[비즈한국] Kakao Group's financial subsidiaries, Kakao Bank and Kakao Pay, both reported strong performances in the first quarter of this year. Kakao Bank achieved record-breaking results driven by investment gains from Indonesia's Superbank, while Kakao Pay saw success through its subsidiaries in securities and insurance. However, both companies face challenges that make it difficult to be entirely optimistic. Kakao Bank is grappling with slowing growth and the need to expand its non-banking sectors, while Kakao Pay is burdened by legal risks and labor conflicts.
Kakao Bank's net profit for the first quarter of 2026 was 187.3 billion KRW, a 36.3% increase from the same period last year (137.4 billion KRW). Kakao Bank explained, "We achieved our highest-ever net profit driven by growth in interest and commission income based on a strengthened customer base." Kakao Bank's Q1 interest income was 373.4 billion KRW and commission income was 9.9 billion KRW, up 15.5% and 47.8% respectively from the same period last year (323.4 billion KRW and 6.7 billion KRW).
However, looking at operating profit, the figures actually regressed. Q1 operating profit was 157.6 billion KRW, a 13.9% decrease from the same period last year (183 billion KRW). Although it increased from the fourth quarter of 2025 (145.1 billion KRW), it failed to recover to the previous year's levels. The surge in net profit occurred because the Indonesian digital bank 'Superbank,' in which Kakao Bank holds an 8.7% stake, underwent an Initial Public Offering (IPO) last December, resulting in a non-operating gain of 93.3 billion KRW for Kakao Bank. Kakao Bank specified that the decline in operating profit was due to an increase in valuation losses on fund management caused by a decrease in earnings from beneficiary certificates amid rising market interest rates.
The company successfully maintained growth in user numbers. Kakao Bank customers increased from 23.6 million in Q1 2024 to 25.5 million in Q1 2025, 26.7 million in Q4 2025, and reached 27.27 million in Q1 this year. Kakao Bank attributed the customer growth to the 'Our Kid Service,' which allows legal guardians (parents) to sign up for products on behalf of their minor children, and the launch of AI services. Kakao Bank stated, "Of the 570,000 new customers in Q1, 24% were 'Our Kid Service' customers," adding that "since the launch of Kakao Bank AI in December 2025, AI-related MAU has also increased tenfold compared to November 2025, before the launch."
Following the earnings announcement, the market evaluated that Kakao Bank's growth momentum had slowed. Jung Joon-seop, an analyst at NH Investment & Securities, analyzed, "Due to the impact of household loan regulations, overall loan growth and commission/platform revenue have stagnated. Given external conditions like regulations and AI investments, it does not appear easy for the core business to show significant outward growth going forward."
In response, Kakao Bank has embarked on expanding its non-banking sector and new businesses. Following overseas investments in Indonesia, Thailand, and Mongolia, it has set a goal to acquire a capital company within the year. During the Q1 conference call Q&A, Kwon Tae-hoon, CFO of Kakao Bank, explained, "We are reviewing the acquisition of a capital company to strengthen corporate finance and enter the non-banking credit market. A capital company can improve profitability by lowering funding costs through credit rating improvements and typically has a higher Return on Equity (ROE) than a bank."
Expanding the proportion of credit loans to mid-to-low credit borrowers is also a task. In Q1 of this year, the proportion of credit loans to mid-to-low credit borrowers in Kakao Bank's average balance of household and personal business credit loans was 32.3%, an increase from Q4 2025 (32.1%) but a 0.5 percentage point decrease compared to the same period last year (32.8%). As the government urges financial firms to strengthen inclusive finance, and the role of internet-only banks—which launched with this goal—continues to grow, the bank is in a situation where it must maintain and expand its proportion of credit loans to mid-to-low credit borrowers.
Kakao Pay, another financial subsidiary of Kakao Group, also recorded a consolidated operating profit of 32.2 billion KRW in Q1 2026, marking its highest quarterly result. This is a 630.9% increase compared to the same period last year (4.4 billion KRW). Net profit was 34.7 billion KRW, a 141.5% increase from the same period last year (14.4 billion KRW). Kakao Pay's business divisions include payment, finance, and platform services, and its subsidiaries include Kakao Pay Securities, Kakao Pay Insurance, KP Insurance Service, and Paymint.
Kakao Pay attributed its strong performance to the earnings contribution of its financial subsidiaries and profitability improvements through operational optimization. In fact, its core subsidiary, Kakao Pay Securities, recorded an operating profit of 23.6 billion KRW in Q1 this year, achieving more than half of its total annual operating profit for 2025 (42.7 billion KRW). Shin Won-keun, CEO of Kakao Pay, stated, "This means that Kakao Pay has evolved into a powerful financial ecosystem that combines profitability and scalability," and added, "We will ensure that technological innovation leads to an increase in corporate value."
However, Kakao Pay also faces mounting internal and external challenges, including legal risks and the threat of a strike. According to the industry, Kakao Pay filed a lawsuit against financial authorities at the end of March to cancel the imposition of fines. This follows the financial authorities' decision in February to issue an institutional warning and impose a fine of approximately 13 billion KRW. During an on-site inspection by the Financial Supervisory Service, it was discovered that Kakao Pay had provided 54.2 billion instances of personal credit information of customers to Alipay without consent between August 2018 and May 2024.
Regarding this incident, Kakao Pay has argued that the information transfer between the consignor and the trustee did not require customer consent. Kakao Pay was also fined approximately 5.6 billion KRW by the Personal Information Protection Commission (PIPC), and a lawsuit to cancel this is also underway. The first-instance court ruling in the lawsuit with the PIPC, expected in early June, is likely to affect the lawsuit with the financial authorities as well.
Labor disputes also need to be resolved. On May 20, the Kakao Labor Union (Kakao branch of the Federation of Korean Metalworkers' Trade Unions) held a rally at Pangyo Station Square in Seongnam, Gyeonggi Province, and announced that a strike vote had been passed in five entities that morning, including Kakao HQ, Kakao Pay, Kakao Enterprise, XL Games, and DK Techin. Kakao Pay has secured the right to strike after receiving a notice of mediation suspension from the Gyeonggi Regional Labor Relations Commission on the 15th. It is reported that labor and management have failed to reach an agreement on the scale of performance bonuses and the wage increase rate.