KT Corp is pushing ahead with an IPO for its digital banking unit K Bank, seemingly overcoming headwinds that have derailed rival SKT's equity market listings.

The 7-year-old bank has filed for an IPO later this year that could raise up to $1 billion, Bloomberg reported.

Through its credit card subsidiary BC Card, KT has a 33.7% stake in K Bank, one of three online-only banks in Korea.

Figure 1: KT's ambitious plan is to transition from telco to digital platform operator.
(Source: Newscom/Alamy Stock Photo)

It narrowed its net loss in 2021 to 6.5 billion won (US$4.96 million) from KRW106 billion ($80.6 million) in 2020, KT said in an annual filing. K Bank had 7.2 million account holders, total deposits of KRW11 trillion ($8.4 billion) and a KRW7 trillion ($532 million) loan book at the end of December 2021.

KT says financial services revenue, most of it from BC Card, accounted for 14.5% of operating revenue in 2021.

This is all part of KT's ambitious plan to transition from telco to digital platform operator, developing fresh revenue streams from content, ecommerce, financial services and cloud as well as traditional network services (see KT plows $9B into digital diversification).

A strategic partnership

In its other big financial play this year, KT sealed a strategic partnership with the Shinhan Financial Group, acquiring a 2.1% stake for KRW437.5 billion ($330 million), with its partner taking an equivalent value share in KT.

Shinhan, one of Korea's biggest financial houses, is also a shareholder in K Bank, along with other local heavyweights including Woori Bank and Hanwha Life Insurance.

KT and Shinhan say they have already planned 23 joint projects, with KT combining its AI, metaverse, NFT, big data and robotics technologies with Shinhan's banking, brokerage and credit card data.

Kakao Bank, a unit of Kakao – Korea's biggest messaging app, raised $2.2 billion in Asia's first digital bank IPO last August, immediately making it the country's largest lending bank. Today it has a market cap of KRW14.9 trillion ($11.3 billion), roughly equal to that of Shinhan and other local financial leaders.

A Morgan Stanley report last August valued K Bank at around $6.9 billion. It said the company was closing the gap on Kakao Bank but needed to grow its loan business.

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In contrast to KT's bullish expectations, SK Telecom canceled two IPOs of non-core business units in May after losing investor confidence (see SKT cybersecurity spin-off pulls plug on $2.8B IPO). It had been aiming to raise KRW3.6 trillion ($2.7 billion) from cybersecurity unit SK shieldus and up to KRW197 billion ($149.9 million) from mobile app store One Store.

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— Robert Clark, contributing editor, special to Light Reading