Internet bank KakaoBank is posting a higher net interest margin (NIM) than commercial banks. Unlike savings banks, it is treated in practice the same as commercial banks and carries lower risk, yet it is engaging in excessive interest-based lending.
According to the financial industry on the 17th, KakaoBank's NIM for the second quarter of this year was 2.13%, up 0.13 percentage points from the first quarter. NIM shows how much profit a bank has earned by deploying its funds into loans and other assets. KakaoBank's NIM exceeds that of commercial banks. In the second quarter of this year, KB Kookmin Bank posted 1.74%, Shinhan and Hana Bank 1.61%, and Woori Bank 1.51%.
Some of the money earned through interest-based lending is being spent on executives and employees. CEO Yun Ho-young received 7.29 billion won in compensation in the first half alone. He received 349 million won in salary and 536 million won in bonuses, and pocketed 7.29 billion won through exercising stock options. Counting salary and bonuses alone, his 885 million won exceeds that of the heads of Woori, Hana and KB banks. Employees' average pay also reached 63 million won in the first half of this year and 125 million won on an annual basis last year.
Even so, KakaoBank is intent on expanding compensation. After holding its first full-day strike on the 31st of last month, the bank's union carried out a second strike on the 14th. The union is also considering industrial action that could directly affect banking operations. Notably, KakaoBank announced on this day that, to enhance shareholder value, it would cancel 270,000 treasury shares and use the remaining 262,334 treasury shares for executive and employee compensation. KakaoBank explained that "the lending characteristics, such as loans to mid- to low-credit borrowers and self-employed individuals, are reflected in the NIM."
