KakaoBank achieves solid earnings growth in Q1

KakaoBank logo / Courtesy of KakaoBank

KakaoBank CEO stresses restructuring of loan portfolio, cooperation with cryptocurrency exchanges

By Anna J. Park

KakaoBank achieved substantial growth in the first quarter of this year, logging a quarterly net profit of 66.8 billion won ($52.8 million), which is up 43.2 percent year-on-year. The net profit growth was mainly attributed to robust sales of various online-only loan products as well as its platform business and commission fees.

The bank achieved an operating profit of 88.4 billion won, up 63.8 percent year-on-year. The figure is also the highest quarterly profit ever for the bank, which opened in 2017.

The mobile-based lender's innovative online-exclusive loan products have been one of the key reasons behind the solid quarterly growth.

The bank's housing mortgage loan, which was launched in February, attracted younger customers in the first quarter. More than 110 billion won was extended to customers as of the end of March, just a month since the mortgage loan was launched. More than 13 trillion won worth of loans for home rent and jeonse deposits were extended to customers as of the end of March.

Jeonse is a unique housing rental system in Korea under which tenants pay a lump-sum deposit without paying monthly rent, and get the full amount of the deposit back at the end of the contract.

“The bank is expected to continue posting solid growth in loan products, as the lender strengthens its competitiveness by offering low interest rates for customers in the realm of rental and jeonse deposits,” Kim Jae-woo, an analyst at Samsung Securities, said. “The bank particularly meets the needs of customers in their 20s to 40s by making the loan process completely online-exclusive,” the analyst added.

KakaoBank CEO Yoon Ho-young / Courtesy of KakaoBank

At a conference call Tuesday, KakaoBank CEO Yoon Ho-young said the bank will focus on restructuring its portfolio of loans.

“Our plan this year is to increase the ratio of mortgages and home rental loans while pulling down that of credit loans,” Yoon said.

He also said that the bank is considering cooperating with a cryptocurrency exchange.

“Since cryptocurrency is considered to be among the key assets of customers, we are positively looking into ways to provide cryptocurrency-related services or business,” he said.

The mobile-based bank also saw an increase of 38.5 percent year-on-year in profits from its platform business and an 18.8-percent jump in profits from commissions and charges.

The bank has also seen the number of its clients grow, with over 18.6 million customers using the mobile-based lender as the end of the first quarter this year. It is an increase of some 620,000 people from the end of last year. About 80 percent of the entire number of customers are considered active users, as the number of the banking app's monthly active user (MAU) stood at some 15 million.

What is particularly noteworthy is that more than 70 percent of the bank's new customers during the first quarter are over 40. Those in their 40s accounted for 28 percent, followed by those in their 50s at 27 percent, and clients in their 60s at 14 percent. Customers aged over 40 are estimated to account for around 41 percent of the mobile lender's total users.

Meanwhile, the bank's stock price fell nearly to half of its 52-week record high of 94,400 won. The bank's market cap also shrank to 19.6 trillion won, which is less than the half of its earlier market cap of over 40 trillion won logged in August last year. Upon the bank's IPO last August, the internet-only bank once ranked higher than KB Financial Group in terms of market cap, yet continued to slide since.