KakaoBank (323410) Q1 2025 earnings summary

Executive summary

• Achieved robust earnings growth in Q1 2025, driven by customer base expansion, differentiated deposit growth, and strong platform and fee revenue, despite a sequential NIM decline.

• Customer base reached 25.45 million, up 0.57 million YTD, with strong penetration across all age groups.

• Operating profit rose 23% year-over-year and 59% sequentially, with net profit up 23.6% year-over-year and 62.6% sequentially to W137.4bn.

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

• AI-enabled services, including search and financial calculators, will launch from May 2025, with a long-term vision to integrate AI across all services.

Financial highlights

• Q1 platform income was KRW 77.6 billion, down 4% quarter-on-quarter but up 9% year-over-year; platform revenue up 14.7% year-over-year.

• Deposit balance up 14% year-over-year and 10% sequentially to W55.0tn; loan balance up 7% year-over-year and 3% sequentially to W44.3tn.

• Advertisement and loan comparison service revenue grew 113% and 40% year-over-year, respectively.

• Cost-to-income ratio improved to 33.8% from 36.4% in 4Q24.

• Delinquency rate improved by 1bp sequentially to 0.51%; credit cost ratio fell due to high base effect in 4Q24.

Outlook and guidance

• Loan growth for 2025 is expected to be similar to 2024, with SOHO lending as a key driver and expansion into larger unsecured and secured loans.

• LDR is expected to approach 70% by year-end due to ongoing deposit growth.

• 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.

• PEM platform revenue is forecasted to grow by at least 15% in 2025, with new product launches and AI-driven services supporting this growth.