KakaoBank, Kakao Pay post record Q1 results as noninterest income grows

KakaoBank and Kakao Pay posted record first-quarter results as they expanded noninterest businesses such as platform services and overseas investments. The shift is aimed at reducing earnings volatility tied to interest rates and policy changes, and at building finance platforms used in everyday life.

KakaoBank said in a regulatory filing on the 6th that its first-quarter net profit rose 36.3% from a year earlier to 187.3 billion won, the highest on record. Noninterest income increased 7.5% to 302.9 billion won, accounting for 37% of operating revenue.

The results reflect a strategy to diversify revenue beyond traditional loan-deposit margins, as tighter household lending oversight has limited banks’ ability to expand profits. KakaoBank has pursued initiatives including entry into Southeast Asia, a loan-comparison platform and an investment tab, seeking to grow beyond a basic banking app into an everyday “super app.”

In the quarter, KakaoBank’s fee and platform revenue rose 4.1% to 80.8 billion won. Fee profit jumped 47% from a year earlier, supported in part by the investment-tab service that links asset viewing to execution. Overseas gains also contributed: KakaoBank recorded 93.3 billion won in nonoperating profit from valuation gains after Superbank, an Indonesian digital bank it invested in, went public.

KakaoBank’s plan to pursue the acquisition of a capital company within the year is also seen as part of its diversification push, aimed at building a nonbank portfolio. Chief Financial Officer Kwon Tae-hoon said on an earnings conference call, “If we acquire a capital company, we can quickly improve profitability by lowering funding rates through an improved credit rating.”

Kakao Pay is also shifting its focus from a payments-centered model toward a broader financial platform. On a consolidated basis, its first-quarter operating profit rose sevenfold from a year earlier to 32.2 billion won, a record, while revenue climbed 41.7% to 300.3 billion won.

Financial services grew to nearly half of total revenue, as investment and insurance services expanded and reduced reliance on payment fees. Platform businesses such as advertising and telecom brokerage also grew, supporting a more diversified revenue mix.

For longer-term growth, the company is targeting AI-based financial services. It plans to upgrade its in-house AI service, Pay i, and expand payment and remittance functions linked to Kakao’s AI ecosystem.