[Click eStock] "KakaoBank, Low Stock Price Despite High Growth... A Buying Opportunity at Low Price"

[Asia Economy Reporter Kwon Jae-hee] Shinhan Financial Investment maintained its 'Buy' rating and target price of 63,000 KRW for KakaoBank on the 14th.

Shinhan Financial Investment forecasted that KakaoBank's operating profit for the first quarter of this year will reach 97.9 billion KRW, and net profit will be 73.4 billion KRW. This represents an increase of 81.4% and 57.4% respectively compared to the previous year. Despite a decrease in high-credit household loans (credit and overdraft accounts) from January to March due to household loan regulations, the overall loan balance is expected to remain at the same level as the previous quarter due to an increase in jeonse and mid-interest loans.

The overwhelmingly high proportion of unsecured loans, which are highly sensitive to interest rates, also contributed to profit achievement. Additionally, with the expansion of mid-to-low credit handling, the net interest margin (NIM) increased by about 6 basis points compared to the previous quarter, showing the fastest NIM growth rate among listed banks. The proportion of mid-interest loans has expanded to 20%, and the year-end 2022 target of 25% is expected to be easily achieved.

From the second quarter, the growth rate is expected to return to normal levels. Following the relaxation of the loan-to-value ratio (LTV) from mid-March and the easing of jeonse loan regulations, the growth rate is expected to recover to normal levels in the second quarter. The loan growth rate for the second quarter is expected to be 5% compared to the previous quarter. Among the expected loan asset growth rate of 17.3% this year, half is expected to be non-face-to-face mortgage loans. The estimated new loan volume is about 2.5 trillion KRW.

Researcher Kim Su-hyun of Shinhan Financial Investment said, "Maintaining high profit growth of over 50% in the first quarter, profit growth of over 40% in the second quarter, resumption of growth due to regulatory easing from the second quarter, and relatively low National Pension Service shareholding compared to the four major banks provide high potential for supply-demand improvement," adding, "After the adjustment over the past two weeks, this is a buying opportunity at a low price."