Deposit and Loan Growth, Q3 Net Profit of 95.4 Billion KRW
Cumulative Net Profit Reaches 279.3 Billion KRW, the 'Highest'
Mid- to Low-Credit Loans Account for 28.7%...All-Time High
Amid intense investigations, Kakao is facing the biggest crisis since its founding, but KakaoBank dismissed concerns about its operations, stating there is "no concern about business continuity."
On the 8th, Kim Seok, Chief Operating Officer (COO) of KakaoBank, responded during the Q3 earnings conference call to a question about concerns over a possible change in the major shareholder, saying, "We have continued to grow as a separate app from KakaoTalk."
He added, "We will engage in various forms of partnerships with an open mind toward diverse players in the market," and said, "I believe we can continue operations without significant disruption in the future."
In the financial sector, speculation continues regarding KakaoBank's future. If Kakao, which is under suspicion of market manipulation related to SM Entertainment, is confirmed to have violated the Capital Markets Act and receives a fine or higher penalty, there is a possibility that KakaoBank's major shareholder could change. Kakao currently holds a 27.17% stake, making it the largest shareholder of KakaoBank.
According to the Special Act on the Establishment and Operation of Internet-Only Banks, major shareholders must not have been fined or penalized under tax evasion laws, the Act on the Aggravated Punishment of Specific Economic Crimes, the Fair Trade Act, or similar laws within the past five years. Financial authorities conduct regular eligibility reviews of bank major shareholders every six months to determine whether to maintain approval. However, considering future litigation procedures, it is expected to take more than three years for a sale of KakaoBank to materialize.
Record High Cumulative Net Profit in Q3
Separately, KakaoBank continued its strong performance in Q3. The bank announced that its cumulative net profit reached approximately KRW 279.3 billion, a 37.9% increase compared to the previous year, marking an all-time high. The net profit for Q3 was KRW 95.4 billion, up 21.2% year-over-year and 16.3% quarter-over-quarter. Revenue was KRW 656.6 billion, and operating profit was KRW 127.5 billion, increasing 59.4% and 21.9% respectively compared to the previous year.
KakaoBank's interest income in Q3 was KRW 535.9 billion, a 58.9% increase year-over-year, while non-interest income recorded KRW 120.7 billion, up 61.8% from the previous year. The net interest margin (NIM) stood at 2.31% for Q3.
The strong performance was driven by loan growth supported by competitive interest rates. KakaoBank's loan balance in Q3 was KRW 37.1 trillion, an increase of KRW 9.6 trillion from KRW 27.5 trillion the previous year, and deposit balance was KRW 45.7 trillion, up KRW 11.1 trillion from KRW 34.6 trillion the previous year.
In fact, KakaoBank's interest rates were among the lowest in the industry. According to the Korea Federation of Banks, KakaoBank's loan interest rates were 4.55% in July, 4.67% in August, and 4.73% in September, the lowest in the industry. The interest rates on jeonse and monthly rent deposit loans were also the lowest in the industry for three consecutive months: 3.74% in July, 3.79% in August, and 3.77% in September, based on the Korea Federation of Banks' disclosures. As of Q3, the proportion of low-cost deposits was about 56.9%, higher than the banking sector average of 38.3%, which helped reduce funding costs, according to the bank.
The proportion of medium- and low-credit loans in KakaoBank's Q3 portfolio reached a record high of 28.7%, up about 5.5 percentage points from 23.2% in Q3 last year. The balance of medium- and low-credit loans in Q3 was approximately KRW 4.1 trillion, an increase of over KRW 1 trillion compared to about KRW 3 trillion in Q3 last year. Despite the active supply of medium- and low-credit loans, the delinquency rate declined. The Q3 delinquency rate was 0.49%, down 0.03% from 0.52% in the previous quarter.
As of Q3, KakaoBank's customer base totaled 22.28 million, an increase of 2.5 million from the previous year. The average monthly active users (MAU) in Q3 was 17.44 million, a 13% increase year-over-year.
Establishing a Growth Foundation through Overseas Expansion
KakaoBank is accelerating its overseas expansion. Following the announcement in June of forming a consortium to obtain a virtual bank license in Thailand, in September, it achieved its first overseas investment as part of a partnership with Grab, Southeast Asia's largest super app. KakaoBank plans to build a long-term cooperative relationship with Grab. Through this, it aims to lay the groundwork for entering the Southeast Asian market, including Indonesia.
Cooperative finance for small business owners and self-employed individuals is also ongoing. This year, KakaoBank contributed KRW 3 billion to six regional foundations to implement small business cooperative guarantee agreements worth about KRW 50 billion, and since May, it has been supporting 50% of guarantee fees for customers executing loans with personal business guarantees.
A KakaoBank official said, "In Q3, we continued steady growth through balanced loan and deposit management and stable risk control," adding, "We will continue efforts to support financially vulnerable groups, including expanding medium- and low-credit loans and supporting small business owners, based on digital innovation."
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