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.
KakaoBank plunges on day of Kakao Pay's market debut
By Lee Min-hyung
By Lee Min-hyung
The stock price of KakaoBank plunged by more than 7 percent Wednesday when Kakao Pay, a mobile payment platform subsidiary of Kakao, made its much-anticipated debut on the benchmark KOSPI.
KakaoBank shares dropped by 7.33 percent or 4,700 won ($3.98) from a day ago and closed at 59,400 won. The lender gained as much spotlight as Kakao Pay had back in August, after being listed on the main bourse for the first time among the nation's internet-only banks.
But the initial public offering (IPO) effect did not last long for the mobile lender. KakaoBank's stock price surpassed the 90,000 won mark in mid-August, but its valuation has since tumbled below 60,000 won per share as of Wednesday.
This situation was attributable to the lender's continuous involvement in an overvaluation controversy. KakaoBank's market capitalization reached 28.22 trillion won, exceeding that of the nation's top-tier financial holding firms, such as KB and Shinhan. The market capitalization of KB Financial Group, the largest financial holding firm here, is around 23.03 trillion won.
Even if KakaoBank boasts the title of the nation's biggest financial firm in terms of market capitalization, its earnings performance has fallen short of that of the conventional banking groups. The relatively weak earnings result is the key reason behind KakaoBank's overvaluation dispute and weakening corporate valuation.
KakaoBank reported a net profit of 52 billion won in the third quarter, up 28 percent from the previous year. But KB Financial Group's net profit during the same period reached 3.77 trillion won. KB Kookmin Bank, the cash cow banking arm of KB, reported a third-quarter net profit of 771.4 billion won, which is about 15 times bigger than that of KakaoBank.
After the earnings report was released, securities firms have downgraded their investment opinion on KakaoBank.
Kyobo Securities revised down its opinion on KakaoBank from “buy” to “hold” based on the less impressive earnings of the lender.
“The conservative investment opinion reflects the possible drop in the growth projection of the nation's mortgage and non-collateral loan market,” Kim Ji-young, an analyst of the securities firm, said.
The analysis came amid tightening lending rules introduced by the financial authorities. The Financial Services Commission stands particularly at the forefront of curbing household debt growth. It has introduced a set of lending rules so that fewer households can take out loans from not just banks, but other financial institutions as well, such as insurers and capital firms.
Despite the plunge in KakaoBank's valuation, Kakao Pay shares went on a rally on the first day of its KOSPI debut. Kakao Pay shares closed at 193,000 won.
Kakao Pay shares rose sharply after trading started Wednesday morning by drawing a bigger-than-expected spotlight from investors. The firm's market capitalization exceeded 25 trillion won, which enabled the company to be ranked as the nation's 13th most-valuable firm.