K Bank's net profit more than doubled in the third quarter as it expanded corporate finance with a focus on loans to sole proprietors. Outstanding loans also topped 20 trillion won for the first time on the back of growth in corporate lending.

K Bank said on Oct. 30 its third-quarter net profit rose 119% from a year earlier to 42.1 billion won. Growth in net interest income, driven by an expanded customer base and an increase in loans to sole proprietors, led the improvement in results.

Net profit for the first three quarters totalled 102.1 billion won. K Bank posted net profit of more than 100 billion won for the first three quarters for a third consecutive year.

Corporate loans up 89%... outstanding loans top 20 trillion won for first time

Outstanding deposits fell about 3% from a year earlier but rose about 10% from the previous quarter. It maintained its deposit base through products including the CodeK time deposit and the Gunggeumhan savings account, despite the impact of money moving into the stock market and a decline in virtual asset deposits.

Outstanding loans topped 20 trillion won for the first time. Corporate loans led the overall increase in lending as tighter management of household loans continued.

The balance of corporate loans rose 89% from a year earlier, and their share of total loans expanded to 17.7%. More than half of the increase in outstanding loans this year came from corporate lending.

K Bank explained that through the third quarter it accounted for 33.1% of net growth in loans to sole proprietors across South Korea's banking sector. Since introducing a guaranteed loan product in 2022, cumulative supply of loans to sole proprietors has surpassed 5 trillion won, and it supplied 2.1 trillion won in the first three quarters of this year alone. The delinquency rate on loans to sole proprietors stood at 0.55%.

The expansion in lending led to higher net interest income. Third-quarter loan interest income was 130.1 billion won, up about 21% from a year earlier. The growth in loans to sole proprietors expanded interest-earning assets.

Net interest margin (NIM) rose 0.22 percentage point from a year earlier to 1.60% on a cumulative basis through the third quarter. Interest profitability improved despite burdens including higher deposit funding costs and lower investment returns.

Third-quarter non-interest income was 26.9 billion won, up 28.3% from a year earlier. Gains from loan receivables sales and higher income related to securities contributed.

Asset quality indicators deteriorated slightly from the previous quarter. The delinquency rate rose to 0.62% from 0.60%, and the non-performing loan (NPL) ratio increased to 0.60% from 0.59%. The credit loss ratio for the third quarter was 1.12%, up 0.4 percentage point from the previous quarter.

K Bank explained it is strengthening loan-loss provisioning and risk management to respond to credit risk from rising interest rates. Its Bank for International Settlements (BIS) capital ratio was calculated at 19.59% at the end of the third quarter.

A K Bank official said, "Even in a highly volatile external environment, we showed strong growth of 119% from a year earlier based on the steady rise in loans to sole proprietors." The official added, "We will secure new growth drivers by expanding the corporate finance market and collaborating with external platforms to broaden our customer base."