The leaders of South Korea’s three internet-only banks have all secured renewed terms. The three banks are seen as having ensured management continuity by delivering results such as a return to profit, an initial public offering and platform expansion. They also face the task of finding new growth engines as household lending rules and pressure on asset quality increase.

The financial sector said on March 11 that K Bank’s executive candidate recommendation committee solely recommended CEO Choi Woo-hyung (최우형) as the next chief executive candidate. His renewed term is expected to be confirmed after a regular shareholders’ meeting on March 31. It is the first time since K Bank’s founding that a CEO is set to serve another term.

Toss Bank also recommended CEO Lee Eun-mi (이은미) as the next chief executive candidate through its executive candidate recommendation committee. Lee is also scheduled to be finally appointed after the same day’s regular shareholders’ meeting and board procedures. It is the first renewal since Toss Bank’s launch.

KakaoBank already reappointed CEO Yoon Ho-young (윤호영) last year, securing a fifth term. This means all three internet-only banks have put in place a renewed-term structure. The internet-only banking industry has seen frequent management changes since launch due to conflicts over growth strategies and changes in major shareholder structures, and it is seen as unusual for the three bank chiefs to be renewed at the same time.

CEOs prove performance; IPO and return to profit underpin renewals

A shared reason for the renewals is performance. The view is that each bank demonstrated results during the incumbents’ terms and secured grounds for management continuity.

For K Bank, completing an IPO became the decisive trigger for the renewed term. Choi succeeded in a KOSPI listing on his third attempt, passing a capital-market test. K Bank raised 498 billion won at an offering price of 8,300 won per share. Its market capitalisation after listing is about 3.37 trillion won.

Performance also improved. K Bank posted net profit of 128.1 billion won in 2024, and recorded cumulative net profit of 103.4 billion won through the third quarter last year, sustaining profit in the 100 billion won range for a second straight year. Customer numbers expanded to 15.53 million as of the end of last year, with loans outstanding reaching 18.4 trillion won and deposits 28.4 trillion won.

After the listing, proving corporate value emerges as a key task. Choi has set a goal of lifting return on equity to around 15 percent. If achieved, the bank plans to pursue shareholder return policies such as dividends or buybacks.

It is also reshaping its business structure. The strategy is to move away from a household loan-heavy structure that exceeds 90 percent and expand lending to sole proprietors and small and medium-sized enterprises, raising the share of corporate loans to around 50 percent by 2030.

At Toss Bank, improved profitability is cited as the reason for the renewed term. Since Lee took office, Toss Bank recorded annual net profit of 45.7 billion won in 2024, achieving its first full-year profit since launch. Cumulative net profit through the third quarter last year rose sharply from a year earlier to 81.4 billion won.

Its loan portfolio has also diversified. It expanded beyond a credit-loan-focused structure into guaranteed loans, and its Together Loan, run in cooperation with Gwangju Bank, grew to 1 trillion won within a year of launch. Asset management service Mokdon Guligi and overseas remittance services also contributed to expanding fee-based income. As of the third quarter last year, Toss Bank’s fee-based income was 129.6 billion won, up 52 percent from a year earlier.

In its second term, Toss Bank’s key task is growth in scale. It is the only internet-only bank that does not offer mortgages, and it is pursuing a strategy to complete its loan lineup by launching mortgage loans. Entry into corporate finance and expanding global business were also presented as mid- to long-term strategies.

KakaoBank already has a stable profit structure. Yoon has led KakaoBank for nearly 10 years since its early days, expanding its platform finance strategy.

Last year, KakaoBank’s net profit reached 480 billion won, its highest on record, and fee-based income also surpassed 1 trillion won. A key feature has been growing fee-based earnings by expanding platform-based financial services and linking partner products. It plans to incorporate artificial intelligence across services and also push global business expansion.

Household lending rules and soundness burden put growth strategy to the test

The management environment surrounding internet-only banks is seen as becoming more challenging than before. Financial authorities are pursuing a plan to raise the target share of lending to mid- to low-credit borrowers to at least 35 percent by 2030, increasing the burden on soundness.

As of the third quarter last year, the average delinquency ratio for the three internet-only banks was 0.71 percent and the non-performing loan ratio was 0.64 percent. That is about twice the levels of the four major banks—KB Kookmin, Shinhan, Woori and Hana—whose average delinquency ratio was 0.34 percent and NPL ratio 0.32 percent over the same period.

With total household lending caps and debt service ratio rules added, it is not easy to continue the previous growth strategy of expanding lending. The view is that the internet-only banks’ business structure leaves them with no choice but to face increased pressure from a slowdown in growth.

As a result, the industry expects the three internet-only banks, having secured stability through renewed CEO terms, to focus more on diversifying profit structures and securing new growth engines.

A financial industry official said, "As a household loan-driven growth strategy has hit its limits, future competitiveness will depend on how quickly they can secure new business models such as expanding corporate lending or platform-based revenue."