In the second quarter, Kakao Bank’s net profit rose 46% annually to 120.2 billion won (US$87.4 million) on the back of a steady increase in customers. In a statement, Kakao said that in the April to June period, it experienced "equal growth of all business sectors, including its banking and platform businesses, adding that it now has 24 million customers.
As of end-June, Kakao’s overall deposits reached 53.4 trillion won, while its outstanding loans reached 42.6 trillion won. "The proportion of its low-cost deposits climbed to 56.9 percent, maintaining the integrity of Kakao Bank's unique low-cost funding system and also widening the gap with the average of other banks, which is at 38.5 percent," the company said in a press release.
Meanwhile, Kakao remains active in M&A. On August 20, Korean media reported that the digital lender had acquired a roughly 15% stake in the fintech startup Naivy for 908 million won (US$680,000). Naivy specializes in musician and music marketing services. Alongside its equity investment, the digital banking unit of the country’s tech giant Kakao integrated Naivy’s service into its banking app, enabling users to access the music service directly through a tab within the app.
Looking ahead, it seems that Kakao’s fintech business may not be noticeably affected by the legal travails of the parent company’s founder in the short term. However, analysts in Korea estimate that the arrest of suggests that at least one or two of the involved individuals are likely to receive prison sentences.
If that happens – perhaps in two or three years as Korea’s Supreme Court may need that amount of time to issue a final verdict – Kakao Corporation will be penalized given that South Korean law has a joint penalty provision that states if an executive or related firm violates the law, the corporation is also punished. A potential penalty for Kakao would be the separation of its banking unit from the parent organization.