Kaspi.kz - Q2 2024
July 22, 2024
Transcript
Operator (participant)
Hello, and welcome to the Kaspi.kz second quarter, first half financial results conference call. My name is Elliot, and I'll be your coordinator today. If you would like to ask a question, please press the Raise Hand icon if you have joined the call via Zoom. If you have joined us on the phone, please press star one on your telephone keypad. I would now like to turn the call over to David Ferguson. Please go ahead.
David Ferguson (Head of Investor Relations)
Thanks, Elliot. Good afternoon. Good morning, everybody. I'm David Ferguson from Kaspi. Welcome to our 2Q first half 2024 financial results. As usual, joining me on the call, I have our CEO and co-founder, Mikheil Lomtadze, our CFO, Tengiz Mosidze, and our Head of Capital Markets, Yuriy Didenko. Standard sort of procedure for the call, Mikheil will take you through the strategic product updates. I'll run you quickly through the financials and guidance for the remainder of the year, then we'll open the call up to Q&A. So on that note, handing over to you, Mikheil. Over to you.
Mikheil Lomtadze (CEO)
Hello, everyone. So, pleased to report our second Q results performance. So we have done pretty well in the second quarter and for the first half year, 2024. You know, pretty much see the growth across all our businesses and the new services showing a remarkable growth. Obviously, all that is, is a result of our team's, you know, historically known execution capabilities. Our consumers continue sort of strong engagement, so we have 72 monthly transactions per active consumer, and that's an, that's an important as we build on this engagement, all the, you know, platforms and individual services, and this is really driving our innovation.
So the payments TPV is up 32% year-over-year, shows the growth is strong on top of a really sort of, you know, big business. Revenue up 23% and the net income up 22%. Marketplace has been showing a very strong performance and now is our fastest growing business. You know, GMV is up 62% year-over-year, and revenue 96%, and net income 68%. And again, marketplace is something which is really excites us because that's a business where we add the value of connecting the sellers and merchants, and, you know, most of the innovations from us actually will be coming from our marketplace business. Fintech growing nicely on a TFV, 43% year-over-year, revenue 23%, and net income +2%.
As TFV, which is basically the volumes of our origination, are growing very nicely, you, you would actually see in the third Q and the rest of the year, quite rapid acceleration of our net income. And on top of it, you know, the interest costs and interest rates have been going down, and as a result, you will see profits, you know, going through our P&L and, and the, and the net income growth accelerating. Our consolidated revenue, consolidated financials showing very strong performance. So, our revenue is 36% up year-over-year, and the net income is 25% up. We have been, historically, sort of, you know, diversifying, across our three platforms and happy to report they're more or less equal now in size.
So 68% comes from Payments in the Marketplace, and the Marketplace—and the Payments have been historically growing faster than Fintech, and now Marketplace is the one that grows fastest from all three. So we're really excited about this diversification is from all three and, you know, really excited about the new services which actually also driving our growth. In terms of the e-Grocery, which, you know, we just started a couple of years ago, we're really excited about this business. You know, execution skills are, you know, top quality from our team across operations, you know, marketing, the product, and the, and the, and the user experience.
So you can see that active consumers now reached 639,000 consumers in the second Q, almost double the GMV, 99% growth. And average ticket remains very high of, you know, 14,000 KZT, which is basically the weekly purchase. So it's not a quick commerce sort of small ticket transactions. And then, in terms of number of purchases, we bypassed 2 million purchases in the second quarter and up 83% from the last year. We are expanding our existing dark stores, which means just adding more capacity. We always work on two fronts. Number one is increase the capacity, which means increase the size of existing dark stores, but also work on the efficiency, which means throughput rate of a dark stores. And both are giving us-...
A very good results, but demand is so high from our consumers that, you know, we are now investing into building another large dark store in Almaty, and as a result, we'll be able to basically support the growth and the demand we have from consumers. We're now present in three largest cities: Almaty, Astana, and Shymkent. And those cities represent roughly about half of the total food retail trade in the country. So for the remaining of this year, those cities would be our priority, and again, we're just continuing executing. Consumers are delighted, demand is extremely strong, so we are just scaling in terms of the capacity, building the new dark stores, but also expanding the capacity of existing dark stores. So really excited about this business, and the growth rates that we're achieving.
Again, on the back of the consumers loving the service and we have a very strong demand in this vertical. We have been also scaling from last year, another new service, which is vacation packages. Incredible growth, you know, 644% from our last year. This is the business when our consumers basically can book their vacations across, you know, several countries. And now we're going into the season, and the growth is really due to the fact that we have a very strong seasonal offering, pretty much from every tour operator in the country. The good thing about this service is not just that it gives us the volumes and consumers love it, but also it's a high take rate business for our travel.
So it's really enhancing take rate, and that business in the second Q is showing 7.9% take rate. So we're really excited. We're still going into the season, so summer will be strong because, you know, differently from many other countries, our consumers actually don't plan their vacation sort of six months ahead, so they usually plan in a month, you know, several weeks before actually taking the vacation. So there is a very good season in front of us. Really excited about this business. We are continuing scaling and innovating across the value-added services. So as you can see, we have increased dramatically the size of that business. That's advertising, classifieds, and delivery. So almost, you know, more than four times increase from last year.
You know, now, out of 9.5% of total take rates in the marketplace, 1.6% is actually coming from the added value services, and that compared to 0.6% of last year. Again, added value services, in our case, is the services which we develop for merchants so they can, you know, promote their products, they can deliver their products across the country. And the reason why we call them value-added, because actually they generate additional sales. And we are... Again, I would like to emphasize, we are carefully scaling those services because we want to make sure they add value to our merchants. But even with such a careful scaling, it's showing a remarkable result. So we're really excited about innovations which coming from us and for our merchants in those sphere.
This example of the recent launch is the brand advertising. So this is the service which we just basically launched, that's a service for the brands or the merchants that have their own brands and advertising agencies. So you know, you can increase the brand awareness by launching this service. You can sort of go from very simple steps. You basically create the campaign, you sort of select the products which you would like to promote, you select the sellers which you believe should be participant of your promotional campaign, then you upload your materials, which are, you know, banners to be shown in different locations of our Kaspi.kz Super App, and then you can see your ads in our mobile application. So that's a service which we like because we are actually going after different revenue stream.
We're going after digital and online marketing services, which come from the global brands, local brands, and some of the merchants that actually are promoting their own brands. And just to remind everyone, that's a second service, because our initial service, which we have launched for merchants, was to promote their own products. So that's the different segments. You know, if I'm the merchant, I want to increase the sales, I want to increase sales of a specific product, I use product advertising. However, if I'm a brand, advertising agency, or the merchants with my own brand, then I use brand advertising, and that really is all about top of mind, promoting brand awareness, views, and things like that. So really excited about this addition, and reception has been really good.
So, hopefully that's another service which we will continue sort of scaling successfully and, you know, yeah, developing innovations around it over time.
David Ferguson (Head of Investor Relations)
Okay, so moving on to the financials. I'll start with the payments platform. So transactions, transaction trends remain very strong, up 46% in the second quarter, up 44% year-on-year in the first half, so slightly stronger in the second quarter, despite again, the size, this is, as Mikheil said, a pretty large business. The growth is being driven by all products, led by Kaspi Pay QR, B2B, but with bill payments still very, very robust. Strong volume growth translates into, therefore, strong TPV growth, albeit with a lower average ticket size, as consumers use us more frequently for more of their everyday needs. TPV up 32% in the second quarter, up 34% for the first half of the year.
Take rate, broadly stable, albeit with the impact of lower take rate, Kaspi Pay QR, visible at the margin, and that is a trend that we've talked about over several years. B2B payments remains the fastest growing component of the payments platform, up to 5% of TPV from zero, just 2.5 years ago. But with a long runway ahead, both in its own right and in terms of the other products and services, it can naturally open up. Strong transactions, strong TPV, drops through to good revenue growth. Just keep in mind here that as interest rates fall, liquidity revenue grows at a slower rate than transaction revenue. So transaction revenue in the second quarter, up 26% year-on-year, versus liquidity revenue, up 12% year-on-year.
Overall, payments revenue for the quarter, up 23% year-on-year, and up 24% for the first half of the year. Tight cost control is ensuring that that strong top line drops through to the bottom line. I think overall, the message on payments platform is that it is comfortably on track for delivering on the full year guidance. So moving on to the marketplace platform. As with payments, marketplace transactions remain, or purchases remain strong, and consistent, up 38% in the second quarter, up 36% for the first half of the year. The difference versus payments is higher ticket size, so that translates into faster GMV growth, up 62% year-on-year for both the second and first half of the year.
E-commerce is the fastest growing component of marketplace, now almost half of marketplace GMV, 45% in the first half of the year. Take rate moving up on the back of promotional events, namely Kaspi Zhuma, but also the value-added services that Mikheil talked about. Take rate up 100 bps, both in the quarter, second quarter, and for the first half of the year. Looking at the individual components, e-commerce GMV up 113% in the second quarter, a similar number for the first half of the year.
So e-commerce demand, very, very strong, driven by number one, e-Grocery; number two, general goods, and the promotional campaigns that we're running and the value-added services, delivery and advertising, driving take rate up 30 basis points in the second quarter, and up 60 basis points for the first half of the year. Worth just flagging here, we talked about... We introduced Kaspi Postomats around 2-3 years ago as a key strategic initiative, and just flagging now, we're sort of past that milestone, 50% of e-commerce orders delivered via Postomats. So this is important because the initiative is proved extremely popular from a consumer perspective. Consumers like the convenience of Postomats, and important for merchants because it's more efficient, it's bringing the cost of last mile delivery down. So adoption has been highly successful.
We're targeting 7,000 Postomats by the end of this year, so there's still more we can do with this initiative. Kaspi Travel, decent GMV growth during both the quarter and the half, up 33% and 38% respectively. Tours are now up to 8% of GMV in the first half, and tours are not only GMV growth enhancing, but are also take rate enhancing as well. Then moving on to mCommerce. mCommerce in the first half of this year has seen very, very strong GMV momentum, particularly as a result of the promotional campaigns that have driven higher ticket size GMV ahead of purchases, and have also driven higher take rate, 100 bps, both in the second quarter and in the first half of the year.
It's probably worth at this point, just flagging that on Marketplace, particularly promotional events, Zhuma. Zhuma will take place three times this year. It took place in Q1, it took place in Q2, and it will take place in Q4. Last year, it took place two times in Q3 and Q4. So what that means for Q3, it's the only quarter of this year without Zhuma, number one, and number two, the comp is tough because it's up against the Zhuma event that took place in the third quarter of last year. The implications of that for the third quarter will be GMV growth at a lower rate and lower profitability before then a strong rebound in the fourth quarter. The decision to hold Zhuma three times a year is just a reflection.
The assortment on Marketplace has expanded dramatically over the last couple of years. That includes items with high seasonality, like, for example, package tours, and by holding the event at three times during the year, it gives us the opportunity to focus on the right seasonal assortment at the, at the right time. Package tours, for example, are a big focus in the June Zhuma. So this is something that is reflected in the full year guidance, but when you're trying to think about the phasing between Q3 and Q4, it's something to keep in mind. I suppose it's also worth saying that for Fintech and TFV, which is a big component of the Zhuma promotional campaigns, that also means you'll see lower TFV growth in the third quarter, but again, then the strong rebound in the fourth quarter and as we go into 2025.
For the second quarter, what you see is that the strong volume trends, higher ticket size, faster GMV growth with take rate expansion translates into even faster revenue growth for Marketplace of 96% in the second quarter, over 100% for the first half of the year. And even with rapid growth from 1P, in grocery and in cars, net income up 68% in the second quarter and up 72% for the full year. So again, here, for the full year guidance that we've provided, Marketplace very, very much on track. Finally, moving on to the Fintech platform. A strong TFV origination has been a theme for the last two years. That continues to be the case, driven by strong growth in Marketplace, and specifically linked to buy now, pay later, and merchant financing.
So TFV growth up 43% in the second quarter, 45% in the second half—in the first half of the year. Portfolio conversion stable, so that tells you that customer behavior is normal. They are repaying quickly and in a consistent manner. Average loan term, just over 5 months. And going forward, we still think that merchant financing, whilst it's now sizable at 17% of our TFV origination, it's the fastest growing component, and the backdrop is still an under-penetrated market opportunity, so there's a lot more we can do there. In the first half of this year, for the first time in several years, net loan portfolio grew faster than deposits. In the second quarter, loan portfolio up 42% versus deposits of 26%. Similar trends for the first half of the year.
What that's meant is that the loan-to-deposit ratio has moved up from 74% to 85%. The implication of that will be particularly from Q3 and again in Q4, you'll see a step up in the profitability of the Fintech platform, and again, that will be a run rate going into when you're thinking about 2025 growth. Fintech yield is lower as a result of BNPL and merchant financing growing share within the mix, and again, that's something that we've talked about as a long-run trend that's been playing out over several years. In terms of risk metrics, whether you look at defaults, losses, collections, I think the message here is very simple, that the trends are low and consistently stable.
Again, that mirrors itself in cost of risk metrics, broadly stable year-on-year at 0.6%, on track for around 2%, this year. NPLs, again, broadly stable versus the beginning of the year, 5.6% versus 5.5% at the beginning of the year, and down from 6% this time, 12 months ago. NPL coverage is lower in the second quarter, but over the course of the year, it should trend consistently with what you've seen in previous years, so around sort of 98-99%. The combination of strong origination over the last two years, albeit with slightly lower yield, translates into decent, healthy Fintech revenue growth of 23% and 25% for second quarter and first half, respectively. We lowered interest rates for the first time at the end of February.
The deposit base takes 12 months to reprice fully. So at this stage in Q2, you don't see the rebound in net income in Fintech profitability, but you will see that in Q3, and again, you'll see it to a greater extent in Q4. So again, you've got those moving parts in Q3. For Marketplace, you've got lower GMV growth and lower profitability rebounding in Q4. For Fintech, you've got lower TFV, limited near-term P&L implications of that, where you'll see the strong rebound in Fintech profitability kicking in. So again, sort of, as I said, different parts moving in different directions, but overall, Fintech also comfortably on track for the full year guidance that we've provided. So here is the consolidated performance.
I think, the summary, the divisional platform summaries that I've given sort of, are clear. A dividend of 850 KZT declared. Just the message here remains consistent, that while we have excess capital, we're happy to return it to our shareholders. In the press release, we do say that we're working hard to expand Kaspi outside of Kazakhstan, and when we think both the time and opportunity is right, we won't hesitate to deploy capital in that way. So that's just to sort of preempt any questions around higher dividends, buybacks. There's the sort of the message on capital allocation priorities. Here is the guidance for the remainder of the year. So each of the respective platforms on track, Kaspi.kz on track for 25% net income growth for 2024.
So overall, we expect to deliver another strong year, albeit that we'll be phasing, the growth in the second half will be Q4 weighted. That's it. So maybe, Elliot, we can open the call up to Q&A, please.
Operator (participant)
Thank you. If you would like to ask a question, please press the Raise Hand icon if you have joined the call by Zoom. If you have joined us on the phone, please press star one on your telephone keypad. When preparing to ask your question, please ensure your line is unmuted locally. Our first question today comes from Darren Peller with Wolfe Research. Your line is open. Please go ahead.
Darrin Peller (MD and Senior Analyst)
Guys, thanks. Some of these initiatives are great to see the momentum on, but I just wanted to first touch on a financial question. And I know you kind of hinted or touched on that a little bit just at the end there, but, you know, you're reiterating your fiscal year expectations. Obviously, the underlying assumptions call for somewhat of a deceleration in second half relative to first half, just given the guide on the segment-level detail, relative to first half growth rate. So if you could just help us understand if it's just comps and, you know, maybe building in some element of conservatism, given how strong some of the trends have been in first half, so we understand the second half cadence, if there's any nuances on a per segment basis we should keep in mind. Thanks.
David Ferguson (Head of Investor Relations)
All right, Darrin. I think sort of, really, I just reiterate what I've said there. So I think the key things you need to be aware of when you're thinking about Q3, Q4 is the Zhuma promotional event. It's important. And what's different this year is it's taking place three times. It only took place two times last year. And the phasing of marketing campaigns can always vary. This year, those campaigns are taking place in Q1, Q2, and Q4. Last year, those campaigns took place in Q3, then Q4. So the point really is that Q3 is the quarter without that sort of big, important promotional event. It manifests itself in a number of ways.
It manifests itself in lower GMV growth, lower marketplace profitability, lower TFV growth, although the nature of TFV, it feeds into the P&L over a longer period of time. So from a P&L implication, it's not material in the third quarter. You've also got the other dynamic, not related to Zhuma, of just the rebound in profitability in the Fintech division, starting from the third quarter of this year. But the takeaway ultimately is you will see lower growth across the board, across payments, sorry, across marketplace and for the group as a whole in the third quarter. Significantly higher growth in the fourth quarter, and that's important because that gives you a sense of the run rate going into 2025.
But the full year guidance that you have, that's the right number that you should be working to.
Darrin Peller (MD and Senior Analyst)
Okay.
David Ferguson (Head of Investor Relations)
So to your point about conservatism, use that as your number. It's realistic, guidance.
Darrin Peller (MD and Senior Analyst)
All right. Thank you, David. Just one quick follow-up on the international efforts and aspirations. I know last time we spoke, you know, there was a hope that it could come as early as maybe even the end of this year into next year in terms of some sort of momentum on any of those fronts. Any update there in terms of progress or just a sense of opportunities you're looking at and regions you're seeing the most opportunity in?
David Ferguson (Head of Investor Relations)
Yeah. Mikheil?
Mikheil Lomtadze (CEO)
Sure. Hi, Darren. Thank you for your question. I mean, I mean, in general, I would say that we, you know, we continue working on this just to reinforce basically our really the desire and capability to bring this business outside of Kazakhstan. As some people are saying during our discussions, you know, basically bring the Kaspi Magic to other markets. And the good news is that we are passing, you know, basically, we're not pursuing some opportunities, just to tell you that how selective we are, and there is a healthy pipeline of some of the companies we're working on.
I wouldn't speculate about, you know, region or or a specific target that we would like to to work on or we're working on at the moment. But yeah, but we are, you know, we are clearly sort of working on this, putting our resources, the time, mostly, and, you know, working with with advisors on different opportunities, basically. So but we are again, we're, we're careful. We want to make sure that we get it right. We want to make sure that the company and the market we look at, there is added value from us, again, from knowledge, technology, experience, perspective.
But, you know, I think we are at the stage when we're also lucky that some of the companies and the targets we look at are really high-quality companies and high-quality targets. Which means we're looking at how we can complement to those companies' management teams to become even better, considering Kaspi's unique experience, technology and the business model. So, you know, again, really excited. We're working on it. You know, at the moment, can't really tell you any specifics of any project that we're executing.
Darrin Peller (MD and Senior Analyst)
Thanks, Mikheil. Thanks, David. Nice job, guys.
Mikheil Lomtadze (CEO)
Thank you. Thank you, David. Thank you.
Operator (participant)
Our next question comes from Reggie Smith with J.P. Morgan. Your line is open. Please go ahead.
Reginald Smith (Executive Director, Equity Research)
Hey, good morning. Thanks for taking the question. I appreciate the color on the brand advertising launch. I was hoping to get a little bit more. Did you guys say exactly when that went live? Mostly curious about how many brands are on the platform today. And maybe talk a little about, a little bit about the process of adding brands. I'm not sure if you've got a outreach program to sales or like... I'm curious how that actually, how that plays out. Thank you. I got a follow-up.
Mikheil Lomtadze (CEO)
Sure, Reggie. Thanks for your question. Basically, we are in a really interesting position as a company, you know, in a sense that some of the ideas are really coming from the use cases that we already have, and there's, you know, almost requests from our merchants or the brands whether we could launch the services. So that's something which is really exciting to be in the type of position as we are. Because, you know, when... Basically what that means, when we launch the service, there is already market for it. So that's why it's exciting. The brand advertising, you know, we are at the moment, it's on at the scaling stage.
Already have, you know, FMCG brands working with us just because we have become one of the largest grocers in the country, and not just in Almaty, with the fastest growth compared to anyone on the market. So the brands on FMCG side basically are working with us on the advertising, and we already have the contracts in place with them, so you will see a very healthy growth on the side of the brands which are selling grocery through us. On the other hand, general goods, you know, the same brands, I mean, I've just shown the Samsung as an example, with actually one of the brands that is working with us as we speak.
On the general goods, you know, there are, you know, pretty much either the brands which are sort of global or the merchants which have their own brands, you know, like locally selling. Basically, they want to promote the awareness. In terms of the size of this opportunity, you know, I would say that's something which... And another, it's a good question that you asked, because another thing you need to keep in mind. We're launching the product when most of the brands have allocated budgets to this type of advertising, especially the global players. You know, they make the decisions end of the year. So and even in this environment, we're able to successfully scale.
So opportunity is, you know, in my sort of opinion, you know, probably equal to the size of the, if not more of the opportunity when merchants are promoting their own goods. So yeah, so it's a big, it's really a big opportunity, and we're just sort of scaling it, and it's not reflected in the numbers which you see in advertising. The numbers at the moment are not material, but they will be growing really fast the second half of the year, because we have contracts in place already with those brands. So quite-
Reginald Smith (Executive Director, Equity Research)
Got it. And how are you thinking about-
Mikheil Lomtadze (CEO)
Really excited about.
Reginald Smith (Executive Director, Equity Research)
Yeah, no, it sounds like a really good business. How are you thinking about KPIs for that segment? I know it's early days, you may not have anything mapped out, but anything you can share there? I have one follow-up after that, sorry.
Mikheil Lomtadze (CEO)
It's I mean, this is really different. I mean, for the KPI, or let's say the targets that we have sort of on the quality level, on the merchant, when merchants are advertising their goods directly, this is their own listings on our marketplace, you know, here we are making sure that it's efficient, so they get the sales, and they not overspend. And so that's something which is very important for us on the goods advertising side of things. And the revenue stream there comes from the merchants themselves, you know, as a part of their GMV, which they sell for us.
So for example, you know, just the one example, if we see the merchants, you know, exceeding sort of 5% of their GMV in advertising investments on that piece, you know, we sort of, you know, work with the merchants to make sure that they—this is something which they really want, because then, you know, the profitability of their business has to be respected, right? Right, I mean, 5%, you know, not many merchants can really afford to or to invest into marketing and advertising. So we just need to make sure they understand the product and if anything we can improve. So that's on the side when actually merchants are launching their own listings, and it's called sort of product advertising.
When we're talking about the brands, that actually is a different service, you know, altogether, because that's, you know, brands, they actually want to promote the brand awareness, you know, whatever the, you know, global FMCG players or the local brands. And that means they're not necessarily looking just for sales straight away, but they are looking for people to know the brand, and the monetization there is really more on the views rather than on the sales. And they have budgets allocated also globally. So, you know, that's basically is the very big difference. And also from a consumer perspective, it's a different product. You know, the goods advertising, it's like, you know, Amazon ads or Google when you have the products in the listings, when you search in our app. And the brand advertising is visual.
So, you know, we started from banners, when you see the item, you see the brand, sort of, and then you go to the products after you click the banner. It's a different object, it's a different real estate of the app, and therefore it's a different pricing, and it's a different revenue stream, and it's a different, different, payers, you know, brands pay us or advertising agencies. So from that perspective, you know, we are, we just need to make sure that our, you know, on, on the side of the brand advertising, we are more efficient and, and we're competitive. So we are competing with the platforms like Instagram, for example, at the moment, which are providing these type of capabilities.
You know, the first test showed us we're multiple times more efficient than Instagram, and then the brands are happy to move their budgets to us. So that's why we're excited about this opportunity.
Reginald Smith (Executive Director, Equity Research)
No, that sounds exciting. If I can squeeze one more in on Zhuma. I guess you always have to be careful about, like, fatigue there, but is this a product or an experience that you see that could happen four times a year, like once every quarter? And then last piece on that, what do you tend to see post-Zhuma? Do you see a lift in engagement and usage on the app in general? Like, I'm just curious, is there any positive benefits you guys see after Zhuma in terms of engagement and things like that? Thanks.
Mikheil Lomtadze (CEO)
Yeah. Well, when you think about Zhuma in general, you can compare this to, like, a national sort of shopping events which happen in other countries. I mean, it would be Black Friday or Amazon Prime and the things like that. So this is really like a nationwide event, and pretty much there is nothing else. So there is no other event, there is no other Black Friday. So it's really that Zhuma where, you know, thousands of merchants really participate. So that's number one. Number two is, Zhuma is great in a sense that it gives us, as you said, you know, it's an opportunity to get uplift on the engagement.
You know, it's a concentrated three-day shopping festival, which basically give us an ability to introduce some of the new categories we've launched, some new merchants, products. So it's really sort of the opportunity for the consumers in a very highly concentrated three-day period to basically acquire some of the items and and therefore for us to promote these new categories, which we would like to promote, because it's quite big. It's also big in terms of moving consumers from offline to online. So, for example, I would say that vast majority of electronics are now, you know, bought online rather than offline, just because we have been able to change this sort of consumer and the merchant experience. So all of that is, you know, basically Zhuma has been, you know, quite a success.
As David said, again, the number, you know, one reason why we are moving into the seasonal, because different categories just have different seasonality, you know. You move from one type of clothing to another during the spring, and then you move back to another clothing during the winter. So from summer and autumn to the winter clothing or the travel. So the variety of products is such a, you know... I mean, it's unmatched. There is no other company in the world that has such an assortment of different goods and services, which have such a high seasonality. And therefore, we basically reply to our consumer needs and the merchants. And this year it will be a bit, I would say, unfair comparison to last year, quarter on quarter.
But in general, you know, we think that three years is good. Answering to your question, we will see, because we have another promotion, which happens in August, September, which is back to school. So it's not Zhuma, but that's something which is also big. And that's why we're not really launching the fourth one, sort of end of this summer, beginning of autumn, because we want to see how, you know, consumer demand will be shifting as a result of this multiple Zhumas during the year. But once we get all these learnings, then next year will be, you know, both much easier to compare, but also it will be, you know, from our side, just much more, I would say, it's not the word predictable, but, you know, much more comparable year over year.
Zhuma itself it just shows, you know, incredible results really, on all fronts. During the Zhuma and after the Zhuma, shoppers continue to shop, basically.
Operator (participant)
Our next question comes from James Friedman. Please announce your company name and proceed with your question.
David Ferguson (Head of Investor Relations)
Hi, Jamie. Maybe you're on mute, we can't hear you.
James Friedman (Senior Fintech and IT Services Research Analyst)
Whoops! Sorry about that, David. Good evening. It's Jamie at Susquehanna. I wanted to ask, and by the way, good results here, but I had two questions about take rates. I'll just ask them upfront. So first on slide 11, when you... This is about the payments take rate. You know, when you have this outsized growth in QR code, and I think B2B, are those deflationary to take rates? 'Cause I know you talked about this in the past, you talked about it today even, but wanted the, perspective on take rates for payments. And then I'll just ask the other one, too, which is about e-commerce take rates. So how should we think about the unpacking the components of take rates in e-commerce between, say, e-grocery and general goods? So slide 11 and slide 16. Thank you.
Mikheil Lomtadze (CEO)
David, you want, you want me to pick it up? Well, I will, I will start with the payments and then you can, you can jump in, right? So, James, thank you for the questions. In terms of the payments, what you know, we have been sort of saying historically that the QR payments, which is sort of increasing, you know, network, you know, basically the service of accepting the payments, you know, it's the, it's a 0.9%-0.95%. Basically, that's, that's the fee. So what you, what you would see that, you know, you know, simply over time, this is something which will be getting, you know, closer to that number.
We have been, you know, lucky, or not lucky, I mean, because we have been diversifying the services and entering into different verticals. You know, the take rate has been quite sustainable, in general, around 1.2. But we've decided to provide this more details, not just 1.2, but basically what it is, 1.19, 1.18, which is 1.24, which we had last year. Just to give you that it's slightly sort of gets towards bigger share of the QR payments. So that's basically how to think about the payments.
There are a couple of, yeah, there are new things we're working on, which will be added value, which will be higher take rate, but those, those things on the payment side, you know, probably will come from us later in the year, so we'll be excited to share with you, but seems like, you know, very exciting services. On the e-commerce side of things, you know, the take rate that you have is basically on the 3P. So the 1P is, you know, e-grocery, that's not in the take rate. So that's basically a, a, you know, gross, gross profit, net income business. And we, we basically are... Yeah, the e-grocery, it's not part of the take rate. That's a simple answer. E-grocery itself continues extremely strong performance.
Even though we're investing, it's still 7%-8% net income margin business, and our gross margin is growing in excess of 30%, just because, you know, there is more demand from the consumers, but also the type of assortment, strategy, and relationship with the suppliers really enables us to also increase the gross margin. But e-grocery, it's not a part of the take rate. Take rate is only on three P. David, anything you want to add?
David Ferguson (Head of Investor Relations)
Yeah. I mean, just overall, I think the message on payments take rate is that it's broadly stable. We've shown you an extra decimal point to today, but I wouldn't read anything too dramatic into that. Take rate is broadly stable.
James Friedman (Senior Fintech and IT Services Research Analyst)
Got it. Thank you both. I'll drop back in the queue.
Mikheil Lomtadze (CEO)
Thank you, James.
Operator (participant)
Our next question comes from Soomit Datta. Please announce your company name and proceed with your question.
Soomit Datta (Head of Fintech and Financials Research)
Yeah, hi. Hi there. It's Soomit Datta from New Street Research. Thanks very much for the, for the call and, the extra, the extra detail. Couple on FinTech, if I could please. Firstly, in terms of the improvement in FinTech net income, through the second half, that, that seems to be predicated on, deposit remuneration dropping back down. Can you just talk through the phasing of that? Is that a sort of rolling process, where depositors kind of roll back over time? Has that sort of, is that—will that have played out in Q3, Q4? Anything on, on the phasing of that...
As a follow-up, how do you see the midterm loan-to-deposit ratio for the Fintech business? It's, as you say, it's moved around a little bit this, this quarter. Just curious how you see that over time. And then if I could just on, on the same, vertical, just Mikheil, interested in your perspective on tax increases in Kazakhstan, which I think if, if they go through, will impact the Fintech business rather than the other businesses. Just curious what your take was on the likelihood of that happening and potential timing. Thank you.
David Ferguson (Head of Investor Relations)
All right, Soomit, thanks for your question. Maybe I'll just try and expand on the Fintech question, on Fintech profitability, and then hand over to Mikheil for regulation. So I'd say it's two things. It's one, rates coming down. So while NBK rates have been coming down since the autumn of last year, our first cut in deposit rates was at the end of February. So that's the first thing. And then the second thing is the balance sheet being used more effectively or the loan-to-deposit ratio moving up, either 'cause we're loaning more money or because people are spending more money and saving less, or a mix of those factors. So that's why. In terms of phasing, deposit customers are repriced at maturity.
It takes 12 months to work through that process. So if you think that the first rate cut was in February, and it was end of February this year, it starts to be visible immediately, but it only becomes more pronounced with each month that goes by. So in Q3, for the first time, the combination of those factors, loan-to-deposit ratio moving up, cost of funding moving down, I think it will be visible to you. And you'll see... I mean, you can yourself just simply work out what is implied by the guidance for Fintech net income growth in the second half of the year.
Q4 will be more than Q3, but that sort of tells you, and longer term, there's sort of no reason why the loan-to-deposit ratio can't move up to maximize use of all of the tenge liquidity that we have.
Mikheil Lomtadze (CEO)
Yeah. And, David, so thank you for your questions. I'll add a bit more color in terms of our strategy and the way the products work. So in our, I mean, in our business, you know, always consumer comes first, right? So we are very unusual compared to some traditional, you know, banks with the traditional savings deposit accounts, which means, you know, when we're increasing the rate, we're increasing the rate for everyone. So, you know, basically, we reprice deposits upwards, and everybody gets benefit of it. And when we reduce the rates, the rates are reduced over time at the maturity. So what that means, in terms of the numbers, in February, we decreased the deposit rate by around 1%.
And as a result, you know, the full savings portfolio, which includes both new savings accounts and existing savings accounts, they will be repriced at this reduced rate by the February of next year. And as David said, you know, that actually means in the third Q it will be more, in the fourth Q more, but they will be actually fully repriced in the first Q of next year. Our business is on the Fintech side of things, also to put things into perspective, the interest rates increased over the last several years from 8% to 16% on the savings account.
So that's basically when the savings interest rates will normalize, you know. It might take a bit longer than everybody thought, you know, across pretty much most of the economies, but we'll still see this, you know, natural reduction of interest expense. But the good thing about us is that we also, you know, acquired consumers with the money and we've built the capability, and we have become the largest savings institution in local currency in the country during this period. So we are thinking about consumers. Consumers always come first. So that's about the interest expense and how the savings work in our case.
In terms of the loan-to-deposit ratio, you know, we see a very increased flow of the new savings accounts during the end of the second quarter and the third quarter, so really excited about that, again. But at the same time, the origination is growing, especially on the new products such as merchant financing. You know, car financing will be the fastest growing in the third Q, now fully online sort of products, which, you know, we are number one in car financing in the country as we speak. So that really will be driving our financing volume, so loan-to-deposit ratio probably would be, you know, broadly stable. So that's basically about your first two questions.
In terms of the taxes and in general, changes in the regulatory landscape, there has been several changes which I think, you know, might be useful for everyone to know. So first of all, there was a change on the NPLs, which means, you know, the financial banks or microfinance companies cannot sell their NPLs to collection companies. That's, that was a one change, Kaspi never done this, so there is no impact on us. But, you know, that there has been the change in the regulation regarding selling your portfolios to collection companies. So no impact on Kaspi at this stage. Then there was a change that you cannot accrue the interest after 90 days' delinquency on the consumer lending.
Kaspi has never been accruing interest after 90 days and, you know, already for, you know, 10 years, so that has no impact on us as well. And the third change is an interest rate, which is currently discussed. Currently is a 56%. The interchange interest rate, which is suggested, is 46% for consumer lending on both banks and the microfinance companies, and I think hundred and seventy percent on payday loans or something like that. That segment we're not playing so, but, you know, I think it's around hundred and seventy percent. So, you know, again, doesn't have really a material impact on us. And but that change has not been in place. It's in the process of a discussion.
In terms of the taxes, in terms of taxes, I think there are several, sort of, you know, projects which and the draft of legislation change, which have been put in place and, and still under the discussion. And I think it's just too early to draw sort of any conclusions, and discussion has been, also, last year. And, and there is a general discussion, also, currently, but there is nothing really. If all the other things which I've said, I think that there is a either happened or have a realistic chance to happen in terms of the taxes, is difficult to say at the moment.
I think there are a lot of pros and cons, and, and I think different government bodies are involved, together with, with the financial institutions. The good thing about the tax changes, by the way, which I think are important, is reduction and simplification of taxes for SMEs. And that's a really exciting thing, because if that taxes are simplified and reduced for small and medium enterprises, which is the majority of our merchants, and, both on the payments and the marketplace, that will fuel another source of the growth. And, and I think that's an exciting piece of the, of what's happening. In general, there is really nothing major from us to hear that would have material impact on us. If there would be something, we would be the first one to tell you.
David Ferguson (Head of Investor Relations)
Very clear. Thank you.
Mikheil Lomtadze (CEO)
Thank you.
Operator (participant)
Our next question comes from Gábor Kemeny. Please announce your company name and proceed with your question.
Gabor Kemeny (MD, Senior Analyst)
Hello, this is Gábor Kemeny from Autonomous Research. Just two quick follow-ups from me, please. The first one is on Zhuma. Are you able to quantify roughly how much of the GMV in Q2 came from Zhuma? Just to give us a sense of how much of the Q2 GMV could be recurring, and possibly if you have a budget for the Q4 Zhuma you are planning, please. And the other question was on cost of risk, which I believe is slightly higher this time, maybe around 2.45%, if we annualize. I mean, you mentioned resilient asset quality, but is there anything specific you can call out?
Like, have you set aside overlay provisions or any reason for the slight increase? Thank you.
Mikheil Lomtadze (CEO)
Okay. So, you know, in terms of the, in terms of Zhuma, we've, we've historically suggested that, you know, in general, that's roughly about, you know, 15%-20% of our, of our, you know, GMV of that month, you know, roughly, of, in increase. I think it's difficult to extrapolate for this year, right? Because, again, the seasonality has changed and, and the, you know, the, the, the GMV is different because, again, different seasonal products, assortment is different. So you should really just, you know, sort of bear with us through the year, and we'll give you sort of more details, you know, especially let's see how the third Q performs, because there are changes on all fronts, you know, before Zhuma, after Zhuma.
You know, basically, consumers are waiting for Zhuma, so they are making more purchases during three days, but afterwards, they continue to buy more in the different verticals. And yeah, so I think historic performance, you know, has been, it would be different from what we have this year. You know, basically, two Zhumas in the sixth month of this year, there would be substantially more than one Zhuma that we had in the summer. So. But again, I think we'll provide you details, as, as we go through. We just would like to see how the merchant and consumer behavior is changing with our, seasonal approach and the strategy. In terms of cost of risk, I mean, you know, our sort of guidance, you know, is...
And the cost of risk, you know, we see no indication of having, you know, anything really to report. So there is some seasonality on some specific products, you know, like, merchant financing is already sort of 17% of our business. And so seasonality, you know, plays a bit differently. But for the year, and especially in the third Q, you know, we have no reasons to be concerned about the cost of risk. So it's stable. That is, you will see basically no increase. I mean, I can put it-
Gabor Kemeny (MD, Senior Analyst)
Thank you.
Mikheil Lomtadze (CEO)
In four words, that word. Yes.
Gabor Kemeny (MD, Senior Analyst)
Thank you, Mikheil. Just a quick clarification here. When you said 15%-20% amount, your previous guidance for Zhuma, was that... So should that be like a quarter? Sorry, should that be like a third for the quarter, or is it a monthly number?
Mikheil Lomtadze (CEO)
Well, you know, let us give you the details, you know. I just don't want to tell you something which wouldn't be the right number.
Gabor Kemeny (MD, Senior Analyst)
Sure. No problem. Thank you.
Mikheil Lomtadze (CEO)
Yeah. Sure.
Operator (participant)
Our next question comes from Mikhail Butkov. Please announce your company name and proceed with your question.
Mikhail Butkov (Equity Research VP)
Good day. Thank you very much for the presentation. I have two questions. One is a clarification on the deposit side. Just what is the average duration of your deposits? And also, what do you see the other players on the market also reducing the deposit costs right now? What is the competitive landscape on the deposit pricing which you see right now? It's the first question. And the second question, we could see in some articles that there were some like investor interest to build large warehouses in Kazakhstan and in Almaty to make it a hub for international deliveries into the Central Asia and into the Europe.
Do you see any way how the Kaspi can benefit from this cross-border potential deliveries, e-commerce? Is it something that you at all consider in your pipeline for the international expansion, the cross-border sales, I mean? Thank you.
Mikheil Lomtadze (CEO)
In terms of deposits, I mean, our deposit is quite straightforward. It's basically an annual deposit. So, you know, it's a very simple product, and at the moment, we have only one product on the market. So we're unusual compared to everybody else, you know, because everybody else, they have, I don't know, they have different type of deposits, and they might have deposit for winter, deposit for spring, summer, whatever. And we just have one deposit because we believe people just want to basically, you know, make money on the liquidity which they have, and therefore, we've launched a simple product, and everybody is pretty much pricing off our product.
So, from that perspective, you know, I would say we're more or less in the market. If we reduce the rate, then most of the people usually reduce it. So that's regarding the deposits. In general, we're not thinking like traditional institution. We're not thinking just purely in terms of cost of funding. We're thinking in terms of consumers and the quality of the engagement, and we know that consumers with the money and the ability to shop and buy are the best consumers for our marketplace and the rest of our products. So that's regarding the savings accounts. Regarding the e-commerce infrastructure, in general, I think it's in general, it's great news because that's, you know, something which will be sort of promoting the another wave of the e-commerce growth on the market.
We are having and sort of building the quite a significant size warehouses now for our e-Grocery, so that's not something which, you know, is new for us. I mean, during some of the investors, we had a trip, we showed some of the operations, which I think are, you know, quite impressive, and they're actually large. It's not like... It's like, you know, basically a big, you know, sort of 10,000 square meter kind of warehouses. And, yeah, so we use that only for e-Grocery at this stage. In terms of cross-border, that's something which is interesting to explore. We are, you know, careful about it in a sense that, we are in the business to promote the local merchants, and we are doing everything to help them to develop.
As a result, that's a central part of our strategy. So for example, if we, you know, if we would be, you know, flooding our marketplace with some cheap, sort of cheap, not brand, not branded items, that would be detrimental to our merchants. And we have been able, you know, historically, successfully compete with other marketplaces, and stand our grounds. But again, we're not standing, you know, idle, which idle or whatever, I don't know how to say English word, but we are basically working on different ways to support the local merchants, and the cross-border might be interesting from that perspective for us. But we're not going to, you know, ourselves, directly go into the cross-border, at least at this stage.
Mikhail Butkov (Equity Research VP)
Okay, thank you very much.
Mikheil Lomtadze (CEO)
We support local merchants, and some of the warehouses which have been built in Kazakhstan, they're also for the not just for Kazakhstan itself, but you know, for the maybe some regional ambitions, I don't know. But these warehouses have been built for a long time already. So when you see, when you read, Mikheil, something in the press, you know, you should come and see the warehouses themselves. Yeah. But yeah, great, great, great. Thank you very much for the color provided on this, and yeah, thank you.
Mikhail Butkov (Equity Research VP)
Thank you.
Operator (participant)
Our next question comes from Can Demir. Please announce your company name and proceed with your question.
Can Demir (Financials Equity Research Analyst)
Yes, good, good afternoon, this is Can with Wood & Company. I wanted to ask two questions. Can you maybe describe the e-cars business model and your value add there in cars? Because e-cars is now a substantial portion of the e-commerce GMV, so I think that would, that would help. And also, in e-grocery, can you describe the business model? It's been a growing business, but, I mean, I personally don't know what the business model there exactly. And do you also offer BNPL for e-grocery purchase as well? That's the other question about e-groceries. Thank you very much.
Mikheil Lomtadze (CEO)
Okay. So, bunch of questions about our business model. I will take a step back for a second, and before going to the specific verticals, I would mention that, you know, we are going now, and really excited about it, is we are going into specific verticals and, you know, building our use cases on the specific user experience, right? So basically buying a, I don't know, buying a vacation package, for example, is not the same as buying iPhone or a car or, or Pampers, you know, for, for the kids. So really different user experience. So we've started, we've started that with, initially with the, with the travel, then we went into the grocery, and then we went into the cars.
What you would see over time from us and maybe second half of this year, really cool ideas about what else we're doing around specific verticals, in our marketplace. So we're just pulling out a specific need of a consumer and merchant, and we are creating the user experience, which is specifically designed for that vertical. So that's the general way we're creating this new wave of innovation across our services, which will continue sort of supporting our growth in Kazakhstan. In terms of the cars, the way you should think about the cars really is if you combine together. Well, I would take the U.S. market as an example. If you combine together Carvana, you know, CarMax in a certain sense, like the biggest sort of, you know, one is fully online dealer.
The biggest, Autotrader, I think, is the biggest classified, if I'm not mistaken, in the U.S. And then you would combine some platform which sells the spare parts, which I think nobody has been successful in many other countries, and here we are working really hard to crack that. So that's a huge market. And now you're thinking, you know, in our car marketplace, on top of GMV and generating businesses, you know, that—it does seem that you don't really know much about our business, but things like, you know, drivers can issue their driving license in our app, they can register car ownership, they can pay car taxes, so that they can buy tires. So there is... Oh, they can buy car, actually car.
So there is a lot; they can get car finance. So it's a huge, you know, universe of different services around the car. So we are excited about that business just because it's after an apartment or real estate, probably the biggest household spending, both buying, servicing, maintaining the car and selling it afterwards. And we are in this market, you know, and we started to, this strategy from acquiring the largest car classified business last year. So now we're basically number one player in the car vertical, but we are just starting to innovate, because there are some things we're really excited about, the maintaining and serving the car, vertical. So that's about the car.
Can Demir (Financials Equity Research Analyst)
So e-cars, just to clarify, so e-cars is actually the business you got with Kolesa. Did I understand it?
Mikheil Lomtadze (CEO)
Portion of it.
Can Demir (Financials Equity Research Analyst)
Right. Portion of it.
Mikheil Lomtadze (CEO)
In the e-cars, we combine together. We're number one in tires, so that is-
Can Demir (Financials Equity Research Analyst)
Mm-hmm.
Mikheil Lomtadze (CEO)
You could actually see in our first few numbers, the breakdown, I think, you know, we provided breakdown for spare parts, cars 1P, car 3P.
Can Demir (Financials Equity Research Analyst)
Got it.
Mikheil Lomtadze (CEO)
It includes pretty much everything around, you know, selling and servicing cars, and we're number one in car sales, we're number one in tire sales as we speak, and we aspire to become number one in the spare part sales. And, you know, other services that you can imagine around the car. Just I don't want to talk, you know, too much about some of the things we are working on. So it's everything around the cars, whatever you can imagine. Fueling your car, everything around the car. So will be some cool stuff talking later this year about it. The grocery is pretty much e-grocery, you know, business. We went into the business. We have around 10,000 SKUs. We deliver you weekly purchase home, and we are working directly with the suppliers and, you know, whatever, Amazon Fresh, something like that.
The main difference of our business compared to many other businesses globally, that we have been able to make it in just 12 months, 7, I think 7% net income margin business. It's profitable, it's growing, and actually, we are, our challenge is to cope with the demand, because-
Can Demir (Financials Equity Research Analyst)
Mm-hmm
Mikheil Lomtadze (CEO)
... there is such a strong demand for that service, and this is a huge market that we're talking about, you know, sort of the $14 billion-$15 billion market in front of us.... So we are in three cities, and we just started one city in spring of this year. So that's something which we will be scaling. And it includes delivery, it includes dark store, everything, relationship with the FMCG brands to our marketing platform, but also with the brands and suppliers and distributors. And we are the biggest grocery player, I think now in Almaty already. So we're really excited about that. So that's, that's about the grocery business. I'm not sure if you had any other question, but-
Can Demir (Financials Equity Research Analyst)
The last question was, do you also offer BNPLs for grocery purchases?
Mikheil Lomtadze (CEO)
Well, I mean, BNPL in our case is, is basically, you know, a substitute of a credit card, right? So we offer our consumers an ability to, to have the payment options, which are related, your own money or BNPL. So, you know, consumers decide. And what happens with the consumers is, consumers don't use BNPL actually for grocery because, you know, that's a small ticket, relatively small ticket transaction, and they actually prefer to pay with their own money. But our, our, our consumers have a choice of using any payment option they want. And we basically completely killed the credit card business because we make approval, you know, within 99% in whatever seconds, you know, less than two seconds, I think. And it can be...
It basically people don't need the credit card, which has fees and untransparent products pricing and in, you know. As far as I'm concerned, credit card business does not exist in Kazakhstan anymore, just because we built such incredible, transparent product for our consumers.
Can Demir (Financials Equity Research Analyst)
Okay. Thank you, Mikheil.
Mikheil Lomtadze (CEO)
Thank you.
Operator (participant)
That's all the time we have for our Q&A. I'll now hand back to David Ferguson for any final remarks.
David Ferguson (Head of Investor Relations)
All right. Thanks, Elliot. Thank you everyone for your time. Thank you for your questions. Let's wrap it up for today. Happy to take any further questions offline, but if not, thank you, and speak to you in the autumn. Thanks a lot. Bye-bye.
Mikheil Lomtadze (CEO)
Thank you.
David Ferguson (Head of Investor Relations)
Thank you, everyone.
Mikheil Lomtadze (CEO)
Bye-bye.
David Ferguson (Head of Investor Relations)
Thank you, everyone.
Mikheil Lomtadze (CEO)
Thank you.
Operator (participant)
Thank you, everyone. This concludes today's webinar. You may now disconnect from the call.