Lee Min-hyung joined The Korea Times in 2014 and has worked as a journalist mainly in Korea’s finance, tech and automotive industry. He specializes in content creation, breaking news and in-depth analysis currently on transportation and mobility. You can reach him via mhlee@koreatimes.co.kr.
Kakao Bank achieves earnings surprise on contactless transactions
By Lee Min-hyung
By Lee Min-hyung
Kakao Bank has surprised the market with an outstanding earnings report, as the nation's first internet-only bank dodged the coronavirus shock due to its expertise in contactless mobile transactions.
The online lender reported a net profit of 18.47 billion won ($15 million) in the first three months from January 2020, a whopping rise of 181.3 percent from the previous year. This was in contrast to earnings declines from some of the major commercial lenders here, such as Woori Bank and NongHyup Bank.
Most other big banks also failed to report noteworthy growth in their first-quarter net profits, hit hard by the COVID-19 shock on the local economy. But as Kakao Bank does not operate offline sales offices, the lender has minimized shock from the pandemic crisis.
On top of the virus factor, Kakao Bank was able to show a different path from traditional lenders, as it succeeded in expanding its interest rate profits during the period, according to the lender.
“Our loan portfolio has increased steadily, so we achieved solid growth in the interest income,” Kakao Bank CEO Yoon Ho-young said in a recent online press conference.
Kakao Bank reported 84.4 billion won in its first-quarter net interest income, which is a growth of more than 50 percent from 54.5 billion won in the previous year.
The company also improved its quarterly commission loss, compared to a year ago. Kakao Bank reported 3.1 billion won in net commission loss during the first quarter, and this was noteworthy improvement from 14.8 billion won from the previous year.
“Kakao Bank is expected to continue improving commission profitability in the second quarter, generating more commission income by launching affiliated credit cards with four card firms,” an official from the lender said.
Kakao Bank and K bank, the country's first two internet-only banks, both started offering services in 2017. But with the latter facing business setbacks due to failure in capital financing, the Kakao affiliate has dominated the market.
The lender's growth outlook remains optimistic, as it can take advantage of its 50 million daily active user base from KakaoTalk, the nation's dominant messenger app.
Against the backdrop, Kakao Bank has a competitive edge against other commercial lenders in terms of marketing. The bank now has more than 10 million users.