A person walks past a wall displaying Toss Bank's logo in the company's headquarters in Gangnam-gu, southern Seoul. (Toss Bank)
Toss Bank has achieved its third consecutive quarter of net profit, fueling anticipation for the internet-only bank's first profitable year in 2024.
The bank announced on Friday a net profit of 14.8 billion won ($10.72 million) in the first quarter, marking a turnaround from the net loss of 28 billion won recorded in the same period last year.
This figure nearly doubled from the 8.6 billion won logged in the third quarter of the previous year, when the online bank first reported a quarterly profit, and has since maintained an upward trajectory.
The bank's customer base also continued its robust expansion, surging by 62 percent on-year to reach 9.86 million by the end of March, and further climbing to hit the 10 million milestone the following month.
Its profitability has significantly improved in the January-March period, with its loan balance soaring by 50 percent on-year to reach 13.85 trillion won, and its deposit balance rising by 30 percent to 28.32 trillion won.
Its loan-to-deposit ratio, a measurement used to assess a bank’s liquidity by comparing its total loans with its total deposits for the same period, rose to 56 percent from 44 percent a year ago.
As a result, net interest income surged to 175.9 billion won, marking a 60 percent increase from the previous year. The net interest margin, a crucial profitability indicator, rose to 2.49 percent from 1.76 percent in the first quarter of the previous year.
Additionally, the bank observed an improvement in its cost-to-income ratio, declining from 44.66 percent in the previous quarter to 28.06 percent, showcasing some of the most efficient management in the entire banking sector.
"While the total number of employees increased, productivity per employee in the first quarter of this year reached 249 million won, more than double the 120 million won in the same period last year, maintaining the highest level in the banking sector," noted a Toss Bank official.
As the banking arm of fintech giant Viva Republica, Toss Bank commenced operations in October 2021. Despite starting off last among the nation's internet-only banks, it has shown rapid growth and is poised to achieve its inaugural annual surplus this year.
Toss Bank CEO Lee Eun-mi vowed to "make 2024 the first year to reach an annual profit" upon her appointment in March, signaling the company's confidence in achieving this feat.
Toss Bank's rapid growth is primarily driven by the success of its innovative financial services, such as commission-free foreign exchange services and the "save and grow" account, which each garnered a million customers in around three months upon launching.
The bank explained that its new housing rental deposit loan products, which garnered approximately 956 billion won within a mere six months since their inception in September, contributed in not just the quantitative expansion but also qualitative enrichment of its loan assets.
While the delinquency rate inched up by 0.02 percent from the previous quarter to 1.34 percent, the Toss subsidiary attributed this to its expansion of mid-to-low credit loans, which reached 36.33 percent, the highest among all internet-only lenders.
The online lender's financial stability barometer also improved with the application of the Bank for International Settlements' Basel III framework starting this quarter. Toss Bank's BIS capital adequacy ratio, which measures the proportion of a bank’s capital to its risk assets, rose to 14.87 percent, up 2.11 percent from the previous quarter.
"Toss Bank has achieved profitability for the past three consecutive quarters and is expected to continue on a stable growth trajectory," said the Toss Bank official, adding, "We plan to sustain growth by firmly establishing soundness indicators and continuing to embrace mid-to-low credit borrowers."
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