KakaoBank, Kakao Games shares uplifted on upbeat earnings report

Shares of Korean platform giant Kakao darlings in banking and game category rebounded after losing more than 40 percent this year upon delivering strong half-year and second-quarter performance.

App-based lender KakaoBank Corp. trading on Kospi reported best-ever net and operating income for the first half, although profits in the second quarter were impaired after booking loss reserve against increased uncertainty.

KakaoBank announced in a regulatory filing Wednesday that operating profit stood at 74.4 billion won ($56.8 million) in the April-June period, down 15.9 percent on quarter and 6.82 percent on year. Net profit also fell 14.65 percent on quarter and 17.72 percent on year to 57 billion won.

The on-year plunge in operating profit was due to additional 12.6 billion won allowance reserved after reflecting future business conditions. Otherwise, operating profit was up 28 percent on year, said an unnamed official from KakaoBank.

Revenue came to 370.8 billion won in the April-June period, up 9.56 percent on quarter and 46.2 percent on year.

For the first half, operating income added 21.7 percent to 162.8 billion won and net income up 6.8 percent at 123.8 billion won, both best figures for a six-month period.

Profitability was boosted by a rise in base interest rate and increased interest revenue on more loans extended to low and mid-tier credit borrowers, it said. Platform and commission businesses were also main drivers of growth.

KakaoBank held 33.18 trillion won in deposits as of end of June, up 3.1 trillion won from the end of December last year. Low-cost deposits accounted for 59.8 percent of total deposits, it said. The loan balance also jumped from 25.86 trillion won to 26.8 trillion won during the same period. KakaoBank said loans to low- and mid-tier borrowers expanded on top of mortgage loans. Loans extended to low-credit borrowers gained 493.9 billion won to 2.96 trillion won.

KakaoBank resumed new loans to high-credit borrowers in June. It plans to accelerate growth in loan business by expanding mortgage targets.

The number of customers added 1.18 million from six months ago as of end of June to 19.17 million. The monthly active users (MAU) for the mobile application amounted to an all-time high of 15.43 million to achieve name as the best banking app, according to Nielsen Media’s digital data.

Net interest margin (NIM) was 2.29 percent in the second quarter and delinquency rate 0.33 percent.

In platform business, KakaoBank saw revenue rise from its stock account opening service. The number of stock accounts reached 6 million and related accumulated loans 5.1 trillion won as of end of June. Credit card issuance jumped 28 percent to 470,000 units.

In commissions, debit card payment and FX remittance cases surged 21 percent and 10 percent each.

KakaoBank plans to seek diverse new loan partners in the second half of the year and also introduce new partner-based credit cards. The online bank will also prepare for global market entry and introduce financial products for individual businesses, it said.

Shares of KakaoBank added 2.8 percent to 31,200 won by Wednesday afternoon.

Kosdaq-listed Kakao Games Corp. also disclosing second quarter earnings Wednesday cheered record quarterly operating profit of 81 billion won, up 900.2 percent on year and 92.52 percent on quarter, on strong performance by leading titles “Odin Valhalla Rising” and “Uma Musume Pretty Derby” games.

Operating profit was comfortably above market consensus of 76.2 billion won. Net profit soared 16,418.26 percent on year and 126.37 percent on quarter to 64 billion won on revenue of 338.8 billion won, rising 161.68 percent on year and 27 percent on quarter.

Shares of Kakao Games jumped 15.6 percent to 58,700 won.

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