KakaoBank said its third-quarter net profit rose 27.2% from a year earlier to 141.7 billion won ($105.3 million), beating analysts' forecasts as South Korea's largest internet-only bank pushed its deposits above 70 trillion won for the first time.

The result, released Wednesday in Seoul, topped the 129.5 billion won consensus compiled by market tracker FnGuide, according to the Korea JoongAng Daily. For investors across Asia who track digital lenders from Jakarta to Hong Kong, the figures offer a test of whether a mobile-only bank can keep growing earnings once its loan book matures. So far the answer from KakaoBank is yes, with fees doing more of the work.

The comparison base was soft. A year earlier, KakaoBank's third-quarter net income had fallen about 10% to 111.39 billion won, RTTNews reported at the time. This year's figure puts profit back on a growth track: net profit for January through September rose 25.2% to 469.8 billion won.

KakaoBank deposits pass 70 trillion won

The standout number was on the funding side. Deposits stood at 71.8 trillion won at the end of September, up 4.7 trillion won from three months earlier and above 70 trillion won for the first time. Both demand deposits and savings deposits increased, the JoongAng Daily reported, during a quarter in which household deposits at domestic banks fell.

That matters for margins. Cheap, sticky deposits let an internet bank fund loans without leaning on wholesale markets, and a bank that gathers deposits while the wider system loses them is taking share.

Lending grew more slowly. Outstanding loans totaled 48.6 trillion won, leaving a wide gap between what the bank holds in deposits and what it has lent out. Loans to sole proprietors accounted for 58% of net loan growth this year. That book reached 4.04 trillion won, up 349 billion won from the second quarter.

Credit quality improved. The delinquency ratio was 0.49% at the end of September, 0.04 percentage point lower than a year earlier.

Third-quarter revenue rose 15.2% to 880.9 billion won, according to the regulatory filing cited by the JoongAng Daily, and nine-month revenue climbed 8.7% to 2.53 trillion won.

Fees and the app do more of the work

KakaoBank attributed the profit gain to balanced growth in interest and noninterest income. Noninterest income for the first nine months rose 6.4% to 888.3 billion won, or 35% of total revenue.

Within that, fee and platform income rose 10.9% to 256.3 billion won. The bank said loan comparison, investment and payment services drove the increase. These are businesses in which KakaoBank earns a commission for steering app users to products from other financial companies, which ties its income less tightly to the interest-rate cycle.

The customer base keeps widening. KakaoBank had 27.94 million customers at the end of September, 1.7 million more than a year earlier, and 20.57 million monthly active users in the third quarter.

A company representative said in a press release that growth was continuing across all business areas despite an uncertain external environment, the JoongAng Daily reported.

How it compares with Korea's big banks

KakaoBank's quarterly profit remains a fraction of what the country's traditional financial groups earn. KB Financial Group, Shinhan, Hana and Woori posted combined third-quarter net profit of 5.76 trillion won, according to market data cited by The Korea Times. KB alone earned 1.91 trillion won, up 13.1%, while Woori was the only one of the four to report a year-on-year decline.

The incumbents also face mounting regulatory pressure. At a meeting with the heads of eight financial holding companies on Oct. 28, Financial Supervisory Service Gov. Lee Chan-jin urged boards to take a more active role in cybersecurity and to make subsidiary CEO appointments more transparent, The Korea Times reported. A string of cyberattacks and data leaks across the financial sector has raised concern about internal controls.

Still, KakaoBank's growth rate is the draw for investors. Its 27.2% profit gain outpaced KB's 13.1% and Shinhan's 11.3%, and the economy behind it has firmed: South Korea's economy grew 1% in the third quarter, well ahead of the central bank's forecast.

The bank has set two public targets: 100 trillion won in assets by 2027 and a 15% return on equity by 2030. Regulators are also keeping up the pressure on banks: on Nov. 5, Financial Services Commission Chairman Lee Eog-weon is scheduled to meet the CEOs of the five major commercial banks and the heads of financial industry associations on defenses against AI-driven cyberattacks, The Korea Times reported. Investors will also watch whether KakaoBank's deposit inflow holds into the fourth quarter.