Focus on Growth Stocks Instead of Bank Stocks
Steep Interest Rate Hikes Increase Discount Rates
Growth Momentum Also Slows
Stock Price Down 66.02% This Year
[Asia Economy Reporter Hwang Yoon-joo] KakaoBank's plunge is alarming. It is continuously falling due to the impact of the U.S. Federal Reserve's (Fed) aggressive tightening policy. This is because it was spotlighted as a 'growth stock' following its listing in August last year.
According to the Korea Exchange on the 1st, KakaoBank's stock price fell 26.56% in September, dropping from 27,300 KRW to 20,050 KRW. This decline was steeper than the KOSPI index's drop of -12.81% during the same period.
The stock price trend this year has been even more dismal. It plummeted 66.02% from 59,000 KRW at the beginning of the year to 20,050 KRW. During this period, the KOSPI and KOSDAQ indices fell by -27.61% and -34.95%, respectively. KakaoBank's decline was even greater than that of the medical precision sector (-42.87%), which was the sector with the largest drop among the KOSPI indices compiled by the Korea Exchange.
There are two main reasons why KakaoBank's stock price is struggling. First, KakaoBank is evaluated as a 'growth stock' rather than a bank stock. Even before its listing, it emphasized being a financial 'platform' rather than a traditional bank. Under the interest rate hike trend, the discount rate increases, making its stock price defense weaker than that of traditional bank stocks.
Above all, doubts about its growth potential are a major issue. In fact, after forcibly handling loans to low- and medium-credit borrowers, KakaoBank has lost its dominance in the high-credit loan market, and the performance of its nationwide expanded mortgage loans is also falling short of expectations amid an unfavorable environment.
Researcher Eun Kyung-wan from Shinhan Financial Investment pointed out, "As of the end of Q2, the proportion of credit loans to low- and medium-credit borrowers was 22.2%, slightly below the 25.0% target set at the end of 2022. Moreover, it will not be easy to guarantee high growth rates for the personal business loans scheduled to be launched in the second half."
The Q3 earnings outlook is also bleak. Researcher Eun forecasted KakaoBank's Q3 net income attributable to controlling shareholders to be 77.1 billion KRW, a 48.3% increase compared to the same period last year. However, this figure is 6.7% below the consensus.
Eun evaluated, "Net interest margin (NIM) is estimated to rise by 6?8 basis points, but the loan growth rate is only about 3%, similar to the previous quarter, and platform and fee income are stagnating. The selling and administrative expense ratio has not yet shown signs of stabilizing downward due to reasons such as workforce expansion."
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