[Click eStock] "KakaoBank, Still a Bank... Must Watch Regulation and Lock-up Release"

Policy Authorities Leaning Toward Stability Over Innovation... Regulatory Risk Increases
Continued Lock-Up Shares Also Weigh on Stock Prices

[Asia Economy Reporter Minwoo Lee] Although KakaoBank is differentiated by information technology (IT) and mobile completeness, it is ultimately a bank, so regulation is considered important. The fact that locked-up shares can still flood the market is also seen as a burden.

On the 18th, Daishin Securities newly issued a 'Buy' investment opinion and a target price of 73,000 KRW for KakaoBank. The previous trading day's closing price was 60,100 KRW.

First, KakaoBank's biggest differentiation from traditional banks is its IT and mobile completeness. A representative example is the Financial Technology Research Institute established in April last year, which received an exception to the network separation environment introduced to financial companies for innovative technology development. This institute is researching and developing areas such as authentication, recognition, and security suitable for non-face-to-face financial transactions. At the end of last year, it launched a non-face-to-face real-name verification service using facial recognition, which was designated as an innovative financial service. Going forward, it is expected to build technology and security infrastructure that will lead 100% non-face-to-face sales of all KakaoBank financial products.

The mobile completeness, which enables all loan procedures to be completed through a single application (app), is also a strength. Researcher Hyejin Park of Daishin Securities analyzed, "Considering that financial holding companies with an average of 14 apps require a long time to integrate into a single app, this is a modest yet powerful competitive advantage."

However, since it is ultimately a bank, it is pointed out that it is under the risk of government regulation. Recently, policy authorities have placed more emphasis on stability rather than innovation, such as starting a full review of the commercial bank refinancing loan platform on the 6th and ordering the banking sector to strengthen household loan management. It is expected that KakaoBank will not be free from household loan regulations because it is also a bank. The growth trend of unsecured loans, which was the foundation of high growth, is also expected to slow down. The proportion of secured loans must also increase, but since real estate registry viewing cannot be conducted non-face-to-face, it is difficult to proceed even with the technology.

Researcher Park said, "Since the new Financial Services Commission chairman emphasizes the principle of same function, same regulation, full-scale regulation will begin from now," and predicted, "The breakthrough for KakaoBank will ultimately be the expansion of mid-interest rate loans, which is the founding purpose of internet banks."

The burden of locked-up shares remains due to the stock price rise far exceeding the public offering price. Researcher Park explained, "When the locked-up shares with a one-month lock-up period ended and flooded the market on the 7th, the stock price fell by nearly 6%," adding, "Since the locked-up shares are largest in the order of 6 months, 3 months, and 1 month, there will inevitably be supply and demand pressure until six months after listing."