Toss Bank mulls introducing house mortgage loans

Hong Min-taek, CEO of Toss Bank, the internet-only banking arm of fintech giant Viva Republica, said Tuesday that launching a house mortgage loan service is inevitable for the firm, but that it will wait for the right timing amid the government's efforts to curb household debt.

Currently, Toss Bank is the only bank among the three internet-only banks, which also include KakaoBank and K-Bank, that does not offer house mortgage loans.

KakaoBank and K-Bank account for 2 percent of the total home mortgage market but their presence is growing at a fast pace.

The two online lenders' combined outstanding home mortgage loans approached 21 trillion won ($15.78 billion) in the first half of the year, increasing by more than 5 trillion won from the end of last year.

Korean financial authorities have recently intensified their pressure on internet banks, saying that the sale of home mortgage loans by these banks contradicts their founding principles, which were centered on providing medium-interest rate loans for low-to-medium credit borrowers.

"The market for house mortgage loans is big and I believe that providing this service is essential. However, the launch will depend on its alignment with the macroeconomic environment," Hong said during a press conference held at the Conrad Seoul in Yeouido, Seoul.

"As a latecomer, our primary mission is to address the issues faced by existing users and devise innovative solutions,” Hong added.

He further noted that the precise timing for the launch remains undetermined.

Hong also talked about the firm's new loan product for two different types of rent, "wolse" and "jeonse," which was launched on Tuesday.

In Korean, wolse refers to monthly rent, where tenants pay a deposit along with monthly rent to reside in the property. On the other hand, jeonse allows tenants to rent a home without making monthly payments to the landlord. Instead, the tenant pays a lump-sum deposit.

“The key differentiating factor of our new product lies not only in its convenience but also in securing the safety of the deposit after taking out the loan. This sets it apart from the products offered by traditional banks,” said Park Shin-gun, Toss Bank’s housing loan product head, during the press conference.

Toss Bank's new loans come in three distinct categories: general, youth, and multi-child family, allowing customers to secure loans of up to 220 million won.

Additionally, Toss Bank has joined forces with the Korea Housing Finance Corporation, to enable clients to conveniently apply for rental deposit protection guarantees directly through the Toss Bank app.

Furthermore, Toss Bank's rental deposit loan program encompasses a notification service for property registration changes.

This service empowers tenants by promptly alerting them to any alterations to the property they reside in, thereby enhancing their ability to respond effectively.

During the conference, the CEO of Toss Bank also discussed the company's aspirations for global expansion.

"In the past 23 months, our rapid growth and innovative services have garnered global attention. We are actively exploring collaboration opportunities," Hong said.

In September last year, Hong met with Bui Van Hai, the deputy head of the Banking Safety Supervision Division at the State Bank of Vietnam and rumors have been circulating about the firm’s possible expansion into Vietnam.

However, Hong refrained from disclosing specific countries or timelines for the firm's expansion on Tuesday.

Meanwhile, Toss Bank has reported its first monthly net profit of approximately 1 billion won in July since its launch in October 2021.

With the improving performance, Toss Bank's CEO anticipates that the bank will continue to see profit in the third quarter.

“Our ability to embrace low-to-medium credit borrowers, accumulate reserves, and achieve profitability is indeed remarkable. We anticipate maintaining this level of growth and profit expansion in the upcoming third quarter and the latter half of the year,” Hong said.