LOANS ISSUED

6 Months Ended

Sep. 30, 2023

Loans and Leases Receivable Disclosure [Abstract]

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)	—	—