[Into the Stock] The "Slide" KakaoBank Rode

[Asia Economy Reporter Hwang Junho] 'How long will KakaoBank's stock price continue to fall?'

Amid a drop of more than 20% over the past five trading days, investors' doubts about KakaoBank are gradually growing. As the government's regulatory impact and intensified competition narrow KakaoBank's standing, the securities industry's outlook is also turning increasingly cold.

According to the Korea Exchange on the 7th, KakaoBank's stock price has fallen for five consecutive trading days since recording 70,600 won on the 28th of last month, dropping to 58,000 won as of the 6th. It has now become difficult to even maintain the initial public offering price of 53,700 won from its listing on the 6th.

After listing, KakaoBank's stock price reached a peak of 92,000 won within nine trading days, even approaching 100,000 won, but then showed a gradual decline, with the drop accelerating since last month. The market capitalization has decreased by 5.9862 trillion won compared to the peak. As a result, it lost its position as the 10th largest company by market cap in Korea to traditional manufacturers Kia and POSCO.

It is analyzed that the stock price decline is due more to KakaoBank's own negative factors than the recent downturn caused by inflation. In particular, the financial authorities' stance to monitor whether KakaoBank neglects consumer protection under the guise of innovation has shaken its stock price. Financial Services Commission Chairman Ko Seung-beom, shortly after his inauguration last month, emphasized the principle of "same function, same regulation," and during the National Assembly audit on the 6th, stated, "From the perspective of consumer protection, they should be subject to the same regulations as existing financial companies," adding, "Regarding big techs' entry into finance, various considerations must be made for financial stability."

To align with the government's stance, KakaoBank suspended new overdraft loans until the end of the year, which also became a negative factor for its stock price. This measure was initiated as part of efforts to stabilize household debt, one of the current administration's biggest concerns, but investors who were focused only on the launch of 'non-face-to-face mortgage loans' and its growth potential interpreted this as a delay in the mortgage loan service launch.

Hyundai Securities researcher Kim Hyun-ki analyzed, "Since the mortgage loan market is about 2.5 times larger than the unsecured loan market, once the mortgage loan service starts, interest income alone is expected to reach around 1 trillion won."

Amid this dilemma, Toss Bank, which emphasizes innovation, launched on the 5th. Toss Bank appeared armed with more competitive products than KakaoBank, including the highest demand deposit interest rate among commercial banks at 2.0%, the lowest unsecured loan interest rate (2.76%), and the lowest overdraft interest rate (3.26%), causing KakaoBank's stock price to slide again.

The securities industry expresses a preference for traditional banks that can benefit during the interest rate hike period rather than KakaoBank. Goldman Sachs researcher Park Shin-young lowered KakaoBank's target price to 90,000 won on the 4th, stating, "KakaoBank will continue to face overhang issues due to the release of lock-up shares for some time, and no new product launches that could serve as momentum are expected until early next year," adding, "Considering economic recovery and valuation levels, traditional banks are preferred."