KakaoBank (323410) Q1 2025 earnings summary

Executive summary

• Achieved robust earnings growth in Q1 2025, with net income of KRW 137.4 billion, up 23.5% year-over-year, driven by customer base expansion, differentiated deposit growth, and strong performance in both banking and platform businesses.

• Customer base reached over 25.45 million, with 18.98 million monthly active users, and strong penetration across all age groups.

• Operating profit rose 23% year-over-year and 59% sequentially, supported by loan growth, treasury management, and platform expansion.

• Asset quality remained stable, with a slight improvement in delinquency ratio, supported by guarantee-backed loans and enhanced risk management for mid- to low-credit borrowers.

• NIM declined by 6 basis points quarter-on-quarter to 2.09%, mainly due to increased allocation to non-interest-bearing assets and market rate changes.

Financial highlights

• Q1 2025 net income was KRW 137.4 billion, with operating revenue of KRW 784.5 billion, up 9.3% year-over-year and 5% sequentially.

• Deposit balance rose 14% year-over-year and 10% sequentially to KRW 55.0 trillion; loan balance up 7% year-over-year and 3% sequentially to KRW 44.3 trillion.

• Fee and platform revenue increased 8.8% year-over-year; platform revenue up 14.7% year-over-year.

• Return on assets (ROA) improved to 0.85%, and return on equity (ROE) to 8.54% for Q1 2025.

• Cost-to-income ratio improved to 33.8% from 36.4% in 4Q24, reflecting cost stabilization.

Outlook and guidance

• Loan growth for 2025 is expected to be similar to 2024, with SOHO lending and platform expansion as key drivers.

• Management targets continued growth in digital customer base and product innovation, focusing on AI-driven services and platform expansion.

• NIM is anticipated to decline further in 2025, but management aims to maintain it around 2% by expanding low-cost deposits and maximizing loan growth.

• Dividend policy aims for a payout ratio up to 50% if BIS ratio exceeds major peers, with a 38.98% payout for FY2024.

• AI-driven financial services and mobile ID to be rolled out in mid-2025.