Kakao Bank recorded a net profit of 183.8 billion KRW in the first half of this year, marking the highest half-year performance ever, while Kakao Pay failed to return to profitability again in the second quarter.
According to the earnings announcements of both companies on the 2nd, Kakao Bank's operating profit for the first half reached 248.2 billion KRW, an increase of about 52% compared to the previous year. A Kakao Bank official stated, "Despite a decrease in net interest margin (NIM) in the first half and conservative provisioning, we demonstrated growth potential through customer inflow expansion based on inclusive finance and the advancement of the credit scoring system (CSS)." Operating profit for the second quarter was 111.8 billion KRW, and net profit was 82.0 billion KRW, up 50.3% and 43.9% year-on-year, respectively.
The loan balance as of the second quarter was 33.9 trillion KRW, up 16% from the first quarter (29.3 trillion KRW). Balances of all loan products, including credit loans, jeonse and monthly rent loans, mortgage loans, and loans to individual business owners, increased. In particular, the mortgage loan balance in the second quarter was 5.5 trillion KRW, about 3 trillion KRW higher than the previous quarter. New loan disbursements in the second quarter amounted to approximately 3.5 trillion KRW, of which about 60% were for refinancing purposes. It is analyzed that customers moved to Kakao Bank seeking lower interest rates. Although total loans increased, the delinquency rate decreased. The delinquency rate fell by 0.06 percentage points from 0.58% in the first quarter to 0.52% in the second quarter.
The deposit balance was 43.6 trillion KRW, an 8% increase from the previous quarter (40.2 trillion KRW). From July 2020 to June this year, the average annual growth rate of demand deposit account balances per person was 14%, and the number of customers registering Kakao Bank as their payroll account increased by 32% annually. According to the Financial Settlement Service, the market share of interbank transfers was 11%.
Kakao Bank's average monthly active users (MAU) in the second quarter reached 17.35 million, an increase of about 1 million from 16.35 million in the first quarter. This is the first time MAU has exceeded 17 million. The number of customers as of the second quarter was 21.74 million. Notably, middle-aged and older customers aged 40 and above actively joined.
Kakao Pay's sales and transaction volume steadily increased, but it failed to return to profitability due to rising costs and poor performance of subsidiaries. Kakao Pay reported consolidated sales of 148.9 billion KRW and an operating loss of 12.6 billion KRW in the second quarter of this year. Sales increased by 11.0% year-on-year, but the deficit also grew by 0.6%. Net loss also rose by 8.6% during the same period to 6.2 billion KRW. As a result, Kakao Pay has recorded nine consecutive quarters of consolidated losses.
The results were significantly below market expectations (consensus). According to financial information provider FnGuide, Kakao Pay's second-quarter earnings forecast was an operating loss of 8.2 billion KRW and a net profit of 3.1 billion KRW. The operating loss was more than 50% larger than the consensus.
Although transaction volume and sales steadily increased, rising costs and poor subsidiary performance are believed to have hindered profitability. In fact, Kakao Pay has consistently posted profits on a separate basis since the first quarter of 2022. In the second quarter of this year, it recorded an operating profit of 10.1 billion KRW and a net profit of 16.2 billion KRW on a separate basis. Transaction volume also showed an upward trend. As of the second quarter, it reached 34.2 trillion KRW, an 18% increase year-on-year. Transaction volume contributing to sales also rose 19% during the same period, reaching 9.9 trillion KRW.
However, as sales grew, operating expenses also increased. In the second quarter, expenses were 161.4 billion KRW, up 10.1% year-on-year and 4.5% quarter-on-quarter. This is the reason for the widening deficit. Kakao Pay explained that the increase in fees paid to card companies and others related to simple payment services was the cause of the expanded deficit. In the second quarter, Kakao Pay's payment fees rose 19.2% year-on-year to 77.2 billion KRW, accounting for nearly half of total operating expenses.
Going forward, the performance of subsidiaries such as Kakao Pay Securities and Kakao Pay Insurance is expected to be key to improving Kakao Pay's overall results. Kakao Pay stated, "If stock trading volume increases in the second half of the year and subsidiaries improve performance through the launch of travel insurance and self-designed insurance products, results will improve," adding, "Through linkage with financial subsidiaries, Kakao Pay will take a step closer to becoming a lifestyle financial platform for the entire nation."
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