[Edaily Reporter Kim Se-yeon ] Kbank, an internet-only bank, is focusing on expanding its low-cost products—parking accounts and group accounts—in the fourth quarter. This is because, although its loan interest rates are higher than those of its competitor KakaoBank Corp., its deposit interest rates are also set higher, resulting in a lower net interest margin (NIM).

According to financial industry sources on the 8th, Kbank’s cumulative net interest margin (NIM) for the third quarter of this year stood at 1.60%, up 0.01 percentage points from the first half of the year (1.59%). KakaoBank Corp.’s third-quarter NIM also rose to 2.15%, up 0.02 percentage points from the previous quarter (2.13%). While both banks saw improvements in their net interest margins, Kbank still faces an urgent need to reduce the cost of deposit funding.

The funding conditions for both banks are reflected in their average deposit rates. On a cumulative basis through the third quarter, Kbank’s average deposit rate was 2.31%, 0.43 percentage points higher than KakaoBank Corp.’s (1.88%). During the same period, the average loan rate was 4.46% for Kbank and 4.41% for KakaoBank Corp. While the difference in loan rates is not significant, there is a considerable disparity in the cost of securing deposits.

Consequently, the cumulative net interest margin stood at 2.15 percentage points for Kbank and 2.53 percentage points for KakaoBank Corp. However, it is difficult to fully explain a bank’s interest profitability based solely on the net interest margin. The net interest margin (NIM) is also influenced by funding costs other than deposits, investment income from securities, the loan-to-deposit ratio, and asset composition.

Kbank faces the challenge of securing profitability while offering competitive interest rates to customers. While raising deposit rates is advantageous for attracting customers and funds, failing to manage the secured funds at an appropriate rate of return can lead to pressure on the interest margin.

Deposits from virtual asset service providers (VASPs) also need to be examined within this funding and investment structure. Kbank’s cumulative NIM for the third quarter, excluding the impact of VASPs, was 1.92%, down 0.04 percentage points from the first half of the year (1.96%). This trend contrasts with the slight increase in the general NIM over the same period, indicating that interest profitability, when excluding factors related to virtual asset service providers, has weakened somewhat.

However, deposits from virtual asset service providers offer the advantage of raising funds at a lower cost than time deposits. A Kbank official explained, “While the interest rate on one-year time deposits is currently in the 3% range, the rate paid on Upbit deposits is in the low 2% range,” adding, “Upbit deposits are also considered demand deposits, so compared to time deposits, they represent a relatively low-cost source of funds.”

The key issue is stability. Since deposits from virtual asset service providers are influenced by market transactions and investor fund movements, it is difficult for banks to independently control their volume. To compensate for this, it is important to steadily secure deposits based on everyday financial transactions.

Kbank plans to broaden its deposit base through products such as parking accounts and group savings accounts. A Kbank official said, “Expanding low-cost deposits, such as Plus Box and group savings accounts, will help lower funding costs and improve the net interest margin (NIM).”