KakaoBank reports profit and Kakao Pay loss in 3rd quarter

KakaoBank logo at the company office in Yeouido, western Seoul [KAKAOBANK]

KakaoBank reported 78.72 billion won ($55 million) in net profit in the third quarter, beating the 75.4 billion won market consensus.

The July-September figure was up 51 percent on year, according to preliminary earnings released Wednesday.

The company’s revenue was 411.85 billion won, up 49 percent on year.

Earnings were helped by a higher interest margin and an increase in the number of teenage users.

Interest income was 337.2 billion won, higher than the 309.6 billion-won market consensus. The figure soared 65 percent from the same period a year earlier.

Its net interest margin has been climbing along with the rise of the base interest rate.

The margin was 2.56 percent in the third quarter, higher than the 1.98 percent in the same year a year earlier.

Non-interest income was up 1.50 percent on year.

The number of teenage users that have signed up to the bank’s payment and transaction service reached 1.5 million, up 50 percent on year.

The internet-only bank said the proportion of loans for people with weak to middling credit scores rose 6 percentage points to 23 percent so far this year.

The bank’s plan is to increase the sale of mortgage products and loans to individual business operators in the fourth quarter.

Jeonse loan growth slowed due to the sluggish real estate market, while the growth of unsecured loans fell due to the rise of the base rate, said Lee Byeong-gyeon, an analyst at DB Financial Investment, citing difficulties encountered by KakaoBank in a report last month.

Situations “in the market is too difficult,” Lee added.

On the same day, Kakao Pay reported a 4.65-billion-won net loss in the third quarter, more than double the 1.89 billion won net loss reported in the same period a year earlier. The loss in the July-September period was smaller than 8.1-billion-won net loss estimate compiled by FnGuide.

Kakao Pay provides transaction, insurance and securities services.

The company said an increased investment in the new services to be introduced by its subsidiaries, including Kakao Pay Securities, contributed to the net loss.

Its revenue rose 23 percent in the same period to 141.37 billion won, but short of the 156.9-billion-won consensus.

The company said transactions in the third quarter totaled 30.5 trillion won, the first time above 30 trillion won in a single quarter. It added the number of monthly active users jumped 12 percent on year to 22.98 million.

Stocks of Kakao-related companies have been struggling this year, as the popularity of IT stocks nosedived.

Kakao Pay’s stock price fell more than 70 percent from the beginning of the year, while KakaoBank is down around 65 percent.

Kakao Pay’s stock fell more than 10 percent in a single day on Oct. 7 when Citigroup recommended selling of the company’s stock, citing intensified competition from Naver and Apple Pay.

BY JIN MIN-JI [jin.minji@joongang.co.kr]