KakaoBank posts record Q1 profit, eyes Thai expansion after Indonesia

KakaoBank Corp., a leading South Korean internet-only bank, posted its highest quarterly profit in the first quarter, defying a drop in interest income, as the digital lender saw a surge in non-interest revenue and platform usage.

The online banking unit of the country’s tech giant Kakao Corp. said in a regulatory filing on Wednesday that its net income in January-March stood at 137.4 billion won ($98.5 million), up 23.6% from 111.2 billion won a year earlier.

The result marks its best quarterly performance since it launched in July 2017 as the country’s first mobile-only lender.

While net interest income edged down 0.6% on-year to 502.7 billion won, KakaoBank’s earnings were buoyed by a sharp rise in non-interest revenue, including fees and income from its digital platform services.

Non-interest income jumped 32.9% to 281.8 billion won, accounting for 36% of the total operating income of 784.5 billion won.

Company executives attributed the uptick to increased customer traffic driven by the bank’s growing user base, which surpassed 25 million during the quarter.

Platform-based services, such as investment products and loans, saw higher engagement, boosting profits and user retention.

KakaoBank’s deposits also rose sharply, crossing the 60 trillion won mark for the first time. As of end-March, total deposits stood at 60.4 trillion won, up 14.1% from a year earlier.

KAKAOBANK SETS SIGHTS ON THAILAND AFTER INDONESIA

With the domestic business reaching maturity, KakaoBank is now focusing on overseas expansion.

The company has made inroads into Southeast Asia, most notably through its equity investment in Indonesian digital bank PT Super Bank Indonesia.

Kakao acquired a 10% stake in the Indonesian digital bank in October 2023, joining other stakeholders, including Southeast Asia's top super app operator Grab, Singapore Telecommunications Ltd., simply known as Singtel, and OVO.

Indonesia’s Super Bank, which reported a profit in the first quarter – less than a year after its official launch – now has more than three million customers.

KakaoBank’s next major target is Thailand.

Last September, it filed an application with the Bank of Thailand for a virtual banking license, in partnership with local financial group SCB X Public Company Ltd. (SCBX).

Kwon Tae-hoon, KakaoBank’s chief financial officer, said during the company’s earnings call on Wednesday that the bank is awaiting the results of its license bid. “We are optimistic,” he said.

Thailand has traditionally maintained high entry barriers for foreign banks, with Korean lenders struggling to secure a foothold in the market for decades. However, Bangkok’s recent push to liberalize the sector has presented a rare opportunity.

“This is a critical moment,” said a senior executive at a domestic lender. “If KakaoBank manages to break into Thailand, it could set a precedent and open the door for others.”

Write to In-Soo Nam at isnam@hankyung.com
Jennifer Nicholson-Breen edited this article.