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LOANS ISSUED | 6 Months Ended
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Sep. 30, 2023
Loans and Leases Receivable Disclosure [Abstract] |
LOANS ISSUED | LOANS ISSUED Loans issued as of September 30, 2023, consisted of the following:
| Amount Outstanding |  | Due Dates |  | Average Interest Rate |  | Fair Value of Collateral |  | Loan Currency
Mortgage loans | 621,096 |  |  | January, 2024 - September, 2048 |  | 10.00% |  | 613,460 |  |  | KZT
Car loans | 245,662 |  |  | October, 2023 - September, 2030 |  | 24.00% |  | 239,170 |  |  | KZT
Uncollateralized bank customer loans | 191,953 |  |  | October, 2023 - September 2043 |  | 26.00% |  | — |  |  | KZT
Right of claim for purchased retail loans | 135,132 |  |  | October, 2023 - September 2028 |  | 15.00% |  | 135,132 |  |  | KZT
Collateralized bank customer loans | 16,474 |  |  | January, 2024 - July 2043 |  | 24.00% |  | 15,345 |  |  | KZT
Subordinated loan | 5,113 |  |  | December, 2025 |  | 3.00% |  | — |  |  | USD
Loans to policyholders | 1,428 |  |  | November, 2023 - September, 2024 |  | 15.00% |  | 1,494 |  |  | KZT
Other | 4,835 |  |  | October, 2023 - March, 2048/December, 2023 |  | 2.00%/14.00% |  | — |  |  | EUR/KZT
Allowance for loans issued | (44,961) |  |  |  |  |  |  |  |  |
Total loans issued | $ | 1,176,732 |  |  |  |  |  |  |  |  |
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 loans to the Program Operator. Under this program, borrowers can receive a mortgage at an interest rate of 7%, for 20 years. In accordance with the program and trust management agreement, the Group carries out trust management of transferred mortgage loans, and transfers all repayments of principal amounts of mortgages plus 4% of the 7% interest to the Program Operator. The remaining 3% of the 7% interest is retained by the Group as profit margin. Under the program and trust management agreement, the Group is required to repurchase the rights of claims on transferred mortgage loans, when the loan principal amount and interest payments are overdue 90 days or more. The repurchase of delinquent loans is performed at the loan nominal value. Since the Group transfers the right of claim with recourse for uncollectible amounts, retains part of interest from those loans, and agrees to service those loans after the sale, the Group has determined that it retains control over the mortgage loans transferred and continues recognizing the loans. As the Group continues to recognize the loans, it also recognizes the associated liability in the amount of $458,608 as of September 30, 2023, which is presented separately as liability arising from continuing involvement in the Condensed Consolidated Balance Sheets. As of March 31, 2023 the corresponding liability amounted to $440,805. As of September 30, 2023 and March 31, 2023, mortgage loans include loans under the state mortgage program "7-20-25" with an aggregate principal amount of $469,612 and $463,114, respectively. 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. After completion of the pilot launch, it is anticipated that the ownership of FFIN Credit will be sold by Mr. Turlov to the Company. 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 September 30, 2023 and March 31, 2023, right of claims for purchased retail loans in the amount of $135,132 and $121,177, respectively. The total accrued interest for loans issued amounted $7,853 as of September 30, 2023 and $3,548 as of March 31, 2023. Loans issued as of March 31, 2023, consisted of the following:
| Amount Outstanding |  | Due Dates |  | Average Interest Rate |  | Fair Value of Collateral |  | Loan Currency
Mortgage loans | 534,154 |  |  | April, 2023 - March, 2048 |  | 9.00 | % |  | 534,154 |  |  | KZT
Right of claims for purchased retail loans | 121,177 |  |  | January, 2023 - March, 2027 |  | 15.00 | % |  | 121,177 |  |  | KZT
Car loans | 102,269 |  |  | April, 2023- April, 2030 |  | 25.00 | % |  | 102,247 |  |  | KZT
Uncollateralized bank customer loans | 46,970 |  |  | January, 2023 - March, 2043 |  | 25.00 | % |  | — |  |  | KZT
Collateralized bank customer loans | 17,653 |  |  | May, 2023 - March, 2028 |  | 2.00 | % |  | 17,636 |  |  | KZT/RUB
Subordinated loan | 5,039 |  |  | December, 2025 |  | 3.00 | % |  | — |  |  | USD
Loans to policyholders | 1,488 |  |  | June, 2023 - February, 2024 |  | 15.00 | % |  | 1,752 |  |  | KZT
Other | 300 |  |  | March, 2024-September, 2029 |  | 2.00 | % |  | — |  | EUR
Allowance for loans issued | (2,792) |  |  |  |  |  |  |  |  |
Total loans issued | $ | 826,258 |  |  |  |  |  |  |  |  |
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 12 months restructured the contract due to the deterioration of the financial condition, the presence of a sign of default, a sign of bankruptcy, the deterioration of the financial performance of the borrower, a significant deterioration in the quality and cost of collateral, 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 September 30, 2023. Current vintage disclosure is the requirement due to first adoption of ASC 326.
| Term Loans by Origination Year
| 2023 |  | 2022 |  | 2021 |  | 2020 |  | 2019 |  | Prior |  | Revolving loans |  | Total
Mortgage loans | 131,220 |  |  | 448,018 |  |  | 41,858 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 621,096 |
that are not credit impaired | 131,045 |  |  | 445,485 |  |  | 41,339 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 617,869 |
with significant increase in credit risk | 175 |  |  | 1,999 |  |  | 442 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 2,616 |
that are credit impaired | — |  |  | 534 |  |  | 77 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 611 |
Car loans | 167,683 |  |  | 77,979 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 245,662 |
that are not credit impaired | 166,768 |  |  | 70,771 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 237,539 |
with significant increase in credit risk | 810 |  |  | 2,488 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 3,298 |
that are credit impaired | 105 |  |  | 4,720 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 4,825 |
Uncollateralized bank customer loans | 153,924 |  |  | 38,020 |  |  | 8 |  |  | 1 |  |  | — |  |  | — |  |  | — |  |  | 191,953 |
that are not credit impaired | 152,747 |  |  | 36,425 |  |  | — |  |  | 1 |  |  | — |  |  | — |  |  | — |  |  | 189,173 |
with significant increase in credit risk | 963 |  |  | 904 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 1,867 |
that are credit impaired | 214 |  |  | 691 |  |  | 8 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 913 |
Right of claim for purchased retail loans | 92,053 |  |  | 41,349 |  |  | 1,730 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 135,132 |
that are not credit impaired | 92,053 |  |  | 41,349 |  |  | 1,730 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 135,132 |
with significant increase in credit risk | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
that are credit impaired | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Collateralized bank customer loans | 16,066 |  |  | 408 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 16,474 |
that are not credit impaired | 16,066 |  |  | 408 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 16,474 |
with significant increase in credit risk | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
that are credit impaired | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Subordinated loan | — |  |  | 5,113 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 5,113 |
that are not credit impaired | — |  |  | 5,113 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 5,113 |
with significant increase in credit risk | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
that are credit impaired | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Loans issued to policyholders | 1,428 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 1,428 |
that are not credit impaired | 1,428 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 1,428 |
with significant increase in credit risk | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
that are credit impaired | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Other | 1,704 |  |  | 116 |  |  | — |  |  | — |  |  | 3,015 |  |  | — |  |  | — |  |  | 4,835 |
that are not credit impaired | 1,704 |  |  | 116 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 1,820 |
with significant increase in credit risk | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
that are credit impaired | — |  |  | — |  |  | — |  |  | — |  |  | 3,015 |  |  | — |  |  | — |  |  | 3,015 |
Total | 564,078 |  |  | 611,003 |  |  | 43,596 |  |  | 1 |  |  | 3,015 |  |  | — |  |  | — |  |  | 1,221,693 |
The table below presents the Group's loan portfolio by credit quality classification as of March 31, 2023.
| March 31, 2023
| That are not credit impaired |  | With significant increase in credit risk |  | That are credit impaired |  | Total
Mortgage loans | 532,621 |  |  | 1,505 |  |  | 28 |  |  | 534,154 |
Collateralized bank customer loans | 121,055 |  |  | 122 |  |  | — |  |  | 121,177 |
Right of claim for purchased retail loans | 102,269 |  |  | — |  |  | — |  |  | 102,269 |
Uncollateralized bank customer loans | 46,882 |  |  | 81 |  |  | 7 |  |  | 46,970 |
Car loans | 17,653 |  |  | — |  |  | — |  |  | 17,653 |
Subordinated loan | 5,039 |  |  | — |  |  | — |  |  | 5,039 |
Loans issued to policyholders | 1,488 |  |  | — |  |  | — |  |  | 1,488 |
Other | 300 |  |  | — |  |  | — |  |  | 300 |
Total loans | 827,307 |  |  | 1,708 |  |  | 35 |  |  | 829,050 |
Aging analysis of past due loans as of September 30, 2023 and March 31, 2023, is as follows:
| September 30, 2023
| 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 | 1,961 |  |  | 656 |  |  | 611 |  |  | 617,868 |  |  | 621,096 |
Car loans | 1,849 |  |  | 1,449 |  |  | 4,825 |  |  | 237,539 |  |  | 245,662 |
Uncollateralized bank customer loans | 1,177 |  |  | 719 |  |  | 913 |  |  | 189,144 |  |  | 191,953 |
Right of claim for purchased retail loans | — |  |  | — |  |  | — |  |  | 135,132 |  |  | 135,132 |
Collateralized bank customer loans | — |  |  | — |  |  | — |  |  | 16,474 |  |  | 16,474 |
Subordinated loan | — |  |  | — |  |  | — |  |  | 5,113 |  |  | 5,113 |
Loans issued to policyholders | — |  |  | — |  |  | — |  |  | 1,428 |  |  | 1,428 |
Other | — |  |  | — |  |  | 3,015 |  |  | 1,820 |  |  | 4,835 |
Total | 4,987 |  |  | 2,824 |  |  | 9,364 |  |  | 1,204,518 |  |  | 1,221,693 |
| March 31, 2023
| 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 | 1,265 |  |  | 240 |  |  | 28 |  |  | 532,621 |  |  | 534,154 |
Collateralized bank customer loans | 123 |  |  | — |  |  | — |  |  | 121,054 |  |  | 121,177 |
Right of claim for purchased retail loans | — |  |  | — |  |  | — |  |  | 102,269 |  |  | 102,269 |
Uncollateralized bank customer loans | 73 |  |  | 8 |  |  | 7 |  |  | 46,882 |  |  | 46,970 |
Car loans | — |  |  | — |  |  | — |  |  | 17,653 |  |  | 17,653 |
Subordinated loan | — |  |  | — |  |  | — |  |  | 5,039 |  |  | 5,039 |
Loans issued to policyholders | — |  |  | — |  |  | — |  |  | 1,488 |  |  | 1,488 |
Other | — |  |  | — |  |  | — |  |  | 300 |  |  | 300 |
Total | 1,461 |  |  | 248 |  |  | 35 |  |  | 827,306 |  |  | 829,050 |
The activity in the allowance for credit losses as of September 30, 2023 and September 30, 2022 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, 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 | (665) |  |  | (13,482) |  |  | (71) |  |  | (8,851) |  |  | (11,073) |  |  | (3,283) |  |  | (37,425) |
Recoveries | 1,599 |  |  | 6,384 |  |  | 36 |  |  | 2,558 |  |  | 7,746 |  |  | — |  |  | 18,323 |
Forex | 91 |  |  | 739 |  |  | 4 |  |  | 637 |  |  | 657 |  |  | — |  |  | 2,128 |
September 30, 2023 | (1,745) |  |  | (14,028) |  |  | (66) |  |  | (12,876) |  |  | (12,963) |  |  | (3,283) |  |  | (44,961) |
| 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
April 1, 2022 | (305) |  |  | (16) |  |  | — |  |  | — |  |  | (1,308) |  |  | — |  |  | (1,629) |
Charges | (1,186) |  |  | (16) |  |  | (9) |  |  | (288) |  |  | (4,869) |  |  | — |  |  | (6,368) |
Recoveries | 224 |  |  | 16 |  |  | 8 |  |  | 4 |  |  | 1,888 |  |  | — |  |  | 2,140 |
Forex | 22 |  |  | — |  |  | 1 |  |  | 3 |  |  | 152 |  |  | — |  |  | 178 |
September 30, 2022 | (1,245) |  |  | (16) |  |  | — |  |  | (281) |  |  | (4,137) |  |  | — |  |  | — |

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