[Click eStock] "KakaoBank, 1Q Net Profit Expected to Fall Short of Estimates... Won Loan Growth to Normalize"

[Asia Economy Reporter Hwang Yoon-joo] Daishin Securities maintained a 'Buy' investment rating and a target price of 52,000 KRW for KakaoBank on the 14th, stating that with the launch of mortgage loans and the availability of corporate loans, the growth of won-denominated loans is expected to normalize.

Researcher Park Hye-jin of Daishin Securities stated, "The net profit for the first quarter is expected to fall short of the consensus of 77.6 billion KRW by 14.1%, and the net interest margin (NIM) is expected to improve by +2~3 basis points (0.02%~0.03%) from 1.98% in the previous quarter."

Researcher Park explained, "Won-denominated loans will increase slightly," adding, "Although jeonse and monthly rent loans are growing, the overall household credit loans in the industry showed a contraction in the first quarter."

However, mid-interest rate loans are still expected to show favorable growth. Researcher Park analyzed, "According to media reports, KakaoBank supplied 625.3 billion KRW in mid-credit loans in the first quarter of this year," and "As a result, the balance of mid-credit loans is expected to exceed 3 trillion KRW this quarter, up from 2.46 trillion KRW in the previous quarter."

She also evaluated, "The proportion of total credit loans is expected to rise from 17% to 20%," and "Mortgage loans were launched on February 22 and will contribute significantly to asset growth starting from the second quarter."

Researcher Park stated, "Non-interest income, which includes platform and fee income, is expected to increase due to the expansion of partnerships related to P2P loans such as PeopleFund in linked loans, despite decreasing by 8.4% year-on-year to 12.9 billion KRW."

She added, "There will be no trading evaluation losses as there is almost no scale of stocks or bonds under management," and "Provision costs are likely to decrease compared to the previous quarter as the growth of mid-interest rate loans slows down."