Hyundai Motor Securities Co. has upgraded its investment opinion on KakaoBank Corp. from “neutral” to “buy,” citing an assessment that the loan growth rate at the online-only bank is expected to exceed expectations, in a report released on Friday.
“The growth, primarily in mortgage loans, is expected to continue, leading to an estimated loan growth rate of 9.3 percent for the third quarter,” Hyundai Motor Securities analyst Lee Hong-jae said in the report. “An increase in the loan-deposit ratio is also forecast to result in a 1 basis point improvement in the net interest margin compared to the previous quarter.”
While the report acknowledged that a slight slowdown in loan growth is likely inevitable due to the recent trend of tighter household debt management by financial authorities and a sluggish real estate market, it emphasized that KakaoBank has not been involved in special-purpose mortgages.
However, KakaoBank’s target stock price remained at 30,000 won ($22.3) according to the report due to a low likelihood of regulatory easing for borrowers with low- and mid-level credit ratings in the near future, as well as relative underperformance in the third quarter, which is putting pressure on the stock prices.
The online bank’s projected third-quarter net profit is expected to decrease by 5.3 percent year-on-year to 74.5 billion won, falling 14.3 percent below consensus.
By Pulse
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