Business context and reporting period
Joint Stock Company Kaspi.kz filed its annual report on Form 20-F for the fiscal year ended December 31, 2023. The company operates consumer and merchant Super Apps across Payments, Marketplace and Fintech, primarily in Kazakhstan. Financial statements are prepared under IFRS in Kazakhstani tenge (KZT); USD figures are convenience translations. This filing reports full-year results, not standalone 2023 Q4 results, so quarterly Q4 financial values are not clearly provided.
Key financial and operating metrics
| Metric | 2023 | 2022 | Change |
|---|---|---|---|
| Revenue | KZT 1,913.5bn | KZT 1,270.6bn | +51% |
| Net income | KZT 848.8bn | KZT 588.8bn | +44% |
| Net income attributable to shareholders | KZT 841.4bn | KZT 585.0bn | +44% |
| Net income margin | 44.4% | 46.3% | Down about 1.9 percentage points |
| Net cash from operating activities | KZT 1,106.1bn | KZT 1,021.0bn | +8% |
| Cash and cash equivalents, year-end | KZT 820.5bn | KZT 615.4bn | +33% |
| Total assets, year-end | KZT 6,821.9bn | KZT 5,121.6bn | +33% |
| Net loans to customers, year-end | KZT 4,236.0bn | KZT 3,154.8bn | +34% |
| Customer accounts, year-end | KZT 5,441.5bn | KZT 4,000.7bn | +36% |
Total costs and operating expenses rose 62% to KZT 891.5bn, or 47% of revenue versus 43% in 2022. Interest expense increased 72% to KZT 478.0bn as the average rate paid on customer accounts rose to 10.1% from 7.9%. Net interest margin declined to 6.8% from 8.1%. Provision expense increased 44% to KZT 79.6bn; cost of risk was 2.0% versus 1.9%.
Cash flow from investing activities was an outflow of KZT 218.4bn (versus KZT 487.2bn outflow in 2022); financing activities used KZT 676.0bn (versus KZT 275.9bn), primarily reflecting KZT 560.1bn of dividends. Cash increased by KZT 205.1bn over the year.
Funding was mainly customer deposits. At year-end, customer accounts were KZT 5,441.5bn; debt securities issued were KZT 99.5bn, subordinated debt KZT 62.4bn and amounts due to banks KZT 0.2bn. Equity was KZT 1,103.2bn. Kaspi Bank’s regulatory capital ratios were 12.6% Tier 1 and 13.0% total under Kazakhstan requirements; under Basel III they were 17.4% and 18.1%, respectively.
Material changes versus the prior comparable period
- Payments segment net income grew 55% to KZT 308.9bn; TPV rose 43% to KZT 28,406bn, while the take rate remained 1.2%.
- Marketplace segment net income grew 63% to KZT 248.0bn. GMV increased 45% to KZT 4,161bn; the take rate rose to 9.2% from 8.2%. E-commerce GMV grew 53%, and e-Grocery GMV grew 254% from a small base.
- Fintech segment net income grew 23% to KZT 291.9bn, slower than the other segments, as higher deposit funding costs partly offset revenue growth. Fintech’s share of group net income declined to 34% from 40%.
- Revenue included KZT 68.8bn of retail revenue for the first time, principally from moving e-Grocery to a first-party model and adding car e-commerce. The company acquired 90.01% of Magnum E-commerce Kazakhstan and obtained control of Kolesa through its share purchase and trust arrangement.
- Gross non-performing loans were KZT 244.2bn, or 5.5% of gross loans, compared with KZT 211.6bn, or 6.3%, in 2022. The allowance was KZT 242.5bn, equal to 99% of gross NPLs.
Outlook, commentary, risks and unusual items
Management expects growth from increasing customer and merchant engagement, expanding digital services, and newer businesses including travel, e-Grocery, merchant finance, advertising and delivery. It expects Fintech profitability to improve if interest rates fall, while acknowledging that e-Grocery’s first-party model may reduce Marketplace margins in the near term. The company provided no specific quantified earnings or revenue guidance in the supplied filing text. It plans to pay annual dividends of at least 50% of IFRS net income, subject to shareholder approval, subsidiary distributions, regulatory capital requirements and business needs.
Key risks include Kazakhstan’s economic, political and regulatory environment; inflation, interest rates and tenge volatility; credit losses and unsecured lending; deposit withdrawals and liquidity mismatches; dependence on Kaspi Bank and regulatory capital requirements; competition; execution and profitability of e-Grocery and acquisitions; cybersecurity, technology availability and data protection; and evolving tax and banking rules. The company reported that 80% of customer accounts were term deposits at year-end, but customers may withdraw term deposits early. It also noted that most loans are unsecured and that estimated uninsured deposits were KZT 1,340.3bn.
The 2022 Kazakhstan unrest resulted in KZT 690m of losses and a KZT 10bn contribution to the Kazakhstan Halkyna fund, both recognized in 2022; no similar fund contribution was made in 2023. The company reported no material pending legal proceedings. The auditor issued an unqualified opinion on the IFRS financial statements, but identified expected credit loss measurement as a critical audit matter. Management concluded disclosure controls were ineffective at December 31, 2023 due to continuing material weaknesses in impairment-model review and validation and in elements of the internal-control framework. Remediation was underway; effectiveness was to be evaluated during 2024.
Important facts investors should verify
- Review the full audited statements and notes, especially expected-credit-loss assumptions, model validation and the movement in loan allowances.
- Track NPLs, cost of risk, loan growth and the effect of Kazakhstan household debt, inflation and individual-bankruptcy rules.
- Assess deposit pricing, early-withdrawal exposure, deposit concentration and liquidity coverage alongside the rapid growth in customer accounts.
- Monitor funding costs and net interest margin if interest rates remain elevated, and assess whether Fintech profitability recovers as management expects.
- Verify e-Grocery unit economics and the margin impact of its first-party inventory and logistics model, as well as the integration and valuation of Magnum and Kolesa.
- Follow remediation of the disclosed internal-control material weaknesses and any subsequent conclusions on control effectiveness.
- Confirm future dividend declarations and applicable tax treatment; the stated dividend intention is not a guarantee of payment.