KakaoBank turns to platform growth
South Korea’s KakaoBank is unusual among Asian pure-play digital banks, in that it is not only growing fast but is also profitable. Having harvested the low-hanging fruit of wallet balances, it is now building higher-fee products. And last year’s listing showed just how much belief there is in the story.
There was a time last year when KakaoBank, the branchless digital lender, was the biggest bank in South Korea by market capitalization. For several months after its August IPO, the six-year-old bank was bigger than Woori Bank, whose legacy operations date back to 1898, or Shinhan Bank, to 1897. It was also bigger than KB Financial Group, whose 13 constituent businesses together account for W663.9 trillion ($543 billion) in assets, about 20 times as much as KakaoBank.
Valuations for anything tech-related have cooled considerably since then, but the ardour for KakaoBank hasn’t really faded: at the time of writing its share price stands at W51,800, well below its absurd and fleeting W92,000 August 2021 peak but still up heavily from an IPO price of W39,000.
One reason its share price has stayed resilient is because from an early point in its history, KakaoBank has had numbers to back up the digital vision. Its full-year 2021 numbers show that it has 18 million customers – the national population is around 52 million – and turned a W256.9 billion operating profit in 2021, up 110% year on year. The bank was established in 2016 but got its banking licence in April 2017 and launched public services that July.