Kakao Bank's mid-rate lending total surpasses W2tr

Kakao Bank, South Korea’s leading internet-only bank and an affiliate of mobile platform operator Kakao, has supplied more than 2 trillion won ($1.7 billion) in accumulated mid-range interest rate loans, officials said Sunday.

The company has also already achieved its annual target of 1 trillion won and has vowed to sustain its mid-rate lending throughout the rest of the year in a gesture to provide liquidity to people with weak credit ratings.

Kakao Bank’s mid-range lending so far this year came to 1.22 trillion won as of end-September, bringing the aggregated total to over 2 trillion won, the bank said in a release.

In January 2019, the internet-only lender launched a mid-range rate lending program, in line with its earlier promise to provide 4.1 trillion won in total in mid-range rate lending over the next four years -- to diversify the range of lending programs and to alleviate the interest rate burden for low-rate customers who otherwise would turn to high-rate nonmonetary institutions.

While the mid-range interest rate generally refers to 5-15 percent, Kakao Bank’s mid-range rate varied from 3.84 to 9.8 percent per year, depending on products.

In 2018, before Kakao Bank came up with its mid-rate lending program, commercial banks had approved a total of 892 billion won in mid-rate loans.

“Kakao Bank has also signed partnership agreements with nonmonetary institutions in order to provide linked loan products to medium and low-credit rating holders,” the company said in its release.

“We shall sustain efforts to revitalize mid-range interest rate lending and to expand inclusive financing through various channels, according to the policy purpose of authorizing the internet-only bank business.”

By Bae Hyun-jung (tellme@heraldcorp.com)