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(EDITORIAL from Korea Times on Aug. 10)

All News 07:02 August 10, 2021

KakaoBank as trailblazer
: IPO should bring changes, innovation to financial sector

KakaoBank made a stunning debut on the nation's main bourse Friday, finishing its first day of trading up 79 percent from its IPO price of 39,000 won (US$34). Shares of the nation's second internet-only bank opened at 53,700 won, 38 percent higher than the asking price, but then fell briefly before rising for the rest of the day. The stock closed at 69,800 won.

The digital lender's market capitalization amounted to 33.2 trillion won, catapulting it to become the country's top -- by valuation -- financial company, ahead of KB Financial Group, with a market value of 21.7 trillion won. KakaoBank is No. 12 on the Korea Exchange, larger than POSCO, which has a market cap of 29.7 trillion won, and slightly behind Kia.

KakaoBank's phenomenal growth has been achieved in just four years, and this certainly reflects the bank's high value as a platform operator, not just a bank. The mobile banking arm under messenger giant Kakao had 16.15 million registered users as of the end of March, and its monthly active users reached 13.35 million, making it the most frequently used financial app. This large user base will surely help KakaoBank remain competitive against large traditional lenders.

Yet some market watchers raise questions about the bank's debut valuation, noting that KB Financial is expected to post about 3 trillion won in net profit this year, more than 10 times that of anticipations for KakaoBank. Yet investors have bet heavily on the bank's future, appreciating its plan to use the proceeds from the IPO to expand its platform-related businesses.

It's no exaggeration to say that KakaoBank is a trailblazer. Capitalizing on growth opportunities following its IPO, the bank should take the lead in bringing change and innovation to Korea's financial world, which has been notorious for overregulation and inefficiency. It's difficult -- not impossible -- to see the birth of such manufacturing giants as Samsung Electronics and Hyundai Motor in the financial sector. KakaoBank may have such a mission on its hands.
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