Thanks for sharing! Three questions (1) How strong is the local law when it comes to enforcing your investment terms? (2) what is KSPI’s risk of being perceived as the sword hanging over entrepreneurs’s head politically and public opinion wise? (3) what does your experience say about bank’s loan portfolio - Halyk’s metrics do not look bad at all
1. Enforcement is generally weak but improving. This is a big plus and a big minus for us. Because we want to strictly adhere to regulations (but they are in some cases very vague and ever-changing), we may choose to not due a deal because of the fear of doing something potentially wrong. Clearer rules would make this easier. It’s a plus because over time we expect there to be a better reg framework for our type of business and our opportunity set might expand.
2. Not a risk at all. Kaspi is focused on building its own ecosystem which while expansive does not touch a lot of areas where entrepreneurs are able to innovate. I think 99/100 times Kaspi entering a certain space is better for the consumer. Kaspi has better governance and is a far more reliable counterparty. Startups generally have worse execution / far inferior balance sheets.
3. Halyk’s loan book is solid. Banks are innovating and adding more services + increasingly trying to compete and win over customers, which is good for the consumer. We are long both Halyk and Kaspi. Macro-wise I would say that things are going to be more shaky next year, curious to see how NPLs and originations will move then.
Very much appreciate your reply and your report on the ground :) I am sure I am just one of the people looking forward to your reports in the area. Oil price has been weak and it probably stay that way for a while. As much as the government’s efforts to diversify its still a huge percentage. How do people feel/respond - is it just not as fast progress or do people need to tight the belt and budget more carefully now?
Thanks! Can't comment on diversification progress but there are some new tax laws coming into force which will likely hit the SME segment. Not too bad I think but will impact cost structure.
Thanks for sharing! Three questions (1) How strong is the local law when it comes to enforcing your investment terms? (2) what is KSPI’s risk of being perceived as the sword hanging over entrepreneurs’s head politically and public opinion wise? (3) what does your experience say about bank’s loan portfolio - Halyk’s metrics do not look bad at all
Hey! Thanks for the comment.
1. Enforcement is generally weak but improving. This is a big plus and a big minus for us. Because we want to strictly adhere to regulations (but they are in some cases very vague and ever-changing), we may choose to not due a deal because of the fear of doing something potentially wrong. Clearer rules would make this easier. It’s a plus because over time we expect there to be a better reg framework for our type of business and our opportunity set might expand.
2. Not a risk at all. Kaspi is focused on building its own ecosystem which while expansive does not touch a lot of areas where entrepreneurs are able to innovate. I think 99/100 times Kaspi entering a certain space is better for the consumer. Kaspi has better governance and is a far more reliable counterparty. Startups generally have worse execution / far inferior balance sheets.
3. Halyk’s loan book is solid. Banks are innovating and adding more services + increasingly trying to compete and win over customers, which is good for the consumer. We are long both Halyk and Kaspi. Macro-wise I would say that things are going to be more shaky next year, curious to see how NPLs and originations will move then.
Very much appreciate your reply and your report on the ground :) I am sure I am just one of the people looking forward to your reports in the area. Oil price has been weak and it probably stay that way for a while. As much as the government’s efforts to diversify its still a huge percentage. How do people feel/respond - is it just not as fast progress or do people need to tight the belt and budget more carefully now?
Thanks! Can't comment on diversification progress but there are some new tax laws coming into force which will likely hit the SME segment. Not too bad I think but will impact cost structure.