[Click eStock] "KakaoBank, Moving Toward an AI-Native Bank"

Non-Interest Income Shows Remarkable Growth
Kakao Group Benefits from OpenAI Collaboration

Kakao Bank is expected to defend against the slowdown in net interest income growth caused by lowered loan growth expectations through expanding deposits and managing money market funds (MMF) and revenue securities. Furthermore, it is analyzed that Kakao Group’s strategic partnership with the U.S.-based OpenAI could further strengthen its identity as an AI-based bank.

On the 6th, KB Securities maintained its 'Buy' rating on Kakao Bank with this background and raised the target price by 7.8% to 27,500 KRW. The closing price the previous day was 22,850 KRW.

Kakao Bank posted a separate net profit of 84.5 billion KRW in the fourth quarter of last year, an 11.6% increase compared to the same period the previous year. This exceeded market consensus estimates by 7.4%. Although additional provisions of 25.9 billion KRW were reflected and advertising expenses increased, non-interest income rose significantly to 26.9 billion KRW. This contrasts with the fourth quarter of the previous year, which recorded a non-interest related loss of about 15 billion KRW. This was due to increased profits related to MMF and revenue securities, as well as continued growth in fee income from loan comparisons and advertising.

KB Securities expects Kakao Bank to defend against the slowdown in loan growth by continuing this trend. KB Securities researcher Kang Seung-geon analyzed, "The strategy of quickly securing deposits based on a high proportion of low-cost deposits and channel competitiveness, and expanding non-interest income through MMF and revenue securities management for excess deposits (after using loan funds) is a reasonable response method under the current regulatory environment."

Kakao Group’s strategic partnership with OpenAI is also seen as a long-term positive factor. The day before, Kakao formed an AI business alliance with OpenAI, starting with technical cooperation. OpenAI technology will be applied to KakaoTalk and its own AI service 'Kanana,' and the alliance is expected to be strengthened through future capital investment. Researcher Kang predicted, "Although the alliance between Kakao Group and OpenAI will not have an immediate impact, it will act as an opportunity factor for Kakao Bank’s transition to an AI-native bank, such as its ongoing development of a natural language-based financial calculator."