KakaoBank Turns to Wealth Management as Loan Growth Slows

Its public fund balance has risen nearly fivefold, led by the MMF Box product

The bank is expanding investment services and preparing to enter the retirement pension market

Yoon Ho-young, CEO of KakaoBank, presents the company’s 2026 strategy and direction at the 2026 KakaoBank Press Talk held in Yeongdeungpo District, Seoul, on May 8. <KakaoBank>

[Insight Korea = Park Ji-hun]

KakaoBank Chief Executive Yoon Ho-young is seeking to sustain the company’s growth by putting wealth management at the forefront. Facing a chill in household lending and difficulties in expanding loans to small business owners, the bank is moving to increase noninterest income through the sale of investment products such as funds.

According to the Korea Financial Investment Association on May 6, KakaoBank’s public fund balance stood at 1.7132 trillion won at the end of March. Compared with the end of last June, that was an increase of about 1.4263 trillion won, or 497.1 percent.

KakaoBank’s strong fund sales stand apart from the broader banking industry. Over the same period, the total public fund balance across the banking sector remained largely unchanged at around 90 trillion won. Since the second half of last year, Korea’s stock market has surged, shifting investment demand away from indirect investment products and toward direct stock investing.

Until the first half of last year, KakaoBank’s wealth management business had little presence. The turning point came at the end of June last year with the launch of “MMF Box,” a parking-style investment product. The product invests in funds rated at level 6, or very low risk. KakaoBank mainly attracted customers who wanted returns higher than deposits or installment savings, but who felt uncomfortable taking on risky investments.

At launch, MMF Box advertised an annualized return of 2.90 percent, higher than the benchmark rate of 2.50 percent at the time. According to the Bank of Korea, the one-year time deposit rate in the banking sector at the end of last June was 2.57 percent, while the one- to two-year installment savings rate was 2.80 percent. The product’s relative stability, higher return than deposits and quick liquidity became its growth drivers.

The expansion of KakaoBank’s wealth management business is also a response to the limits of loan-centered growth. With the government strengthening household debt management, expanding household loans is difficult. The slowdown in the real economy also forces banks to handle loans to small business owners more conservatively. In this environment, directing part of deposits into investment products can help secure fee income.

MMF Box carries an annual fee of 0.24 percent. Based on the current fund balance, a simple calculation suggests annual fee income of about 4.1 billion won. The cost ratio is only about 0.01 to 0.02 percent, meaning most of the revenue remains as profit. KakaoBank’s net fee income in the first quarter was 9.9 billion won, up 3.2 billion won from a year earlier.

More Investment Products and a Push Into Retirement Pensions

Since the second quarter, KakaoBank has been accelerating its wealth management business. Late last month, the bank added an “Investment” tab at the bottom of its mobile app and organized it into two menus: “Investment” and “Discovery.”

Through the tab, KakaoBank introduces investment products such as special-sale bonds and commercial paper through advertising partnerships with securities firms. Users can also check market information such as major indexes and exchange rates.

A notable feature is the placement of products that are riskier than MMF products but offer higher expected returns. For example, the Kiwoom Capital 222-3 bond sold by Korea Investment & Securities carries an A credit rating and an ordinary risk grade, and as of the day in question offered a pretax annual yield of 4.40 percent. The strategy is to absorb customers with different investment preferences by expanding beyond stable products into medium-risk products.

KakaoBank has also introduced an AI service to improve access to investment information. Based on Kakao’s proprietary large language model, Kanana, KakaoBank AI provides customized investment information, including Korean and U.S. stock prices, dividend data and portfolio analysis. The goal is to make complex investment information easier to access in a mobile environment and improve customer convenience.

The bank is also preparing to enter the retirement pension market. Since the third quarter of last year, KakaoBank has been hiring staff responsible for retirement pension systems, planning and operations. It is also pursuing approval for a trust business license required to become a retirement pension provider.

At a press conference early last month, Mr. Yoon formally announced the move into the retirement pension market.

“We will become the easiest and most convenient investment partner helping customers build and grow their assets,” he said. “Through the retirement pension service currently under preparation, we will innovate the existing difficult and complex pension management process with KakaoBank’s overwhelming convenience.”

KakaoBank’s wealth management business is emerging as a core growth pillar this year. First-quarter net income reached 187.3 billion won, up 49.9 billion won, or 36.3 percent, from a year earlier. However, much of the increase reflected a 93.8 billion won rise in nonoperating income from the successful listing of Indonesia’s Superbank, in which KakaoBank had previously invested.

Growth in the bank’s core interest income is no longer as strong as before. First-quarter net interest income stood at 373.5 billion won, up only 17 billion won, or 4.8 percent, from the previous quarter. Until 2022, KakaoBank’s net interest income had grown by around 10 percent each quarter. Since then, however, tighter household loan regulations and more conservative lending amid an increase in vulnerable borrowers have led to more frequent quarters of negative growth.

“Despite an uncertain and volatile external environment, we have continued to grow steadily,” a company official said. “We will introduce innovative products and services and establish ourselves as the first-choice essential financial app for customers’ financial lives.”

-This article was translated by ChatGPT. (이 기사는 챗GPT가 번역했습니다.)