KSPI Q2 2025: Funding Costs +70bps; Provisions Rise to 2.5%
- Product Innovation and Quality Focus: Management’s emphasis on enhancing existing services and introducing new offerings ensures that core customers and merchants remain highly satisfied, establishing a strong foundation for future growth.
- Resilient Marketplace Performance: Despite temporary challenges in the smartphones category, other verticals—including clothing, beauty, and electronics—are exhibiting robust growth (up to 60% year-over-year), underscoring the underlying strength of the marketplace.
- Strong Cash Generation and Capital Return Potential: The company’s highly cash generative core business supports the potential resumption of dividends and share buybacks in 2026, even as significant investments are made in Turkey and bank licensing initiatives.
- Rising Funding Costs: Management noted that funding costs have risen significantly—with deposit funding cost increasing by 70bps YoY and expectations to reach around 100bps over the year. Such increases may pressure margins in a high interest rate environment.
- Asset Quality Concerns: Q&A discussion highlighted an uptick in NPL ratios and a quarterly provisioning rate of 2.5%, above the formal guidance of 2%, suggesting potential deterioration in asset quality and heightened credit risk.
- Uncertainty Over Capital Returns: Management remained vague on the timing and mix of capital returns (dividends and share buybacks) due to substantial ongoing investments, particularly in Turkey. This uncertainty could delay or reduce shareholder returns.
| Metric | Period | Previous Guidance | Current Guidance | Change |
|---|---|---|---|---|
Overall Guidance | Q3 2025 | no prior guidance | Reiterated full‐year guidance with trends in line and Q3 “started well” – no specific metrics | no prior guidance |
GMV Growth | FY 2025 | Revised down to 15%-20% from the previous guidance of 25%-30% | no current guidance | no current guidance |
TFE Growth | FY 2025 | Expected at the lower end of the previously guided range of 15%-20% | no current guidance | no current guidance |
Interest Rate Impact | FY 2025 | Higher interest rates identified as a significant drag on earnings | no current guidance | no current guidance |
Tax on Revenue from Investments | FY 2025 | 10% tax on revenue from investments | no current guidance | no current guidance |
National Bank Reserve Requirements | FY 2025 | Increase expected starting in summer; marginal business impact | no current guidance | no current guidance |
Blended Average Increase in Funding Costs | FY 2025 | Expected funding cost increase of 100–150 basis points | no current guidance | no current guidance |
| Topic | Previous Mentions | Current Period | Trend |
|---|---|---|---|
Product Innovation and New Offerings | Q3/Q4 2024: Focus on launching gift cards, expanding e‑grocery into new cities, developing e‑cars and BNPL products, and introducing merchant‐focused innovations such as business deposit and buy inventory now, pay later. | Q2 2025: Emphasis on expanding e‑grocery with robust GMV growth, launching a fixed‑term deposit product, introducing KaspiQR enhancements, rolling out a smartphone registration service, and launching domestic tours alongside continued focus on Hepsiburada. | Shift: While the core focus on product innovation remains, new offerings such as fixed‑term deposits and domestic tours have emerged, and emphasis on gift cards has diminished. This indicates a broader product mix aimed at driving both consumer and merchant engagement. |
Resilient Marketplace and Payments Growth | Q3/Q4 2024: Robust marketplace growth driven by diverse categories, strong take‐rate expansion, and consistent payments growth with solid TPV and revenue metrics. | Q2 2025: Continued strong growth in both segments with marketplace GMV and revenue increases, solid advertising performance, and payments expansion via KaspiQR despite a decline in smartphone sales due to registration challenges. | Consistency: The resilient growth story remains, although minor headwinds such as lower smartphone sales are evident. Overall, the sentiment remains positive with sustained expansion across both platforms. |
Capital Returns and Shareholder Value Strategies | Q3/Q4 2024: Emphasis on a strong track record of capital returns with a dividend declaration (e.g., 850 million Tenge per ADS) and discussions on leveraging operating cash flow for shareholder returns. | Q2 2025: The focus has shifted to prioritizing significant investments, particularly related to international expansion, with plans to resume capital returns in 2026 rather than immediate dividends or buybacks. | Transition: There is a noticeable shift from immediate capital returns to reinvestment in growth initiatives, with deferred shareholder payouts planned for the future. |
Rising Funding Costs and Interest Rate Pressures | Q3 2024: Earlier discussions noted lower funding costs from reduced deposit rates, contributing to improved fintech margins. Q4 2024: Raised rates and increased funding costs impacted yield and led to headwinds in fintech margins. | Q2 2025: Funding costs have increased (deposit funding up by 70 basis points) and the high interest rate environment continues to pressure the bottom line, particularly in the fintech segment, although benefits are anticipated when rates eventually decline. | Mixed Sentiment: After an earlier period of easing funding costs, Q2 2025 sees renewed pressure from higher rates, highlighting uncertainty in margin performance despite future expectations of improvement. |
Regulatory and Compliance Risks | Q3 2024: Emphasized full compliance with local and international regulations and transparency in transaction processes. Q4 2024: General discussions on regulations (e.g., VAT, national payment network) but no imminent risk was flagged. | Q2 2025: There is no specific mention of regulatory and compliance risks in this period. | Disengagement: The removal of detailed regulatory discussions in Q2 2025 may reflect a stable or less concerning regulatory environment compared to earlier periods. |
International Expansion and Investments in Turkey | Q3 2024: Strategic discussions around acquiring Hepsiburada, highlighting Turkey’s large market potential and cultural fit; planning for integration while maintaining brand independence. Q4 2024: Emphasis on market opportunity with macro normalization and strong investment in Hepsiburada. | Q2 2025: Continued focus on international expansion with the final acquisition of Hepsiburada completed and progress on obtaining a banking license in Turkey; strategy remains to leverage Turkey as a key market for future growth. | Reinforcement: The expansion strategy into Turkey remains a constant priority, with Q2 2025 milestones (final payment and banking license progress) reinforcing earlier ambitions and suggesting further deepening of the international footprint. |
Acquisition Integration Challenges | Q3 2024: Discussion centered on integration approach with emphasis on cultural fit and collaborative technology sharing between Kaspi and Hepsiburada, though challenges were acknowledged in maintaining independence. Q4 2024: Integration approach highlighted with strategic investor positioning. | Q2 2025: There is no specific discussion around acquisition integration challenges, suggesting that the integration issues may be largely resolved or are not a current focus. [N/A] | Resolution: The absence of current integration challenges indicates that previous integration efforts are progressing smoothly, reducing integration risk as a focus. [N/A] |
Asset Quality and Credit Risk Concerns | Q3 2024: Consistent and predictable credit risk with stable cost of risk and sound collection trends; lower coverage due to growth in collateralized car loans. Q4 2024: Stable credit metrics with efficient balance sheet usage despite loan portfolio and deposit dynamics. | Q2 2025: Asset quality remains strong with stable credit trends; a slight uptick in NPL provisioning and a marginal increase in macro provisions are noted due to higher interest rates. | Stability with Caution: Overall asset quality is maintained, though higher macro provisioning and slight NPL upticks signal caution in a challenging macro environment. |
Profit Growth and Margin Pressure Uncertainties | Q3 2024: Profit growth was steady across segments with marketplace and fintech platforms showing stable margins; guidance and performance metrics were positive overall. Q4 2024: Guidance for profit growth was slightly more conservative amid yield dilution in fintech and currency volatility. | Q2 2025: While robust profit growth is reported in marketplace and payments, margin pressures persist in the fintech segment due to high funding costs and lower-margin e‑grocery contributions, tempering overall growth optimism. | Heightened Pressure: The continuation of profit growth is balanced by increased margin challenges, especially in fintech, as high interest rates impose additional costs. The sentiment remains cautiously optimistic but acknowledges pressures. |
FinTech Business Dynamics | Q3 2024: FinTech revenue and bottom-line growth were strong with improved margins, stable yield, and consistent cost of risk, supported by a better deposit rate environment. Q4 2024: Continued robust growth in origination, loan portfolio, and deposits, though yield dilution was noted. | Q2 2025: FinTech shows healthy origination and portfolio growth, with deposits rising; however, revenue gains are partly offset by lower net income growth as high funding costs challenge profitability. | Dynamic Yet Challenged: FinTech remains a key growth driver with strong underlying metrics, but the high interest rate environment introduces challenges that dampen net income growth, indicating a nuanced performance outlook. |
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Capital Deployment
Q: Funding, asset quality, capital allocation rationale?
A: Management noted that deposit funding costs increased by about 70 bps and are expected to reach around 100 bps over the year, while asset quality remains stable despite temporary macro provisions. They intend to balance significant investments—like the banking license and Turkish opportunities—with returning capital through dividends or buybacks, ensuring long‑term value for shareholders. -
Capital Returns
Q: Future dividend and buyback levels?
A: Management indicated that although investments are substantial this year, they will strike a balance next year between growth investments and returning capital to shareholders. No firm payout ratio was committed yet, but the strong, cash‐generative business supports a potential return ratio similar to past performance. -
Marketplace & Smartphones
Q: Smartphone impact and promotion strategy?
A: Management explained that despite a temporary setback from mandatory smartphone registration, underlying marketplace growth remains healthy—with growth excluding smartphones at about 31%—and new services are being deployed to restore consumer confidence, supporting robust vertical performance overall. -
Product & Vertical Growth
Q: HepC product improvements and restaurant expansion?
A: Management emphasized that their primary focus is to enhance existing services for both consumers and merchants. They are rolling out straightforward, value‑adding enhancements in the HepC platform and are carefully expanding into key verticals like restaurants, ensuring immediate value while paving the way for further innovation. -
Fintech Margin Management
Q: Dividend timing and fintech margin resilience?
A: Management clarified that while the precise timing of dividends or buybacks remains flexible—potentially resuming in 2026—the fintech business saw improved profitability driven by robust volume growth, which helped offset the impact of higher funding costs.
Research analysts covering Joint Stock Co Kaspi.kz.