KakaoBank posts record H1 profit; costs hurt Kakao Games’ Q2 earnings

KakaoBank Corp., a leading South Korean internet-only bank, saw its first-half net profit rise to a fresh record high, driven by decent growth in interest revenue and an expanded customer base.

The online banking unit of the country’s tech giant Kakao Corp. said on Wednesday it posted a net profit of 183.8 billion won ($143 million) in the first six months of this year, up 48.5% from 123.8 billion won in the year-earlier period.

Operating profit gained 52.5% year on year to an all-time high of 248.2 billion won.

In the second quarter alone, the financial company posted 82 billion won in net profit and 111.8 billion won in operating profit, up 43.8% and 50.3%, respectively, from a year earlier.

The bank’s deposit balance at the end of June stood at 43.6 trillion won, up 3.4 trillion won from three months earlier.

Its loan balance rose by 4.6 trillion won to 33.9 trillion won.

KakaoBank said its customer loans increased across the board, from credit loans, overdraft account loans, and jeonse and monthly rent loans to mortgage loans, contributing to its profit growth.

LONE DELINQUENCY RATES FALL

Its outstanding mortgage loans with a relatively low interest rate of 3% per annum reached 5.5 trillion won at the end of June, a 3 trillion won increase from the end of March.

The internet bank’s second-quarter net interest margin (NIM), a key profitability barometer, was 2.26%, down slightly from 2.29% in the year-earlier period. From the first quarter of this year, its NIM fell by 0.36 percentage point.

Its customer base expanded to 21.74 million at the end of June from 21.18 million at the end of March.

Despite its customer base growth, its creditworthiness has improved with its loan delinquency rate down to 0.52% at the end of June from 0.58% at the end of March.

KakaoBank set aside 59.1 billion won in provisioning against potential loan delinquencies in the second quarter after 52.6 billion won in provisions in the first quarter.

KAKAO GAMES POST DISAPPOINTING Q2

Meanwhile, Kakao Games Corp., the game publishing unit of Kakao Corp., on Wednesday posted 26.5 billion won in second-quarter operating profit on a consolidated basis, down 67.3% from a year earlier.

Its net profit declined 86.5% year on year to 8.7 billion won while sales revenue fell 20% to 271.1 billion won.

The second-quarter results came below the market consensus.

Compared with the first quarter, however, the game publisher’s second-quarter operating profit and net profit more than doubled, buoyed by ArcheAge War, its new massively multiplayer online roleplaying game (MMORPG) released near the end of March. Its second-quarter sales rose 8.8% from the previous quarter.

Second-quarter operating costs fell 5.1% from a year earlier but rose 2.9% from the first quarter.

Kakao Games said it expects its sales and profits to improve in the coming quarters, driven by new games.

Following the launch of Ares: Rise of Guardians, a popular MMORPG, in July, the company plans to release Goddess Order, an action MMORPG, in the fourth quarter, and ROM (Rise of Mythos) in the first quarter of next year.

The company also said it will take the role-playing game Eversoul and its box-office hit MMORPG Odin: Valhalla Rising to Japan, North America and Europe in the fourth quarter of this year.

Early next year, Kakao Games plans to take ArcheAge War to the Greater China region, which includes Taiwan, Hong Kong and Macau.

MMORPGs, which require players in groups, or guilds, are a key revenue source for game developers as they allow players to buy items to upgrade their capabilities to compete against users in other groups.


Write to Seung-Woo Lee and Bo-Hyung Kim at leeswoo@hankyung.com

In-Soo Nam edited this article.