KakaoBank Doubled Operating Profit Last Year, "Confident in Double-Digit Growth Next Year" (Comprehensive)

Operating Profit of 256.9 Billion KRW in 2021... 110% Increase YoY
Customer Base Grows by 2.55 Million... "No Issues with Growth Drivers"
This Year, Full-Scale Entry into Mortgage and Corporate Loans to Diversify Loan Portfolio

[Asia Economy Reporter Minwoo Lee] KakaoBank posted strong earnings last year, with operating profit exceeding 250 billion KRW, more than doubling compared to the previous year. The surge in customers in their teens and those aged 40 and above appears to have driven this growth. Emphasizing that KakaoBank's greatest competitive advantage is its customer base, the bank expects to achieve double-digit loan growth again this year based on this foundation.

◆Smooth progress across loans, platform, and fees= KakaoBank announced on the 9th that its preliminary results for Q4 last year showed revenue of 309.1 billion KRW and operating profit of 52 billion KRW, representing increases of 45.4% and 109.7% respectively compared to the same period the previous year. Net income for the same period rose 30.3% to 36.2 billion KRW.

As a result, the full-year performance last year recorded revenue of 1.0649 trillion KRW and operating profit of 256.9 billion KRW, up 32.4% and 109.7% respectively from the previous year. Annual net income also increased by 79.6% to 204.1 billion KRW during the same period. The expansion of interest income from loan growth and the growth of platform and fee businesses contributed to strengthening profitability.

Specifically, platform revenue grew 86.8% year-on-year to 93.2 billion KRW, and fee income increased by 13% to 168.6 billion KRW. The proportion of non-interest income within total revenue was maintained above 25%.

In the platform segment, the number of stock account openings and the volume of linked loans with secondary financial institutions grew by 73% and 100% respectively compared to the cumulative figures at the end of the previous year.

Last year, customers opened 2.2 million stock accounts through KakaoBank. Since the service launch, the cumulative number reached 5.2 million accounts by the end of last year. The cumulative amount of linked loans executed increased by more than 2 trillion KRW last year, reaching 4.132 trillion KRW. The cumulative issuance of affiliated credit cards rose to 370,000 cards.

In the fee segment, the volume of check card payments and the number of foreign exchange remittance transactions increased by 23% and 9% respectively compared to the previous year.

Deposit balances rose by 648.69 billion KRW from the end of the previous year to 30.0261 trillion KRW. Low-cost deposits accounted for 58.3%. Loan balances increased by 554.81 billion KRW to 25.8614 trillion KRW during the same period.

In particular, loans for jeonse (key money deposit) and monthly rent deposits and loans to low- and medium-credit customers drove growth. The balance of jeonse and monthly rent deposit loans increased by 465.87 billion KRW due to the rise in youth jeonse loans. Loans to low- and medium-credit customers amounted to 246.43 billion KRW.

The cost-to-income ratio (CIR) fell by 6 percentage points to 45% during the same period. As of the end of last year, the delinquency rate was 0.22%, net interest margin (NIM) was 1.98%, and the capital adequacy ratio (BIS) stood at 35.65%.

◆Customer base increased by 2.55 million in one year... Teens and those over 40 led growth= Meanwhile, as of the end of last year, KakaoBank's customer base reached 17.99 million, an increase of 2.55 million from the end of the previous year. The penetration rate among the economically active population rose to 64%.

Notably, new customer growth was driven by those aged 40 and above and teenagers. Among new customers last year, 60% were aged 40 and above (age distribution of new customers: 40s 26%, 50s 23%, 60 and above 11%). For teenagers, the youth-targeted financial service 'mini' was effective. The cumulative number of 'mini' subscribers reached 1.15 million. Accordingly, KakaoBank's mobile application monthly active users (MAU) rose by more than 2 million to 15.23 million by the end of last year compared to the previous year.

◆Diversifying loan structure is top priority= This year, diversifying the loan structure, which has been concentrated on unsecured loans, is seen as the top priority. Yoon Ho-young, CEO of KakaoBank, said during a conference call, "Expanding into portfolios that traditional banks have, such as jeonse deposit loans, newly launched mortgage loans, and corporate loans, is important to solidify the foundation for loan growth going forward." He added, "Due to external factors such as rapidly increasing household debt, growth this year will be lower than last year, but we still expect mid-teens percentage growth."

KakaoBank plans to launch mortgage loans in the first quarter of this year and subsequently expand loans for small business owners. The bank also intends to continue growth by increasing partnerships with securities firms, card companies, and others. Especially, since the customer base, which is the foundation of its competitiveness, is solid, there is no concern about growth potential. CEO Yoon stated, "The foundation of KakaoBank's growth potential is not the loan volume but the number of customers and the resulting traffic," adding, "This year, both customer numbers and traffic will increase beyond last year's levels, further expanding KakaoBank's influence."

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