[Click eStock] "KakaoBank, Outstanding Competitiveness Amid Global Banking Crisis"

Hana Securities maintained its investment opinion of 'Buy' and a target price of 35,000 KRW for KakaoBank on the 22nd.

KakaoBank's estimated net profit for the first quarter is about 82 billion KRW, expected to increase by 22.3% compared to the same period last year, although it is likely to slightly miss consensus. Jeonse and monthly rent loans, which accounted for most of last year's loan growth, experienced negative growth in the first quarter due to worsening market conditions, but total loan growth is expected to somewhat recover to about 3.4% as mortgage loans increased significantly.

However, net interest margin (NIM) is expected to decline by about 18 basis points due to growth focused on relatively low-interest mortgage loans, a drop in market interest rates, and increased funding costs from expanded deposits, resulting in a somewhat larger NIM decline.

First-quarter selling and administrative expenses are projected at 106 billion KRW, with an operating profit expense ratio slightly below 40% at 39.2%. Following the fourth quarter of last year, additional provisions reflecting future economic outlooks are expected to increase first-quarter loan loss expenses to about 56 billion KRW. However, ordinary loan loss expenses are expected to remain below 50 billion KRW, indicating that asset quality is not deteriorating despite the expansion of loans to low- and medium-credit borrowers. The delinquency rate for low- and medium-credit loans in the first quarter is estimated to be around 1%, which is lower than that of competing internet banks K Bank and Toss Bank.

Choi Jung-wook, a researcher at Hana Securities, analyzed, “KakaoBank decided on a share repurchase of 13 billion KRW and a cash dividend of 80 KRW per share (total shareholder return ratio of 19.5%) to enhance shareholder value. This exceeds expectations, and as of the end of 2022, it holds overwhelming capital strength and deposit competitiveness with a common equity tier 1 ratio of 36%, demand deposit ratio of 61.3%, and time deposit ratio of 38.1%.”

Researcher Choi added, “This is a factor that makes KakaoBank stand out even more amid the current global banking crisis.”