[Click eStock] "KakaoBank Maintains Growth in Interest Income and Platform Sectors"

Increase in loan loss costs as mid-interest rate loans expand... Q3 earnings below consensus
Daishin Securities "Maintain KakaoBank target price at 73,000 won"

[Asia Economy Reporter Gong Byung-sun] KakaoBank posted third-quarter earnings this year that fell short of market consensus due to increased expenses. However, it showed steady growth not only in interest income but also on its platform.

According to Daishin Securities on the 3rd, KakaoBank's third-quarter revenue this year rose 36.64% year-on-year to 277.3 billion KRW, and operating profit increased 58.48% over the same period to 71.2 billion KRW. Net profit showed a 28.02% year-on-year increase to 52 billion KRW. Both operating profit and net profit were below consensus by 20.89% and 31.8%, respectively.

The increased expenses affected the earnings. As mid-interest-rate loans expanded, credit loss expenses in the third quarter rose 166.1% year-on-year to 29.6 billion KRW. Selling and administrative expenses also increased 38.2% during the same period to 67.3 billion KRW. The rise in selling and administrative expenses appears to be due to brand marketing costs related to the listing and call center expenses. However, KakaoBank explained that these costs were limited to the third quarter only.

Nevertheless, interest income maintained its growth trend. Interest income in the third quarter increased 50.7% year-on-year to 162.6 billion KRW. Park Hye-jin, a researcher at Daishin Securities, explained, "With a significant increase in mid-interest-rate loans, loan interest rates rose, and the net interest margin (NIM) reached 1.92%. KakaoBank's mid-interest-rate loans reached about 1.1 trillion KRW, rising to 13.4% of total unsecured loans."

Non-interest income, including platform revenue, also grew. KakaoBank's non-interest income rose 271.3% year-on-year to 21 billion KRW. This was due to increased fee income from higher check card transaction volumes and overseas remittance counts. Additionally, with Lotte Card newly incorporated, affiliated credit cards increased, and securities accounts expanded, leading to growth in platform fee income.

Accordingly, Daishin Securities maintained its investment opinion of "Buy" on KakaoBank and kept the target stock price at 73,000 KRW. The closing price on the previous day was 64,100 KRW.

This content was produced with the assistance of AI translation services.