Kakao Bank defies lending curbs with 25% profit growth

Kakao Bank posted a 25.2 percent rise in net profit for the first nine months of the year, as the South Korean internet-only lender expanded loans to individual business owners and grew its platform business.

Net profit reached 469.8 billion won ($351.8 million) in the January-September period, the bank said Wednesday. Third-quarter profit rose 27.2 percent from a year earlier to 141.7 billion won, while revenue for the nine-month period increased 8.7 percent to 2.53 trillion won.

The bank kept household lending in check while expanding loans to individual business owners, which accounted for 58 percent of its net loan growth this year. Such loans rose 349 billion won during the quarter to 4.04 trillion won, bucking a sector-wide contraction, according to Kakao Bank. Total loans stood at 48.6 trillion won.

Nine-month fee and platform revenue rose 10.9 percent to 256.3 billion won. Third-quarter loans issued by partners through its comparison service increased 14 percent on-year to 1.4 trillion won. Fund balances on its platform nearly doubled from a year earlier to 1.9 trillion won.

Deposits rose 4.7 trillion won during the quarter to 71.8 trillion won, topping 70 trillion won for the first time. Customers reached 27.94 million, with monthly active users at a record 20.57 million.

Asset quality also improved. The delinquency ratio fell 0.02 percentage point from the previous quarter to 0.49 percent, while the nonperforming loan ratio declined 0.01 percentage point to 0.53 percent.

Kakao Bank is pursuing acquisitions and overseas expansion to diversify its business. It signed an agreement in June to acquire full ownership of Mastern Capital, with plans to extend its digital banking capabilities into nonbank lending.

Globally, it is pursuing a stake in Mongolia's M Bank, part of MCS Group, and helping improve credit assessment at the group's financial affiliates. In Thailand, Bank X, a virtual bank being developed with SCBX, is set to launch in the first half of 2027. Kakao Bank is leading service planning and app development.

The bank plans to broaden its customer base by expanding services for teenagers next year, following its recent launch of services for long-term foreign residents.

It also plans to launch an AI-powered spending analysis service in December.

"Despite an uncertain external environment, our customer base and platform capabilities have helped us sustain growth across our businesses," a Kakao Bank official said. "We will build on that growth to expand inclusive finance, integrate AI and enter overseas markets as we work to become customers' preferred platform for a full range of financial services."