Anna Jiwon Park has been covering the politics at The Korea Times since the summer of 2024, when she joined the press pool for the Office of the President in Korea. Prior to that, she spent about five years reporting extensively on financial markets, regulatory authorities and the financial industry. She joined The Korea Times in 2019 after spending eight years as a broadcast journalist at Arirang TV, Korea’s leading global broadcaster, covering politics, defense and culture.
KakaoBank achieves record $267 mil. net profit in 2023
The headquarters of KakaoBank in Seongnam, Gyeonggi Province / Newsis
By Anna J. Park
Robust earnings driven by expansion of loan refinancing services
KakaoBank posted a record-high annual net profit last year, thanks mainly to the digital bank's continued success in attracting new customers, which in turn led to stable increases in both loans and deposits.
The internet-only bank said on Wednesday that 2023 net profit jumped 34.9 percent year-on-year to 354.9 billion won ($267 million).
The bank's operating profit stood at 478.5 billion won, a 35.48 percent year-on-year increase.
Behind the digital bank's robust performance was its growing interest income. KakaoBank's annual interest income amounted to 2.04 trillion won last year, a whopping increase of 58.3 percent compared to the previous year.
Actually, the bank's net interest margin (NIM), a representative profitability indicator for banks, stood at 2.36 percent for the fourth quarter of last year, 0.47 percentage points lower than the same period of the previous year. Despite the fall in NIM, the bank succeeded in achieving a major increase in interest income thanks to the rapid growth of the total loan size. KakaoBank's loan balance stood at 38.7 trillion won at the end of last year, a 38.7 percent rise from 2022.
The logo of KakaoBank is displayed at its headquarters in Seongnam, Gyeonggi Province. Courtesy of KakaoBank
Particularly, KakaoBank is attracting customers seeking to switch their loans from other lenders offering higher interest rates. About half of the housing mortgage loans executed by KakaoBank last year were for such refinancing purposes. With the government strongly supporting easier refinancing to reduce the interest burden on households, the ratio of refinancing out of the digital bank's mortgage loan balance soared to 67 percent last month.
Besides the housing mortgage loan refinancing, the digital bank was also popular among the 53 financial institutions participating in the credit loan refinancing service that began last May. KakaoBank's market share in the credit loan refinancing service was 14.7 percent, as of mid-January.
"The number of customers seeking KakaoBank for refinancing their existing loans is significantly increasing," an official from KakaoBank said.
The bank's deposits are also showing a steady growth. As of the fourth quarter of last year, KakaoBank's deposit balance reached 47.1 trillion won, a 35 percent jump compared to the year before.
The influx of middle-aged and older customers is also noticeable. With the expansion of loan refinancing services, there has been a significant rise in the number of new customers in their 40s, 50s, 60s and above.
The number of the internet-only bank's customers reached 22.84 million in the fourth quarter of last year, an increase of 2.42 million compared to the same period the previous year. Monthly active users increased as well, from 16.1 million to 17.58 million during the same period.
"As our customer base expands, the bank is now solidifying its position as a 'must-have financial app' that everyone, regardless of age or gender, uses frequently," the official explained, adding that the digital bank plans to introduce new innovative products, including foreign exchange services.