, the trend has reversed again this year.
The slowdown in Toss Bank's personal business loan growth is attributed to relatively high delinquency rates. Analysts suggest that the portfolio formed during the bank's initial aggressive expansion of personal business credit loans is impacting current delinquency rates.
Indeed, Toss Bank's corporate loan delinquency rate was 3.33% in the first quarter of last year and has gradually improved, but it still stood at 2.11% in the first quarter of this year, significantly higher than Kakao Bank's 1.40% and K Bank's 0.55%. This rate is more than double that of Toss Bank's household loan delinquency rate of 0.97%.
In response, Toss Bank is diversifying its asset portfolio by increasing the proportion of guaranteed loans. As of the first quarter of this year, guaranteed loans accounted for 38% of Toss Bank's personal business loans, up 13 percentage points from 25% in the same period last year.
However, there are still limitations in expanding a guarantee and collateral-based portfolio, as the bank currently lacks secured products like real estate-backed loans. In contrast, the proportion of guaranteed and collateralized loans in Kakao Bank's personal business loans is nearing 70%.
A Toss Bank official stated, "Rather than reducing the scale of personal business loans, we are restructuring our loan portfolio to balance credit and guarantees. We plan to continuously expand guarantee-based products to maintain a balance between soundness and growth."
* This article has been translated by AI.
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