Record-Breaking Performance KakaoBank, Will It Succeed in Conquering the Untapped Thai Market?

Yoon Ho-young, CEO of Kakao Bank (left), and Arsid Nandawidya, CEO of SCBX, are posing for a commemorative photo at the signing ceremony of the "Business Agreement for Obtaining a Virtual Bank License in Thailand," held on June 15 last year at the SCBX headquarters in Bangkok, Thailand.

KakaoBank, which recorded unprecedented performance, is actively expanding into Southeast Asia, including Thailand and Indonesia, beyond Korea. In particular, as KakaoBank, which achieved a success story as an internet-only bank by targeting the Thai market, considered a barren land by domestic financial companies, attention is focused on whether it will also succeed in overseas expansion.

Full-scale Expansion into Southeast Asia including Thailand

On the 8th, during the Q1 earnings conference call, KakaoBank announced, "China's WeBank has joined the consortium of Thailand's SCBX and KakaoBank as a partner," adding, "Through consultations among the three companies, we plan to submit the related license application to the Bank of Thailand by August."

Since June last year, KakaoBank has partnered with SCBX, the financial holding company that owns Siam Commercial Bank (SCB) in Thailand, aiming to enter the Thai version of an internet-only bank. Having firmly established its position as an internet-only bank domestically, KakaoBank plans to seek business expansion through overseas entry. Especially in Thailand, digitalization is accelerating across industries, and last year, the Bank of Thailand announced plans to issue new digital bank licenses.

Whether KakaoBank will succeed in entering Thailand is also a matter of interest in the domestic financial sector. Thailand has long been considered a "barren land" for domestic financial companies. During the 1997 Asian financial crisis, domestic banks that had entered Thailand withdrew en masse despite requests from the Thai government to remain, which strained relations and made subsequent entry into Thailand difficult. A senior official in the banking sector said, "The difficulty for overseas subsidiaries lies in building relationships with local authorities, which is really not easy."

KakaoBank is also knocking on the door of Indonesia. It is currently collaborating with Superbank, a local Indonesian corporation, and plans to announce details soon. A KakaoBank official stated, "Based on the service capabilities and experience accumulated so far, we are negotiating to ensure that KakaoBank's philosophy and characteristics are reflected locally in Indonesia."

Q1 Performance Soars... Effects of Mortgage Refinancing and More

KakaoBank is also recording strong performance domestically. KakaoBank's Q1 net profit was 111.2 billion KRW, up 9.1% year-on-year and 46.9% quarter-on-quarter, marking the highest quarterly performance. Operating profit was 148.4 billion KRW, an 8.8% increase from the previous year. The bank explained that this was the result of balanced growth across all sectors, including continuous customer inflow, loans and deposits, fees, and platform revenue.

KakaoBank's loan balance reached 41.3 trillion KRW in Q1, driven by growth centered on refinancing. This is an increase of 2.6 trillion KRW compared to the end of last year. Specifically, the mortgage loan balance was 11.8 trillion KRW at the end of Q1, up 2.7 trillion KRW from 9.1 trillion KRW at the end of last year. Jeonse and monthly rent loan balances increased by 200 billion KRW from 12.2 trillion KRW to 12.4 trillion KRW during the same period.

It was particularly analyzed that the number of people seeking KakaoBank for "refinancing purposes" to reduce interest expenses has significantly increased. Last year, 50% of new mortgage loan originations were for refinancing, and this proportion rose to 62% in Q1 this year. For jeonse deposit loans, the refinancing ratio reached 45%.

KakaoBank's deposit balance in Q1 increased by 5.8 trillion KRW from the previous quarter to 53 trillion KRW. Demand deposits increased by more than 4 trillion KRW. The balance of group accounts rose sharply by about 1 trillion KRW compared to the previous quarter, driving the expansion of low-cost deposits. Due to the increase in demand deposits, low-cost deposits accounted for 56.8% of KakaoBank's deposits in Q1.

Based on this growth, KakaoBank plans to continue practicing inclusive finance for financially vulnerable groups such as middle- and low-credit borrowers and small business owners. A KakaoBank official said, "By reflecting changes in internal and external conditions in risk management capabilities and advancing the credit scoring system (CSS), we have caught the 'two rabbits' of inclusive finance and soundness simultaneously," adding, "We will continue sustainable growth together with customers based on mutual growth and inclusive finance."