LOANS ISSUED

9 Months Ended

Dec. 31, 2023

Loans and Leases Receivable Disclosure [Abstract]

Loans issued as of December 31, 2023, consisted of the following:


	Amount Outstanding		Due Dates	Weighted Average Interest Rate	Fair Value of Collateral	Loan Currency

Mortgage loans	693,167		February, 2024 - December, 2048	10.30%	692,016	KZT
Car loans	274,980		January, 2024 - December, 2030	23.70%	264,953	KZT
Uncollateralized bank customer loans	243,029		January, 2024- December, 2043	27.10%	—	KZT
Right of claim for purchased retail loans	142,970		January, 2024 - December, 2028	15.00%	142,970	KZT
Collateralized bank customer loans	21,104		January, 2024 - July, 2043	20.97%	20,748	KZT
Subordinated loan	5,038		December, 2025	3.00%	—	USD
Other	12,391		January, 2024 - September, 2029	9.10%/3%/16%/2.4%	24	UAH/USD/KZT/EUR

Allowance for loans issued	(46,674)

Total loans issued	$	1,346,005

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 $494,513 as of December 31, 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 December 31, 2023 and March 31, 2023, mortgage loans include loans under the state mortgage program "7-20-25" with an aggregate principal amount of $506,150 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 December 31, 2023 and March 31, 2023, right of claims for purchased retail loans in the amount of $142,970 and $121,177, respectively.

The total accrued interest for loans issued amounted $7,942 as of December 31, 2023 and $3,548 as of March 31, 2023.

Loans issued as of March 31, 2023, consisted of the following:


	Amount Outstanding		Due Dates	Weighted 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 December 31, 2023. 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	192,157	459,089	41,921	—	—	—	—	693,167
that are not credit impaired	192,021	457,138	41,687	—	—	—	—	690,846
with significant increase in credit risk	108	1,333	138	—	—	—	—	1,579
that are credit impaired	28	618	96	—	—	—	—	742
Car loans	202,591	72,389	—	—	—	—	—	274,980
that are not credit impaired	200,842	62,915	—	—	—	—	—	263,757
with significant increase in credit risk	942	2,122	—	—	—	—	—	3,064
that are credit impaired	807	7,352	—	—	—	—	—	8,159
Uncollateralized bank customer loans	206,378	36,643	8	—	—	—	—	243,029
that are not credit impaired	201,802	33,768	—	—	—	—	—	235,570
with significant increase in credit risk	2,873	1,030	—	—	—	—	—	3,903
that are credit impaired	1,703	1,845	8	—	—	—	—	3,556
Right of claim for purchased retail loans	117,226	25,361	383	—	—	—	—	142,970
that are not credit impaired	117,199	25,359	383	—	—	—	—	142,941
with significant increase in credit risk	27	2	—	—	—	—	—	29
that are credit impaired	—	—	—	—	—	—	—	—
Collateralized bank customer loans	20,760	344	—	—	—	—	—	21,104
that are not credit impaired	20,657	344	—	—	—	—	—	21,001
with significant increase in credit risk	40	—	—	—	—	—	—	40
that are credit impaired	63	—	—	—	—	—	—	63
Subordinated loan	—	5,038	—	—	—	—	—	5,038
that are not credit impaired	—	5,038	—	—	—	—	—	5,038
with significant increase in credit risk	—	—	—	—	—	—	—	—
that are credit impaired	—	—	—	—	—	—	—	—
Other	8,078	1,337	—	—	2,976	—	—	12,391
that are not credit impaired	1,290	116	—	—	—	—	—	1,406
with significant increase in credit risk	—	—	—	—	—	—	—	—
that are credit impaired	6,788	1,221	—	—	2,976	—	—	10,985
Total	747,190	600,201	42,312	—	2,976	—	—	1,392,679

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 December 31, 2023 and March 31, 2023, is as follows:


	December 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	1,151	428	742	690,846	693,167
Car loans	1,862	1,202	8,159	263,757	274,980
Uncollateralized bank customer loans	2,100	1,803	3,556	235,570	243,029
Right of claim for purchased retail loans	29	—	—	142,941	142,970
Collateralized bank customer loans	40	—	63	21,001	21,104
Subordinated loan	—	—	—	5,038	5,038
Other	—	—	10,985	1,406	12,391
Total	5,182	3,433	23,505	1,360,559	1,392,679


	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 claim 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 December 31, 2023 and December 31, 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	(1,760)		(16,846)		(84)		(13,013)		(10,493)		(11,008)		(53,204)
Recoveries	1,782		9,826		58		7,096		15,617		—		34,379
Foreign currency translation difference	17		16		1		17		87		—		138
December 31, 2023	(2,731)		(14,673)		(60)		(13,120)		(5,082)		(11,008)		(46,674)


	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	(2,816)		(79)		(15)		(2,559)		(11,301)		—		(16,770)
Recoveries	709		23		8		36		3,295		—		4,071
Foreign currency translation difference	(80)		(1)		(1)		(78)		(223)		—		(383)
December 31, 2022	$	(2,492)	$	(73)	$	(8)	$	(2,601)	$	(9,537)	$	—	$	(14,711)