Annual report [Section 13 and 15(d), not S-K Item 405]

LOANS ISSUED

v3.25.1
LOANS ISSUED
 12 Months Ended
Mar. 31, 2025
Receivables [Abstract]  
LOANS ISSUED LOANS ISSUED
Loans issued as of March 31, 2025, consisted of the following:
Amount Outstanding Due Dates Average Interest Rate Fair Value of
Collateral		 Loan Currency
 
Mortgage loans $ 924,530   April 2025 - March 2050 11.4% $ 924,386  KZT
Uncollateralized bank customer loans 249,448   April 2025 - March 2045 28.1% —  KZT
Right of claim for purchased retail loans 183,635   April 2025 - March 2030 15.0% 183,635  KZT
Car loans 156,340   April 2025 - April 2032 24.2% 155,320  KZT
Collateralized bank customer loans 148,759   April 2025 - July 2043 19.6% 128,543  KZT
Other 7,838  April 2025 - September 2029
18.00% / 12.70%/ 3.00%
 29  KZT/EUR/USD
Allowance for loans issued (75,115)
Total loans issued $ 1,595,435 

The Group provides mortgage loans to borrowers on behalf of the JSC Kazakhstan Sustainability Fund ("Program Operator") related to the state mortgage program "7-20-25" and transfers the rights of claim on the mortgage loans to the Program Operator. The proceeds received from these transfers are presented within funds received under state program for financing of mortgage loans in the Consolidated Statements of Cash Flows. Under this program, borrowers can receive a mortgage at an interest rate of 7%, subject to not less than 20% down payment, for 25 years, and the interest payments received by the Group are recognized as interest income in the Group's Consolidated Statements of Operations and Statements of Other Comprehensive Income. In accordance with the program and trust management agreement for the program, Group services the transferred loans and remits all repayments of principal it receives plus 4% of the 7% interest received to the Program Operator. The interest paid to the Program Operator is recognized as interest expense in the Consolidated Statements of Operations and Statements of Other Comprehensive Income. The remaining 3% of the 7% interest is retained by Group. Under the program and trust management agreement, Group is required to repurchase the rights to make claims on the transferred loans when either loan principal repayments or interest payments are overdue 90 days or more. The repurchase of overdue loans is performed at the loans' nominal value and is presented within repurchase of mortgage loans under the State Program in the Consolidated Statements of Cash Flows.

Since the Group transfers the rights to make claims on the loans with recourse for loans that are more than 90 days past due, retains part of the interest received on the loans and agrees to service the loans after the sale of the loans to the Program Operator, the Group has determined that it retains control over the loans transferred and continues recognizing the loans, which are accounted for as secured borrowings of the Group in accordance with ASC 860, Transfers and Servicing. As the Group continues to recognize the loans as assets, it also recognizes the associated liability equal to the proceeds received from the Program Operator, which is presented separately as liability arising from continuing involvement in the Consolidated Balance Sheets. This liability accrues 4% interest annual as described above. As of March 31, 2025 and March 31, 2024, the corresponding liability amounted to $503,705 and $521,885, respectively.

As of March 31, 2025 and March 31, 2024, mortgage loans include loans under the state mortgage program "7-20-25" with an aggregate principal amount of $511,851 and $532,389, respectively, were presented within loans issued in the Consolidated Balance Sheets.
The Group has an agreement with FFIN Credit, a company established and controlled by FRHC's controlling shareholder, chairman and chief executive officer, Timur Turlov, to purchase uncollateralized retail loans. FFIN Credit is a non-bank credit institution that issues loans in Kazakhstan under simplified lending procedures. FFIN Credit was created as a pilot project to test and improve the scoring models used for qualifying and issuing loans. The principal operation of FFIN Credit is to provide loans to customers online using biometric identification and its proprietary scoring process. Following the successful pilot, the Company intends to either acquire FFIN Credit from Mr. Turlov or implement an in-house solution to replicate its functions, ensuring continuity and scalability of the lending operations. The bank has legal ownership over purchase from FFIN Credit uncollateralized retail loans, however, in accordance with U.S. GAAP requirements, the Group does not recognize those loans, since effective control over the transferred loans are maintained by FFIN Credit. Instead, the Group recognizes the loans receivable from FFIN Credit presented on the consolidated balance sheets within the loans issued. As of March 31, 2025 and March 31, 2024, right of claims for purchased retail loans in the amount of $183,635 and $146,152, respectively.

The total accrued interest for loans issued amounted $13,385 as of March 31, 2025 and $8,327 as of March 31, 2024.
Loans issued as of March 31, 2024, consisted of the following:
  Amount Outstanding Due Dates Average Interest Rate Fair Value of
Collateral		 Loan Currency
Mortgage loans
 $ 741,312 
April, 2024 - March, 2049
 10.3% $ 740,462  KZT
Car loans 262,708  April, 2024 - March, 2031 23.9% 259,755  KZT
Uncollateralized bank customer loans 245,188  April, 2024 - March, 2044 27.4% —  KZT
Right of claims for purchased retail loans 146,152  April, 2024 - March, 2029 15.0% 146,152  KZT
Collateralized bank customer loans
 22,299  June, 2024 - July, 2043 19.1% 22,270  KZT
Subordinated loan 5,037 
December, 2025
 3.0% —  USD
Other 2,638  April, 2024 - January, 2029
18.6%/15.0%/2.5%
 18 
KZT\USD/EUR
Allowance for loans issued (43,619)
Total loans issued
 $ 1,381,715 
Credit quality indicators

Freedom Bank KZ uses a loan portfolio quality classification system that indicates signs of a significant increase in credit risk and contractual impairment, depending on the analysis of reasonable and supportable information available at the reporting date. The loan portfolio is classified into "not credit impaired", "with significant increase in credit risk" and "credit impaired" agreements.

Loans "not credit impaired" under the agreement are serviced as usual, there are no primary signs of an increase in credit risk. Agreements classified as "with significant increase in credit risk" represent loans for which there is an increase in the credit risk expected over the life of the agreement compared to the initial risk at the date of recognition of the loan. In practice, the presence of overdue debt on principal and interest for a period of more than 30 days or the absolute probability of default
threshold PD exceeds 20%. Agreements classified as "credit impaired" represent loans for which at the reporting date there are signs of impairment, the borrower has been in default for 90 or more days for individuals and 60 or more days for legal entities, the borrower for the last 6 months for individuals and 12 months for legal entities restructured the contract due to the deterioration of the financial condition, the borrower is recognized as credit impaired, the presence of a sign of default, a sign of bankruptcy, the deterioration of the financial performance of the borrower, the presence of other information indicating the presence of a high credit risk.
The table below presents the Group's loan portfolio by credit quality classification and origination year as of March 31, 2025. Current vintage disclosure is the requirement due to first adoption of ASC 326.
Term Loans by Origination Year
2025 2024 2023 2022 2021 Prior Revolving loans Total
Mortgage loans $ 336,535  $ 186,816  $ 370,588  $ 30,591  $ —  $ —  $ —  $ 924,530 
that are not credit impaired 336,051  184,610  367,918  29,876  —  —  —  918,455 
with significant increase in credit risk 410  1,361  1,402  340  —  —  —  3,513 
that are credit impaired 74  845  1,268  375  —  —  —  2,562 
Uncollateralized bank customer loans 110,094  120,583  18,771  —  —  —  —  249,448 
that are not credit impaired 108,045  103,320  15,590  —  —  —  —  226,955 
with significant increase in credit risk 1,011  3,557  663  —  —  —  —  5,231 
that are credit impaired 1,038  13,706  2,518  —  —  —  —  17,262 
Right of claim for purchased retail loans 151,237  30,702  1,688  8  —  —  —  183,635 
that are not credit impaired 151,237  30,702  1,688  8  —  —  —  183,635 
with significant increase in credit risk —  —  —  —  —  —  —  — 
that are credit impaired —  —  —  —  —  —  —  — 
Car loans 5,974  116,459  33,907  —  —  —  —  156,340 
that are not credit impaired 5,974  110,871  26,014  —  —  —  —  142,859 
with significant increase in credit risk —  1,603  836  —  —  —  —  2,439 
that are credit impaired —  3,985  7,057  —  —  —  —  11,042 
Collateralized bank customer loans 140,835  7,788  136  —  —  —  —  148,759 
that are not credit impaired 138,761  7,498  136  —  —  —  —  146,395 
with significant increase in credit risk 2,020  73  —  —  —  —  —  2,093 
that are credit impaired 54  217  —  —  —  —  —  271 
Other 232  1,237  6,323  46  —  —  —  7,838 
that are not credit impaired 232  1,229  6,323  46  —  —  —  7,830 
with significant increase in credit risk —  —  —  —  —  —  —  — 
that are credit impaired —  8  —  —  —  —  —  8 
Total $ 744,907  $ 463,585  $ 431,413  $ 30,645  $ —  $ —  $ —  $ 1,670,550 
The table below presents the Group's loan portfolio by credit quality classification as of March 31, 2024.
Term Loans by Origination Fiscal Year
2024 2023 2022 2021 2020 Prior Revolving loans Total
Mortgage loans $ 241,848  $ 458,401  $ 41,063  $ —  $ —  $ —  $ —  $ 741,312 
that are not credit impaired 240,974  454,933  40,784  —  —  —  —  736,691 
with significant increase in credit risk 676  2,415  111  —  —  —  —  3,202 
that are credit impaired 198  1,053  168  —  —  —  —  1,419 
Car loans 196,305  66,403  —  —  —  —  —  262,708 
that are not credit impaired 193,302  55,427  —  —  —  —  —  248,729 
with significant increase in credit risk 1,590  2,232  —  —  —  —  —  3,822 
that are credit impaired 1,413  8,744  —  —  —  —  —  10,157 
Uncollateralized bank customer loans 210,612  34,568  8  —  —  —  —  245,188 
that are not credit impaired 200,211  30,337  —  —  —  —  —  230,548 
with significant increase in credit risk 4,715  1,072  —  —  —  —  —  5,787 
that are credit impaired 5,686  3,159  8  —  —  —  —  8,853 
Right of claim for purchased retail loans 130,291  15,694  167  —  —  —  —  146,152 
that are not credit impaired 130,291  15,694  167  —  —  —  —  146,152 
with significant increase in credit risk —  —  —  —  —  —  —  — 
that are credit impaired —  —  —  —  —  —  —  — 
Collateralized bank customer loans 21,972  327  —  —  —  —  —  22,299 
that are not credit impaired 21,796  327  —  —  —  —  —  22,123 
with significant increase in credit risk 89  —  —  —  —  —  —  89 
that are credit impaired 87  —  —  —  —  —  —  87 
Subordinated loan —  5,037  —  —  —  —  —  5,037 
that are not credit impaired —  5,037  —  —  —  —  —  5,037 
with significant increase in credit risk —  —  —  —  —  —  —  — 
that are credit impaired —  —  —  —  —  —  —  — 
Other 2,404  165  69  —  —  —  —  2,638 
that are not credit impaired 2,395  165  69  —  —  —  —  2,629 
with significant increase in credit risk —  —  —  —  —  —  —  — 
that are credit impaired 9  —  —  —  —  —  —  9 
Total $ 803,432  $ 580,595  $ 41,307  $ —  $ —  $ —  $ —  $ 1,425,334 
Aging analysis of past due loans as of March 31, 2025 and March 31, 2024, is as follows:
March 31, 2025
Loans 30-59 days past due Loans 60-89 days past due Loans 90 days or more past due and still accruing Current loans Total
Mortgage loans $ 2,835  $ 678  $ 2,562  $ 918,455  $ 924,530 
Uncollateralized bank customer loans 3,132  2,099  17,262  226,955  249,448 
Right of claim for purchased retail loans —  —  —  183,635  183,635 
Car loans 1,548  892  11,041  142,859  156,340 
Collateralized bank customer loans 957  1,135  271  146,396  148,759 
Other —  —  8  7,830  7,838 
Total $ 8,472  $ 4,804  $ 31,144  $ 1,626,130  $ 1,670,550 
March 31, 2024
Loans 30-59 days past due Loans 60-89 days past due Loans 90 days or more past due and still accruing Current loans Total
Mortgage loans $ 2,133  $ 1,069  $ 1,419  $ 736,691  $ 741,312 
Car loans 2,167  1,655  10,157  248,729  262,708 
Uncollateralized bank customer loans 3,576  2,211  8,853  230,548  245,188 
Right of claim for purchased retail loans —  —  —  146,152  146,152 
Collateralized bank customer loans —  89  87  22,123  22,299 
Subordinated loan —  —  —  5,037  5,037 
Other —  —  9  2,629  2,638 
Total $ 7,876  $ 5,024  $ 20,525  $ 1,391,909  $ 1,425,334 
The activity in the allowance for credit losses as of March 31, 2025 and March 31, 2024 is summarized in the following tables.
Allowance for credit losses
Mortgage loan Uncollateralized bank customer loans Collateralized bank customer loans Car loans Right of claim for purchased retail loans Other Total
March 31, 2024
 $ (3,033) $ (19,636) $ (80) $ (14,262) $ (6,577) $ (31) $ (43,619)
Charges (10,043) (38,895) (4,703) (5,335) (20,324) (24) (79,324)
Recoveries 1,694  6,778  1,524  6,761  8,331  —  25,088 
Write off 1  13,273  7  2,914  —  30  16,225 
Forex 682  3,001  138  1,457  1,237  —  6,515 
March 31, 2025
 $ (10,699) $ (35,479) $ (3,114) $ (8,465) $ (17,333) $ (25) $ (75,115)
Allowance for credit losses
Mortgage loan Uncollateralized bank customer loans Collateralized bank customer loans Car loans Right of claim for purchased retail loans Other Total
March 31, 2023 $ (554) $ (233) $ —  $ (758) $ (1,247) $ —  $ (2,792)
Adjustment to allowance for adoption of ASU 2016-13 (2,216) (7,436) (35) (6,462) (9,046) —  (25,195)
Charges (2,361) (22,464) (115) (15,014) (13,334) (31) (53,319)
Recoveries 2,132  10,795  71  8,181  17,095  —  38,274 
Forex (34) (298) (1) (209) (45) —  (587)
March 31, 2024
 $ (3,033) $ (19,636) $ (80) $ (14,262) $ (6,577) $ (31) $ (43,619)