KakaoBank's Growth Continues... 3Q Cumulative Net Profit 'Record High'

The Proportion of Medium and Low Credit Loans Also Hits an All-Time High... 28.7%

Yoon Ho-young, CEO of Kakao Bank

Despite Kakao facing its greatest crisis since its founding due to intensive investigations, Kakao Bank continued its strong performance by recording its highest-ever cumulative net profit in the third quarter.

On the 8th, Kakao Bank announced that its cumulative net profit reached approximately 279.3 billion KRW, a 37.9% increase compared to the previous year, marking an all-time high. The third quarter net profit was 95.4 billion KRW, up 21.2% year-on-year and 16.3% quarter-on-quarter. Revenue was 656.6 billion KRW, and operating profit was 127.5 billion KRW, increasing 59.4% and 21.9% respectively compared to the previous year.

Kakao Bank’s interest income in the third quarter was 535.9 billion KRW, a 58.9% increase year-on-year, while non-interest income recorded 120.7 billion KRW, up 61.8% from the previous year. The net interest margin (NIM) stood at 2.31% for the third quarter.

The strong performance of Kakao Bank was driven by loan growth enhanced by competitive interest rates. The loan balance in the third quarter was 37.1 trillion KRW, an increase of 9.6 trillion KRW from 27.5 trillion KRW the previous year, and the deposit balance rose by 11.1 trillion KRW to 45.7 trillion KRW from 34.6 trillion KRW the previous year.

In fact, Kakao Bank’s interest rates were among the lowest in the industry. According to the Korea Federation of Banks, Kakao Bank’s loan interest rates were the lowest in the industry at 4.55% in July, 4.67% in August, and 4.73% in September. The interest rates on jeonse and monthly rent deposit loans were also the lowest in the industry for three months based on the Korea Federation of Banks’ disclosures: 3.74% in July, 3.79% in August, and 3.77% in September. As of the third quarter, the proportion of low-cost deposits was about 56.9%, higher than the banking sector average of 38.3%, which the bank explained helped reduce funding costs.

The proportion of mid- to low-credit loans in Kakao Bank’s third quarter reached a record high of 28.7%, up about 5.5 percentage points from 23.2% in the third quarter of last year. The balance of mid- to low-credit loans in the third quarter was approximately 4.1 trillion KRW, increasing by more than 1 trillion KRW from about 3 trillion KRW in the third quarter of the previous year. Despite the active supply of mid- to low-credit loans, the delinquency rate declined. The third quarter delinquency rate was 0.49%, down 0.03% from 0.52% in the previous quarter.

As of the third quarter, Kakao Bank’s customer base was 22.28 million, an increase of 2.5 million compared to the previous year. The average monthly active users (MAU) in the third quarter was 17.44 million, a 13% increase year-on-year.

Kakao Bank is also accelerating its overseas expansion. Following the announcement in June of forming a consortium to obtain a virtual banking license in Thailand, in September it completed its first overseas investment as part of a partnership with Grab, Southeast Asia’s largest super app. Kakao Bank plans to establish a long-term cooperative relationship with Grab, laying the foundation for entry into the Southeast Asian market, including Indonesia.

Financial cooperation for small business owners and self-employed individuals continues as well. This year, Kakao Bank contributed 3 billion KRW to six regional foundations to implement a small business win-win agreement guarantee worth about 50 billion KRW, and since May, it has been supporting 50% of the guarantee fees for customers executing personal business guarantee loans.

A Kakao Bank official said, "In the third quarter, 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 mid- to low-credit loans and supporting small business win-win initiatives, based on digital innovation."

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