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By Lee Min-hyung
Kakao Bank achieved record earnings in the first quarter of 2021 by generating a net profit of 46.7 billion won ($41.24 million), up 152 percent from last year, on stable growth of its interest margin.
The stellar earnings performance has raised hopes of a successful initial public offering (IPO) slated for the latter half of this year. The internet-only lender's pre-IPO valuation is about 33 trillion won, exceeding the market capitalization of other major commercial banking groups here.
In a recent regulatory filing, the company said its solid growth was driven by a rise in interest and commission profits. The firm's net interest profit came in at 129.6 billion won in the first quarter. As of the end of March, Kakao Bank's net interest margin (NIM) also reached 1.87 percent. The NIM is a key barometer of a bank's profitability.
"We were able to report stable growth in the first quarter, as the number of our users were on the rise and our platform business reported solid growth," an official at the mobile lender said.
The number of Kakao Bank users exceeded 16 million as of the end of March, up by 700,000 from the end of 2020, according to the lender. Kakao Bank, which started its business in 2017, attracted the attention of the market mostly from customers in their 20s and 30s with its easy-to-use platform.
The company also spoke highly of its widening user base, particularly among the older generation. By age group, nearly 10 percent of the population aged over 50 were Kakao Bank users here.
Kakao Bank also shared its plan to expand its loan product portfolio, as part of its key growth strategy this year.
To supply more loans to those with middle to low credit scores, the lender lowered its loan interest rate by 1.2 percentage points to these groups from May 12. The company also lowered the line of credit for customers with high credit scores, in order to provide more loans to lower-credit groups.
"We decided to increase the line of credit to 70 million won from the previous 50 million won for those with mid-credit scores," the official said.
Kakao Bank CEO Yoon Ho-young earlier shared its plan to launch mid-interest-rate loan products targeting groups with mid- to low-credit scores sometime in the latter half of this year.
The mobile lender did not specify the exact volume of the products, and said it would confirm details later due to coronavirus-sparked financial uncertainties here.
Kakao Bank provided 56.7 billion won in loans to customers with middle credit scores during the first four months of last year combined. But the volume increased by 108 percent to 118 billion won during the same period this year.
