LOANS ISSUED

12 Months Ended

Mar. 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 claim 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

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% for 20 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, 2024 and March 31, 2023, the corresponding liability amounted to $521,885 and $440,805, respectively.

As of March 31, 2024 and March 31, 2023, mortgage loans include loans under the state mortgage program "7-20-25" with an aggregate principal amount of $532,389 and $463,114, 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. 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 March 31, 2024 and March 31, 2023, right of claims for purchased retail loans in the amount of $146,152 and $121,177, respectively.

The total accrued interest for loans issued amounted $8,327 as of March 31, 2024 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	9.0%	534,154	KZT
Right of claims for purchased retail loans	121,177		April, 2023 - March, 2027	15.0%	121,177	KZT
Car loans	102,269		April, 2023 - April, 2030	25.0%	102,247	KZT
Uncollateralized bank customer loans	46,970		April, 2023 - March, 2043	25.0%	—	KZT
Collateralized bank customer loans	17,653		May, 2023 - March, 2028	2.0%	17,636	KZT/RUB
Subordinated loan	5,039		December, 2025	3.0%	—	USD
Loans issued to policyholders	1,488		June, 2023 - February, 2024	15.0%	1,752	KZT
Other	300		March, 2024 - September, 2029	2.0%	—	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 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, 2024. Current vintage disclosure is the requirement due to first adoption of ASC 326.


	Term Loans by Origination 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

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
Right of claim for purchased retail loans	121,055		122		—		121,177
Car loans	102,269		—		—		102,269
Uncollateralized Bank customer loans	46,882		81		7		46,970
Collateralized Bank customer 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 March 31, 2024 and March 31, 2023, is as follows:


	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


	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
Right of claims for purchased retail loans	123		—		—		121,054		121,177
Car loans	—		—		—		102,269		102,269
Uncollateralized bank customer loans	73		8		7		46,882		46,970
Collateralized Bank customer 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 March 31, 2024 and March 31, 2023 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	(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)


	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	(3,616)		(3,450)		(39)		(5,187)		(16,778)		—		(29,070)
Recoveries	3,381		3,238		39		4,443		16,878		—		27,979
Forex	(14)		(5)		—		(14)		(39)		—		(72)
March 31, 2023	$	(554)	$	(233)	$	—	$	(758)	$	(1,247)	$	—	$	(2,792)