Joint Stock Company Kaspi.kz(KSPI) - 2025 Q4 - Annual Report

Business Operations and Growth - As of December 31, 2025, the company had approximately 764,000 Active Merchants on its platforms[54] - The company launched its e-Grocery business in partnership with Magnum in 2021, and has developed Government Services in collaboration with the Kazakhstan government[46] - The company’s revenue from its Marketplace is significantly growing, relying on merchants selling their products on its platforms[54] - The company is focused on increasing user engagement in its Super Apps, which integrate all products and services offered, to drive growth in online and mobile consumption[85] - The company has invested significantly in infrastructure and technology to enhance its platform and introduce new products and services[43] - The company’s acquisition of a controlling stake in Hepsiburada is a strategic move to expand its addressable market in Türkiye[47] - The company has expanded its geographical reach, acquiring a controlling stake in Hepsiburada in Türkiye, which was settled in U.S. dollars, exposing it to exchange rate fluctuations[104] Financial Performance and Risks - The Fintech segment generated 33% of net income for the year ended December 31, 2025, up from 31% in 2024[74] - The company is exposed to liquidity risk, with 85% of customer accounts held in term deposits as of December 31, 2025, which can be withdrawn prior to maturity[66] - The company faces interest rate risk, with higher than normal interest rates contributing to declining profitability in the Fintech segment in 2025, 2024, and 2023[71] - The company relies on funding from retail customer deposits, which may be impacted by unexpected withdrawals, affecting its ability to meet funding requirements[67] - The company incurred losses of ₸690 million due to disruptions from protests in January 2022, impacting technology and product development expenses[173] Regulatory and Compliance Challenges - The evolving regulatory environment in Kazakhstan may lead to inconsistent interpretations and increased compliance costs, affecting profitability[143] - Legal uncertainty in Türkiye regarding e-commerce regulations may adversely affect the company's operations and customer perception[113] - The company has implemented anti-money laundering measures, but failures in compliance could result in significant fines and reputational harm[149] - The company may face increased costs and operational challenges due to compliance with local and international laws regarding AI, which could impact its ability to develop and implement AI solutions[88] - The company is subject to broader laws, regulations, and standards, including the Exchange Act and Sarbanes-Oxley Act[239] Market and Economic Conditions - The annual consumer price inflation in Kazakhstan was reported at 9.8%, 8.6%, and 12.3% for the years ended December 31, 2023, 2024, and 2025 respectively[57] - The Kazakhstan economy is subject to significant legal, economic, tax, and political risks, which could adversely affect the company's financial condition and results of operations[161] - The company is dependent on the economic conditions in Kazakhstan, which could be affected by geopolitical tensions and market downturns[163] - The company faces risks from inflationary pressures in Türkiye, with a forecasted inflation rate of 23.2% in 2026, potentially impacting growth and profitability[190] Technology and Cybersecurity - The development and implementation of AI and machine learning capabilities are critical for enhancing user experience and risk management, but face risks related to data quality and algorithm effectiveness[87] - The company has experienced system failures and interruptions, which could adversely affect the availability and functionality of its platforms, potentially leading to customer attrition[107] - The company processes a large amount of data, and any breach or failure of its systems could materially adversely affect its financial condition and results of operations[110] - The company has experienced cyberattacks in the past, and any future security breaches could have a material adverse effect on its business and financial condition[114][115] Shareholder and Corporate Governance - The principal shareholders, including Mr. Vyacheslav Kim and Mr. Mikheil Lomtadze, collectively own 66.5% of the outstanding share capital, significantly influencing corporate strategy and decisions[223] - The rights of shareholders are governed by Kazakhstan law, which may differ significantly from U.S. corporate governance practices, potentially limiting shareholder influence[225] - The company may be subject to adverse media coverage related to its principal shareholders, which could impact its reputation and financial condition[224] Taxation and Financial Regulations - Kazakhstan's new Tax Code increased the corporate income tax rate for second-tier banks from 20% to 25%[208] - A 10% tax on revenue from government securities was recently imposed by the Kazakhstani government, increasing tax expenses[208] - The Tax Code introduced a 50% reduction of existing tax exemptions for certain financial transactions of second-tier banks[208] - Tax legislation in Kazakhstan is subject to frequent changes, creating unpredictability and potential adverse tax implications[209] Capital Adequacy and Financial Stability - Kaspi Bank's total capital adequacy ratio was 12.7% as of December 31, 2025, exceeding the minimum required by the National Bank of Kazakhstan (NBK) of 12.0%[156] - Kaspi Bank's Tier 1 capital adequacy ratio was 12.7% as of December 31, 2025, also above the minimum requirement of 10.5%[156] - As of December 31, 2025, Kaspi Bank's total capital adequacy ratio calculated under Basel III was 19.6%, significantly higher than the minimum requirement of 8.0%[157] - The Tier 1 capital adequacy ratio under Basel III was 19.6% as of December 31, 2025, exceeding the minimum requirement of 6.5%[157]