KakaoBank’s mascot stands in front of the Korea Exchange’s digital board on Aug. 6, the day the online-only bank went public. (KakaoBank)

KakaoBank, the country’s largest internet-only lender by user base, on Tuesday said its net profit in the first three quarters rose 96.6 percent from a year prior, despite growing regulatory moves on household debts that slowed the lender’s growth in the third quarter.

In its first quarterly report that reflects its post-IPO performance, the banking arm of mobile giant Kakao Corp., said it recorded 52 billion won ($44.3 million) in net profit in the third quarter of this year, a 28 percent increase from a year ago. The figure brings the company profit during the January-September period to 167.9 billion won, nearly a twofold increase from the same period last year.

The company attributed the increase in the third quarter to an increase in interest income and fees from platform businesses, spanning from brokerage account opening services and “mini” saving accounts for those aged 14-17.

The earnings report reaffirms KakaoBank’s unwavering popularity as well as its business value, but it faces a series of challenges that are likely to undermine its momentum for further growth, including financial authorities’ firm moves to rein in household debt.

In a move to strictly regulate household debt, the government decided to limit the country’s loan growth to under 6 percent this year and in the 4-5 percent range next year. Restrictions on loan growth are a blow to KakaoBank, as it was to compete against traditional lenders with its strategy of offering an easy loan process and lower interest rates.

“We do expect the loan growth to slow down in the fourth quarter, but we will introduce new mortgage loan services early next year and increase mid-rate loans,” Yoon Ho-young, CEO of KakaoBank, told investors during a conference call Tuesday.

In addition, the mobile-only bank is tasked with increasing loans for mid-rate borrowers, which was why the country’s regulators gave the green light for internet-only lenders. KakaoBank’s goal for such loans is 20 percent by the end of this year, but it has been slow to make progress on that front, going from 10 percent at the end of 2020 to 13.4 percent at the end of September.

To meet that goal, the bank suspended credit loans for high-credit borrowers while developing a new credit-scoring system.

Increasing loans for thin-filers, who lack access to decent financial services, would be key to KakaoBank’s growth, another analyst said.

“KakaoBank is expected to contribute to the expansion of mid-interest loans and non-face-to-face mortgage loans with information technology,” said Park Hye-jin, an analyst at Daishin Securities.

“To justify the market capitalization, KakaoBank should prioritize medium-credit loans,” Park added.

KakaoBank made its market debut on Aug. 6 and became the largest financial institution by market capitalization on the country’s stock market. As the end of October, KakaoBank had 17.58 million registered users.