Joint Stock Company Kaspi.kz

Hello and welcome everyone to the CACB KZ first quarter 2025 financial results. If you would like to ask a question and you have joined the call via Zoom, please press the right hand icon on your screen. If you've joined us on the phone, please press star one and it's her bank keypad. I will now hand you over to David Ferguson, Head of Investing Relations at CACB KZ to begin. David, please go ahead.

Great, thank you Maxine. Good afternoon, good morning to everyone. Thanks a lot for joining us for our first quarter 2025 financial results. I'm David Ferguson. I'm joined as usual by Mikhail Lontazza, our CEO and co-founder, Yuri Dedenko and Pengiz Macitse, our deputy CEOs. So Mikhail will take you through the strategic update. I'll run you operational performance in the first quarter. I'll do that quickly and then spend a bit more time on the guidance for the remainder of the year. There's a couple of moving parts to discuss and then we'll open up the call for Q&A. So on that note, I'll hand it over to Mikhail. Mikhail, over to you. Thank you.

Hello everyone. So let's just go through our first two performance. In general, we had a good first few. The company itself is performing at the levels which we expected broadly within our expectations. The payments, you know, continue to show growth revenues plus 16 percent, I think 21 percent. The marketplace in the first group, you will do 20 percent year over year and the revenue for the 3 percent net income 19 percent. And the FinTech origination volumes grew 17 percent, 18 percent revenue, 8 percent net income. The monthly transactions have been strong and we continue to have a very engaged consumer base and the revenue plus 21 percent and income plus 16 percent. Overall, the company's underlying performance is probably within our expectations. It could have been better on the GMV side. There was a requirements to register smartphones which introduced PASAS-PAN and that had a quite significant temporary impact on the demand for smartphones. And then on the FinTech side, we see the continuous high interest rate environment which again will continue probably through this year. And we are here also introducing a higher interest new deposit products which I will talk a bit as well. So next slide, David, please. So the e-grossing, this is the business which we have started one of the fastest growing business in our e-commerce. We continue scaling fast and expect to continue strong growth through the year. The active consumers reached almost 1 million. The GMV 64 percent up year over year and then the purchases are 66 percent up year over year with 3.3 million purchases in the first few. As you know, we are operating in the three cities, three largest cities now and we are planning to enter another two cities. So the P continues to execute on the grocery and you see the average ticket is very good, stable and yeah, we just continue scaling because the country with simultaneously as you know, PASAS-PAN is very good and continuously it form an operational side but also scale and we are entering the new cities to support the growth and we expect e-grossing to continue scaling fast through the year. New term deposits that we have launched for consumers, those deposits are aiming at a higher interest rate. Our interest rate environment has been you know, basically due to all sorts of factors which have nothing to do with the trustee itself, we are in the high interest environment and there is a demand for deposits which on the one hand have high interest, on the other hand those deposits are for sort of savings where you can top up deposits basically anytime but the term of deposit is actually fixed through the three or six months. The deposits itself have been very successful on the market as you can see. We went from basically nothing to yeah, 84,000 consumers and almost 379 billion in 10 years of those deposits. So they are growing fast, there is a demand for those deposits and therefore this product has been quite successful and we will be you know, the strategy we have always set historically is those are the best consumers that are saving with you and in the future they are making purchases through all our other services and therefore investing into the acquiring the consumer deposits and the consumers with deposits and the historical strategy always. Again in the future interest rates will go down and therefore there is additional opportunity for the you know, for profitability. At this stage we are in the high interest environment therefore we are taking advantage of this as well. We have been going through the different deposit terms upgrades so this is just a bit of a timeline for you guys to understand. So for example, we did reduce the deposit in February of 24 from 14 to 15 percent but then in 25 we do have the high interest environment so we have introduced six month maturity deposit at 17 percent. Then we have increased the rate on all our current deposits from 14 to 15 percent and then we introduced the three month maturity deposit at 18 percent interest rate. The way that we work with our consumers for example when we introduce when we increase the rate of the existing deposit from 14 to 15 percent we reprice our entire portfolio so that's the way our products work and we have been doing this consistently for for you know as long as we had basically deposit products so that's something you should keep in mind. The sooner we increase the interest rate we reprice our entire portfolio so when we went from 14 percent to 15 percent we therefore reprice the existing portfolio of our custody deposit and now the fastest growing deposits are the ones which offer the higher interest rate of 18 and 17 percent. A couple of other things we have raised euro bonds. This is our first euro bonds which we have successfully raised 650 million at 6.250 percent which is due to 2030. Again this was for us an opportunity to build a track record with the with the fixed income investors and this is the first euro first euro bond we have done and yeah considering our strategy for international expansion and and investments in Turkey more specifically you know it's good to be in a position of the financial strength so that's a good to build a track record but also the specifically that the transaction was successful you know euro bond fundraising. We have also signed the agreement to acquire Rubber Bank and this is a fully licensed bank which doesn't really have any customers and doesn't have branch network and this enables us to you know continue developing a fintech product in the in the in the turkey and also our initial plan is that you know we'll invest roughly around 300 million dollars in 2025 to fund our fintech strategy in turkey. So very then back to you just to go through the platforms.

Yeah

sure so thank you Michael so firstly on the payments platform pretty straightforward decent volume growth of 17 percent year on year faster TPV growth of 23 percent year on year that is a function of higher ticket size higher inflation all three of the core payment products are are contributing to that Casby Pay, bill payments and B2B payments with B2B payments growing and expected to continue growing at a faster rate than overall TPV. Pay rate moves down to 1.13 percent that is consistent with the trend over the last 12 to 18 months and is simply a function of mixed change mainly B2B payments and Casby Pay QR growing in share within the mix. In terms of the financials TPV growth with some yield compression results in 16 revenue growth versus 23 percent TPV growth. There is slower revenue growth on interest balances average current account balances increased eight percent year on year but overall 16 percent is decent and then as you've consistently seen with payments business the combination of tight cost control and its inherent operational gearing ensures the strong top line drops through at a faster rate to the bottom line 21 percent bottom line growth. Outlook for payments highly predictable healthy and unchanged versus when we updated the market at the end of February. Moving on to marketplace marketplace remains the fastest growing top line platform GMB growth up 20 percent year on year on in the first quarter supported by purchases of over 36 percent year on year e-commerce and e-grocery particularly playing the past but actually again just like the payments all three services e-commerce and commerce and travel are contributing to growth. Take race moves up continuation also of a theme you've seen over the last couple of years driven by value added services. Take rate accretion will ensure that fast GMB growth prostrates the revenue at a faster rate. Specifically on e-commerce e-commerce increased 20 e-commerce GMB increased 23 percent year on year on the back of purchases up 97 percent year on year. Grocery the main driver of that growth that high number of growth in purchases. As Nikhil talked about however in March of the year the Kazakh government introduced requirements around the registration for smartphones imported into the country. A number of reasons for this but one being to ensure the correct duties are paid by importers and merchants and what that meant is a sharp increase in prices on smartphones country-wide at a fall off in demand in the final month of the quarter. Smartphones are an important GMB category for e-commerce they account for around 18 percent of e-commerce and we estimate the impact of the fall off in demand in March not around seven percentage points off growth so that's 23 percent GMB growth would have been around 30 percent. You can expect this to remain a theme in the second quarter of the year but the good news is that this will be temporary once this is sort of worked through the demand for smartphones in Kazakhstan is not going to change and actually it's perfectly possible you see some catch-up effect in the second half of the year. Moving on to e-commerce e-commerce also delivered decent growth GMB up 17 percent. -per-rate accretion in m-commerce is less than for e-commerce. E-commerce is the beneficiary of value added the main beneficiary of value added services advertising delivery and classifieds so e-commerce -per-rate moved up to 12 and a half percent 140 bits m-commerce take rate moved up 20 bits m-commerce growth also impacted about a slowdown in smartphone sales in March but to a much lesser extent than e-commerce. Happy travel continues to deliver good healthy results GMB up 22 percent and strong growth across the board but again tours which we introduced around 12 to 18 months ago delivering really decent GMB performance and now up to 11 percent of travel GMB from zero just 18 months ago and driving the increase in take rate here so take rate moves up 5.3 percent from 4.5 percent further innovations planned in travel over the course of the year. In terms of the financials for marketplace fast GMB growth always take rate expansion in all three platforms translates into faster revenue growth of 33 percent year on year that's versus the 20 percent GMB growth. Profit growth is lower and that again is consistent with trends over the last two years is primarily a function of growth in e-grocery. The other point to call out here is that going forward it is possible that some large ticket size discretionary transactions which would be largely weighted towards e-commerce are impacted by broader macroeconomic uncertainty so categories to call out would be categories like consumer electronics and cars. Keep in mind that a category like cars one transaction makes a material contribution to GMB with a negligible contribution to the bottom line. We can come back to that later on. Finally moving on to the FinTech platform. Decent marketplace growth translates into decent TFV origination as has been the case over the last couple of years the growth has been primarily being driven on the merchant side of the equation rather than on the consumer side of the equation and again that should be a theme that replicates it continues to be seen going forward. On the balance sheet side of things for the last two and a half years you've seen the loan portfolio grow at a faster rate than the deposit portfolio that will now switch around the other way. The loan to deposit ratio is high and just as you saw in 2022 will take advantage of a high interest rate environment to once again focus on growing the deposit base as Mikhail talked about the logic being more deposits will drive more future transactions and will give us more funding which again will drive more future transactions on the marketplace business. Pricing trends in FinTech stable year on year. Cost of risk in the quarter increased to .6% from 0.5%. The increase was primarily due to macro provisioning and that macro provisioning is related to the sharp increase in interest rates in the first quarter. Underlying credit trends remain unchanged and for the year we expect a cost of risk to remain stable therefore cost of risk was a drag on FinTech profitability in the first quarter but over the course of the year again we expect stable trends. The increase in the MPL ratio versus the end of the year is normal Q1 seasonality. Actually if you look back on the last the Q1 conference calls over the last couple of years you'll see a similar pattern. Q1 MPLs move up and then they typically move down again in the second quarter related to Q1 seasonality. So decent TSE growth over the last 18 months has translated into decent revenue growth of 18%. Higher cost of risk, muted net income growth in the first quarter of 8% but again we expect cost of risk to be flat over the course of the year although as Mikhail has talked about higher funding costs now will be a theme as we grow the absolute number of deposits and the cost of those deposits has increased interiorly. You should keep in mind that we came into this year with interest rates at 14% across the portfolio and within a couple of months the top the latest product has rates of 18% that's a substantial increase in costs in a short period of time but we see it again as an investment in the business assuming we have successfully attract deposits over the remainder of the year. Moving on to Hepsi-Barada their first quarter results were published are the close of market on Thursday of last week. You can refer to their disclosures for a detailed update on the revenue side of things we just say make the main call out would be the politically driven consumer boycotts in March did materially impact GMV trends that also meant that the company pulled back on its marketing performance marketing initiatives which again exacerbated the revenue and negative revenue momentum in the quarter. On the cost side of the combination therefore of negative operational gearings number one and growth in loan loss provisions number two resulted in a net loss of 355 million Turkish lira around a step 40% of that loss is coming from higher loan loss provisions that is perfectly normal in the context of early FinTech products you're testing your risk you're experimenting with different risk models or high provisioning is a normal consequence of that number one and number two just to avoid sort of any confusion here these sort of loan products should not be confused with what CASPY is doing with its ban cap position in Turkey this relates to product initiatives that were started in Hepsi-Barada last year and have been part of its strategy over the last couple of years

so for CASPY

despite the impact of our low smartphone sales in March and despite higher macro provisioning in the first quarter the first quarter results were broadly where we expected them to be revenue up 21% net income up 16% year on year if you ask out the impact of the macro provisioning net income would have been up around 19% year on year these numbers exclude TANETI including TANETI revenue increased to 834 billion TENGE net income loss was 200 net income was 254 billion profits the loss from Turkey was equivalent to 6 billion TENGE so around sort of 2% dilution so a small negative impact from Turkey and particularly small in the context of CASPY and relative to the long-term opportunity that Turkey offers so moving on to the guidance GMV probe moves to 15 to 20% from 25 to 30% previously so number one that is a function of the new role rules for imported smartphones you know higher prices in the short term and temporarily lower demand but again this should be a short-term that should work itself out in the second half of the year and into the following year secondly increased macro uncertainty and the potential for that to impact higher ticket verticals I gave the example of cars average ticket size for one car transaction ten thousand dollars versus average ticket size for an e-commerce transaction 30 dollars so you can how that vertical can have a disproportionate impact on GMV but almost no impact on the bottom line that changing outlook should not be confused with a changing outlook the core 3p marketplace business beyond the point we've made on smartphones TPV outlook unchanged TSC growth of around 15% the lower range of the range given previously of 15 to 20% again that just reflects slower marketplace growth there's a couple of other factors to point out number one higher interest rates we've talked about it before that in itself is probably the sort of biggest drag on earnings again just to reiterate while that is a headwind in the near term interest rates in Kazakhstan are extremely high though the medium term that should turn into an important tailwind for the business number one number two we expect the Kazakh government to introduce a 10% tax on revenue from investments primarily in government securities we expect this to be applied to interest revenue for the whole of 2025 at 10% number one and number two we expect the government to increase national bank reserves from the summer of this year both of these two factors are still to be confirmed but we think there is a high probability and hence we include them in our guidance today the combined effect of those two factors will be around 200 approximately 200 50s of net income this year so there's a number of moving parts of the question is is the guidance conservative but we try to definitely reflect these different scenarios in the updated guidance to the best extent that we can on that note we'll open the call up to Q&A

thank you if you would like to ask a question please press the right hand icon on your screen if you've joined the call via zoom if you've done this on the phone please press star one on your telephone keypad now when preparing to ask your question please ensure that your line is unmuted locally our first question comes from Egal Arunian please state your company name and proceed with your question

Hey guys good morning good afternoon that's Egal Arunian from Citi maybe just on from the macro because I have a couple factors if you could expand on the macro uncertainty in Kazakhstan is that driven just by the higher interest rates or are there more things you're seeing there to help us kind of understand the framework of what's going on there and then in Turkey too with the the boycotts has that changed your I know it's not going to change your long-term outlook but your near-term outlook for the integration your expectations around what you can do in Turkey we'd love to kind of get a sense on on that level thanks

all right Egal so thanks for your questions so on macro I guess there's a couple of things you could sort of point to but I think let's just keep it simple lower oil price can translate into slower GDP growth number one volatility in commodity prices can translate into currency volatility and increased uncertainty number number two again I wouldn't over exaggerate this I mentioned earlier we expect payment trends to be resilient throughout the year payment trends are indicative of spending in the economy but some high ticket discretionary transactions which would be weighted to marketplace and could disproportionately impact gmv could be impacted to some extent and we're choosing to take a conservative approach the third area currency weakness translates into inflation and higher interest rates which we've talked about and that is a pressure on earnings in the near term so there are a number of different moving parts they create some more uncertainty there's a margin we're taking a conservative approach but again overall the outlook for this year remains robust and and and decent our uncertainty simple answer for me is no but and I know Mikhail has anything to add to that

yeah I mean in terms of our in terms of our class we there has doesn't have any those have any impact again you know whoever has been who has been following the in the past day and the way we sort of work you know I think it's all about you know quality of the of the consumer and the merchant experience and that's what is you know important for the long-term success it's again it's not about competition it's not it's really about delivering the the super quality products and the services to to the customers and that has been our most important strategic or priority always in our operation so that remains our focus

okay thanks and it's just a follow-up then on Turkey and the bravo bank exhibition talk about a little bit more the early steps there and building out the the syntax platform you know how much progress that may be an update on timeline products as you roll that out thank you so much

at this stage we are still in the process of getting the the approval for the position so that will happen over some time in the in the second half of the year and and therefore that's basically the the most important immediate step for us you know to put a simple words you know a license to to launch the products on the market we do see a lot of opportunities in the digital and online services so as soon as we have approval and then we'll start you know yeah we'll start introducing some of the things like products on to the to the market in tokyo but we're really excited about the things that we could we could do and we can uh we can take uh feedback and financial services to another level

thanks so much

the next question comes from darren from water search please go ahead darren your line is now open um

all right thanks guys can we just start off by uh going a little further into those one-time factors impacting guidance one more time i mean i think the interest rate on securities just is that is that a one-year uh item just trying to figure out the timing of that and even on the smartphone dynamic if you could explain a little bit more of what's what exactly happened how how you estimate it's impacting your numbers uh and then putting those aside what you see as marketplace normalized growth right now if you were to pull out some of the factors on the macro front that you're just referring to now thank you

yeah darren so a couple of things so all right firstly let's do the smartphone one so uh this is ruling that came into place in march um it relates to the import of all devices smartphone devices into the country um the the unique code within the device needs to be registered with the authorities i think this is actually quite common all around the world there's different reasons for this security being um one um to ensure the relevant sort of import duties are paid number two amongst other factors and what that has meant is that over across the country um the price of smartphones increased number one and demand temporarily fell off we saw this quite dramatically in our numbers in march and you can expect that to continue in q2 it will work its way through relatively quickly it's a guess a price adjustment a short-term price adjustment to the margin nothing to the market nothing has changed in kazakhstan with regards to people's use of smartphones and and so on so the managers normalize in the second half of the year as i mentioned there could also be some sort of catch-up effect there you asked about our normalized rate well i would even know take the normalized rate you asked how we can quantify it well we know the size of smartphones are the category within e-commerce i said it's about 18 percent of e-commerce gmv we saw the impact in march so i think normalized e-commerce growth rate is around 30 percent if you adjust for that that that factor versus the 20 i think three percent that we reported in the the quarter so that's sort of one off um i think the um second is interest rates i mean that is actually the biggest sort of drag higher interest rates you saw that the central bank we came into we sort of if you think about sort of six to seven months ago just as the trend globally rates are expected to move down inflation started to wobble central bank moved rates up in december and then again moved them up sharply in march of the year higher national bank rates to combat inflation translates into higher deposit rates for for us but again while this isn't worn off the good news here is that well i don't want to speculate on whether interest rates have peaked but they are incredibly high at the moment and there is a material drag on earnings in the near term it's not unreasonable over the medium term to think about rates normalizing if you think that's a sort of pre-2022 rates were sub 10 percent so there's a big big change in uh costs so what is the uh for 2025 a headwind does have the potential to be a tailwind over the the medium term although the timing difficult predict on the 10 tax that's likely to be introduced for liquidity revenue no that's not one-off you should assume that that stays in place going forward it's not actually material for us there's other banks in kazakhstan that have a much larger share of their p and l that comes from from investment activities we're a transaction based business um what at the margin it makes an impact same also for national bank higher potential reserve requirements is not huge for us but again at the margin it makes a difference i talked about so that those two factors knocking around two percent off growth so there is a number of different moving parts we try to sort of put them all together here and reflected in the guidance and hopefully hopefully we've done that correctly

all right that's that's very helpful david because just a quick follow-up would be on the payment side when i think of the underlying growth rate and i see the b2b side in particular or bill payment maybe just break down the key drivers you're seeing more versus less strength than right now uh affected by macro perhaps but on the payment side of the business if you were to break it down a little bit more than what you're seeing more value and

the calla question is here

yeah sure i mean on the on the payment side uh you know at this at this stage i mean it's it's i mean our payments business it's really all about you know enabling the smaller money and the purchasing and the transactions and the payments so from that perspective that is uh you know we that is you know less you know less impact just because we are the drivers so for cashless transactions uh the b2b side uh that's something which has been historically growing fast just because of the low penetration but also the type of services that were launched when the payments and the process between our merchants and distributors so from that perspective you know we feel like uh you know payments business is uh yeah it isn't is it is in a good place and uh and also we constantly innovate around the payments uh as well just you know supporting the growth and b2b is really just one example of what we do

all right thanks guys

thank you the next question comes from buddy smith from jp morgan please go ahead ready your line is now open

hey thanks for taking the question um i've had a follow-up on the uh on the mobile phone things to make sure that i'm understanding it correctly so if i understand it like i guess the government is cracking down on counterfeit phones and um like a quick search showed that we're just at that you know as much as half of the phones uh brought into kazakhstan are sold in kazakhstan were i guess believed to be counterfeit you talked about things improving in the back half it sounds like there's a supply issue more so than a demand issue i'm not thinking about that correctly um because if the issue is that there just aren't i guess legit phones coming in like how does that erect in the back half of the year and then a second piece of that uh was there any signaling prior to the announcement that this can be coming down the uh the pipe uh and i guess finally is there anything else that that is going on in kazakhstan that could potentially um be a thing or an issue uh for you guys from a regulatory perspective that we may not be talking about or thinking about today when i say we i mean us investors thank you

i mean from my side i wouldn't say it's a supply issue that's not sort of um over complicated there's there's no reason why smartphones can't be imported to to kazakhstan um so it isn't a issue um if um devices are being imported the correct way it's just meant a sudden increase in prices it means the duties are being paid actually this is a good thing in the long run because you are um again just bringing more more transactions into the formal economy which of which we are a beneficiary of this is a blip that will work itself out in the next couple of months but for any e-commerce business whether you're in kazakhstan or globally in the u.s and smartphones are just an important e-commerce uh category so any sort of change in demand um is is hard to escape from but it will work itself um out um mikhail anything else on the the coming down the pipe that we need to be aware of

um well i mean we did mention about the you know 10% tax on revenue from diamond security so at the moment the tax is uh is zero which you know is unusual for many other markets so the as part of new tax code discussions you know the new tax of around 10% and on revenue for diamond securities will be introduced uh at least we think that it will be introduced and uh yeah i mean nothing really else comes to my mind i think we did discuss on a previous show that the the bank uh tax also being discussed as a part of the of the new tax code that the bank income tax will be raised from 20 to 25 percent and the banking is one of the businesses that uh that we have so uh yeah i don't know i don't think there is anything else at this stage that that would believe what we think might have a impact

yeah that makes sense and i guess just to follow up on the uh the mobile phone and maybe i'm thinking about this wrong um i guess previously there was a uh a large supply of keeper mobile phones due to counterfeiting or whatever and that supply is going to go away and so now people are going to have to buy legitimate phones that may be more expensive is that the right way to think about or or have i oversimplified it or am i missing something

that's the correct way to think about it

okay got

it

thank you yeah we estimate that the price for mobile phones will go up got it perfect thank you

thanks

rebecca

The next question comes from James Freedman. Please state your company name and proceed to the question.

Hi,

good evening. It's Jamie Freeman at Tuscany Hanna. In terms of the Rabobank acquisition and the overall banking strategy in Turkey, Mikhail, I'm just wondering how you would compare the opportunity there relative to Kazakhstan, how the strategy may be different as you go to market there versus in your home country and and what the 300 million dollar investment is is targeted to to achieve to get you standing up there?

Okay well i mean we will be discussing the details you know in a in a due course and the one thing i can i can i can mention that the the investment itself should the should the transaction be improved is a combination of funding the total development but also the you know capital which you know any licensed bank needs a minimum capital to operate so all those things will just you know give us an opportunity to innovate around the financial services i wouldn't expect you know anything or major introduction of the new sort of services piece here the approval only itself will take us into the second half and and when you think about the financial services in general it's important to have the very high quality product from the very beginning because that's what you know does some of the loyalty and therefore you know we will be looking to launch uh i mean not launch but basically just uh do you know we have already i think the world's first financial products in our in our mobile application so those are the things we'll look to uh to launch but you know i don't expect anything sort of major to happen this year because we need to complete acquisition first gets approval and then set up everything right for the for the long term success so we're not we are not in uh we never we never had it to launch things we want to make sure we get them right and and perfect especially financial services and in the lending business it's equally important to get paid back when you originate so originating you either build assets or we build the liability so in our case you know you need to build the whole process to make sure that the product is is is a very high quality like it has but also the cost of risk which we have historical around two percent which is the world is the is really the important metrics for any lending operation

okay uh thank you for that and then my uh follow-up is with regard to the relative growth of one p versus three p um so in terms of what is embedded in the assumption for the guidance data that could get alluded to this in your prepared remarks um yeah how should we be thinking about that because that can have an impact on uh take rates obviously and margin one p versus three p assumptions as we travel through the cadence of the year thank you

well one p is really just grocery grocery to a much lesser extent one p cars so one p grocery actually we pulled it out in the first quarter you saw very very strong growth and i think you can expect it to continue to post numbers not dissimilar to what you've seen in the the first quarter which is faster is faster than the the three p business in response to darren's question we talked about three p business normalized of growth in the first quarter around 30 versus e grocery growing north of 50 the one sort of the flag but again let's not over exaggerate it because in practice it's non-core is is one p cars but one and three p cars but where it makes a difference the gmv again i made the point of a ten thousand dollar transaction versus a fifty dollar or thirty dollar transaction but the bottom line in fact from that is is is very is is not material so don't confuse the gmv downgrade with an equivalent bottom line downgrade you'll get to the wrong answer if you you you do does

that answer the question yeah perfect thank you david

thank you the next question comes from nira chandra please state your company name and proceed with your question

hey nira can you hear us are you on mute now nira okay i think you're on mute you're showing is on mute to me all right maxine let's is uh let's start with david i'll follow up with you guys afterwards apologies

sorry nira we can hear you

do you want to ask you a question um i think we've lost him let's uh let's go to the next um question please

next question is from gebor come any please state your company name and proceed with your question

hi there this is gabor from autonomous thank you for taking my questions firstly on funding um can you help us scale how much more how much more to come in terms of the increase in in in funding costs from higher deposit rates and possibly possibly the change in the mix so what do you pay on the back book and where do you see your incremental costs overall um secondly uh on the pricing of your lending products have you made changes there i mean i i seem to recall you were placing the pricing the buy now pay later in the in the mid teens interest rates presumably and you you would consider making changes when you implement deposit costs in the in the high teens and just finally on the turkish lending product pepsi is experimenting with how comfortable are you with with with them um you know introducing your new lending products and when you are about to to scale up the the Finza offering with a different franchise thank you

so gable no change to pricing gross gross yield was flat year on year 26 percent number one number two um increase in percentage cost of funding for the year and realize between 100 to 150 bits number three just keep in mind that with a banking French a banking license you can do things in a different scale you can have deposit functionality if you have dot deposit functionality the people who save with you will spend with you number one number two you can use that to fund more lending which drives more transaction on your marketplace exactly the sort of thesis behind um cassey marketplace in Kazakhstan so you can do that at a much bigger scale over over over time um and he doesn't have anything like that at scale currently all initiatives are just early in

in stage but logical to do thank you david all fair points i just want small follow-ups 100 to 150 basis points that was the blending average increase in funding cost to expect this year or something different please

correct

got it thank you

maxine i think we're ready for the next question please

yep our next question comes from candomir please put your company name and confused with the question yes

good afternoon this is john with wood and call thank you very much for the opportunity so i have a couple of questions so on rubble i think it was acquired through the kazakh entity and not through hepsey burada as far as i understand it and i was wondering why you didn't acquire it through hepsey burada then you know this bank will work pretty closely with the tepsey so that's the first question um the second question is how do you plan to get out of this boycott driven drag in turkey is it marketing is it pr are there any plans around it and the third question is on your cost of risk and asset quality so the cost of risk is i think exceptionally low in kazakhstan which is good news but how is it possible that it's not affected by the macro outlook at all when the macro outlook affects gme and other things so i was just curious about that thank you very much

can't remember what the first question was

the first question is rubble was acquired through the kazakhstan yeah thanks

but in simple answer hepsey doesn't have the money to acquire and subsequently invest casby has the the money so it simply is impossible for the hepsey entity to fund that transaction that's the answer to number one number in the absence of a capital injection into hexy number one number two um the boycott i mean that's probably a question that is better directed towards the hepsy management team we wouldn't speak on their behalf they will update in due course on trade and trade indian q2 i think the the results will um that that question number three what you need to keep in mind is that the trade-off is not just cost of risk in isolation it's cost of risk versus volume so you can manage cost of risk at stable by turning down volume or turn it you can accept a higher cost of risk with more volume so whereas you're looking at cost of risk is the variable i'd look at it the other way and look at volume is the variable

okay and on on the first first question so i mean why why wasn't it possible to to to inject capital into hepsey because i mean it it doesn't look that smooth to me when you know rubble will work super close with hepsey but hepsey you know is had minorities right i mean isn't that a problematic structure slightly

no um so in terms of simplicity um this is the sort of simplest way to progress this transaction in the near term number one um in the medium term arrangements can be structured in lots of different ways um but again you're getting you're probably jumping the gun a little bit let's just complete this transaction it's subject to regulatory approval expected in the second half of the year and then then we'll be in a better position to talk in more detail about how we address the point that you've fairly raised

super thank you thank you

thank you our next question comes from salmon i please state your company name and refuse your

question good evening i am from fountain head partnership my question again comes back to the deposit cost with two questions related to it one is that how does your 18 percent compare with the deposit trades being offered by other banks and second is that if the central bank is not able to planning to increase the reserve requirements do you expect another round of increase in deposit costs as other banks try to manage their liquidity thank you

do you want to talk about the attractiveness of the deposit

products mccain yeah of course i mean in general our strategy has been always to be to have attractive uh you know products uh for for our consumers but not the highest you know interest rate on the market and again you know our deposit is a bit different from many others because it's a sort of a qualification you know consumer experience is better the the process is better the product itself it's uh it's probably better so i would say that our interest rate is uh is on the on the comparable sort of strong deposits the you know low end that's number one number two in terms of the national bank reserve requirements i mean that's you know the impact that it has on the potential impact it has on that income is because the additional national bank reserves as they have been discussed correctly there will be free with the national bank so that's where the impact really comes on the on the bottom line so it's not really an equity issue uh and i don't think it's a liquidity issue for most of the banks i would assume so but no not in our case definitely but it just said this is why we have it in the net income section because if it's an interest free balance is the national bank obviously you know we don't have uh well interest rate associated with us

that's the question

yes yeah thank you i'm just wondering that what what is the system ldr like you are at 97 percent so do you know what is the system ldr and does it mean it will squeeze other banks

oh country we help you with the without events uh we're really focused on our business and this is what we care about uh historically we had anywhere from ap to pretty much close to 100 won't be post-racial so you know it's in our in our case we're we're

good thank you very much we appreciate it

thank you

so maxine maybe in the interest of time we can take the final question

please thank you our final question today comes from bonac gurdier please state your company name and proceed with your question

hi good afternoon this is ronak from danos uh just a quick one on your take rate on payments we've seen a pretty significant consistent decline over the last two or three quarters whereas you know if i look at the tpv breakdown that hasn't you know the contribution hasn't changed much so if you could just talk about what's driving the reduction in take rate and where we should expect that to normalize thank you

it wouldn't say it's a dramatic change i'd say it's a gradual uh change but if you think about it the caspy pay is 95 bits and b2b is less than than that then just mechanically if they grow slightly faster then you will just see gradual attrition and i think you should expect that to continue for a period of time and that is the expense which you can't really see in that chart of things like interchange on the legacy car product which would be in a higher take rate business so your base case going forward should be on ongoing gradual attrition in take rate but it's not not substantial i guess over time as as growth moderates then so also will there will be also a moderation in take rate dilution as well

yeah and just so just again mentioned if you look at the track record and the rest you know several years whatever or uh you know transactions the main the fastest growing transactions are you know the the caspy take you know transactions 0.95 percent take rate so we have always said that you know as this business becomes you know bigger you know the the take rate basically will be gradually moving towards 0.95 and exactly for that reason i think two calls before this one we've introduced to give a bit more details and before we would say like 1.2 take rate then we said we started to say two digits you know like 115 or 118 just so that you can guys track but this strategy and the trend hasn't changed so in the in the medium term it will be going towards uh you know the lowest take rate business which is growing the fast which is just 0.95 percent take rate

thank you all

right

so i think we're going to wrap things up apologies if we haven't got your question please we're happy to follow up separately but we need to move to another meeting now so thanks a lot for your time today thanks everyone for your questions keep in touch let us know if you have follow up and we'll speak to you also thanks a lot everyone thank you

thank you everyone at this complete today's webinar you may now disconnect from the call