41
S&P Global Ratings has raised its forecast for Freedom Holding Corp. subsidiaries by two steps to “positive.”
This rating action has been applied to Freedom Finance JSC, Freedom Finance Europe Ltd., Freedom Finance Global PLC and for Bank Freedom Finance Kazakhstan JSC., the rating remained at “B/B.”
According to the report, the forecast has been raised due to improved indicators of the holding’s capitalization and risk management system.
Timur Turlov
S&P issued the new forecast right after Freedom released its annual report. In the 2024 fiscal year, the company reported a record-high revenue of $1.64 billion, a remarkable increase compared to $795.7 million over the same period last year.
Commenting on these results during a live stream, Timur Turlov, the founder and CEO of the Freedom Holding Corp., underlined that the net profit of the company. grew by 82.4% to $375 million, with earnings per share at $6.37.
What other changes have happened in Freedom’s ecosystem to influence better forecasts and the current results of the company?
Stronger team and compliance:
According to S&P analysts, the company has managed to improve its overall risk management system as the group started consolidating risk management and compliance functions in 2023.
As Turlov has highlighted many times, Freedom is the regional leader in measures designed to prevent accepting money obtained through illegal activities, as well as anti-money laundering and sanction procedures.
“Our compliance system is extremely rigorous. For instance, we often refuse to open accounts if we suspect something is wrong,” he stated.
“Our public status, transparent reporting, and approach to risk management make it next to impossible to offer services to untrustworthy clients, and our auditors’ and regulators’ oversight helps us to continuously improve and maintain high standards of compliance,”
The number of employees within Freedom Holding Corp. is constantly growing due to the expanding ecosystem and the high-tech nature of the company itself. This is necessary because the company must deal with new types of risk, including compliance, IT risks and cybersecurity issues, and it needs more specialists.
“These days, banks simply cannot support smooth operations without lots of specialists, unlike their predecessors doing business 30 years ago. Today, the banking process requires many more professionals and each year, business operations become faster and more sophisticated,” said Turlov. He believes that the major problem for doing business today is the shortage of qualified specialists, not infrastructure or political institutions.
The company has made its team stronger by inviting new executives with experience in risk management, compliance, and legal issues. Moreover, the group has expanded the number of members on its board of directors from six to seven people, with four of them being independent directors with who possess diverse international corporate experience.
Investments and development:
In Kazakhstan, Freedom Holding Corp., headquartered in Almaty, has been actively developing its diversified fintech ecosystem, which currently includes a bank, two brokerage and two insurance companies, and a lifestyle segment.
Furthermore, an additional 13 companies have joined the ecosystem over the past twelve months. The company has invested more than $170 million in various startups. “In Kazakhstan, we have promoted new startups over the past five years and then successfully integrated them into the company.
“We didn’t intervene in their business, and many of them have become even more profitable as a result,” Turlov emphasised.
According to Turlov, strategic acquisitions have played a crucial role for the company. Among them were the acquisition of ReKassa, an online financial services company catering to small businesses; Freedom Pay (formerly known as Paybox), an e-payment processing service; Aviata and Ticketon, flight and event booking services; Arbuz, an online supermarket; and DITel, a telecommunication company in Shymkent.
Through the acquisition of Aviata, for instance, Freedom has obtained access to a database of two million frequent flyers in Kazakhstan, which has helped the company to more effectively promote its banking services.
“As a result, these clients receive bonuses from Freedom Bank and cashback from using our bank cards; we offer bigger cashback allowances than any other bank,” Turlov explained, adding that all these services are available in the Freedom SuperApp.
Financial results and strategy:
In the 2024 fiscal year, Freedom Bank, a Kazakhstani digital bank within the Freedom Holding Corp. enterprise, reported $615 million in annual revenue, a 151% increase over last year.
The brokerage business brought in $617 million in revenue, marking a 60.4% growth year-on-year. Within a year, the number of brokerage accounts has grown from 370,000 to 530,000, driven by organic growth as well as client migration from Belize (after the brokerage business there closed) to Kazakhstan and Armenia in early 2024.
Turlov pointed out that banking has become the fastest-growing business line within the company. Freedom Holding Corp.’s team has created successful digital products such as online mortgages, car loans, and loans for small and medium-sized businesses that appeal to a wide variety of consumers and all these services work quickly and smoothly.
“Our bank has integrated data from all available public services data in Kazakhstan, which is why we can risk score clients and issue loans so quickly,” the company’s CEO underlined. Currently, the bank serves roughly one million clients, while the entire Freedom ecosystem has about five million customers.
Commenting on the future growth strategy, Turlov highlighted the importance of reinvesting the company’s profit into promising business lines such as banking and insurance.
“We have plenty of opportunities for future growth and it would be wrong not to get on this horse. We’re going to invest our profit in further development to outpace our competitors and continue to set new trends in our industry,” the company’s CEO explained. For the same reason, the company doesn’t plan to make dividend payouts anytime soon.
Along with business purposes, the company is investing a portion of its profit in various social and educational projects in Kazakhstan.
In 2024, Turlov became the chairman of the Advisory Committee of the UN Global Compact in Central Asia, an organization engaged in solving environmental and infrastructural issues and fighting poverty. As of 2023, the company is also a signatory of the UN Global Compact which is actively pursuing ESG transformation.
Technology achievements:
One significant change in the Freedom Holding Corp. ecosystem over the last year is the rapid development of Freedom Telecom, an ambitious young company aimed at developing the Digital Silk Road (a joint project of Kazakhstan and Azerbaijan) and expanding fiber-optic networks throughout the country.
To provide state-of-the-art Wi-Fi in all regions of Kazakhstan and build many up-to-date telecommunication networks across the country, Freedom has entered into a strategic advisory partnership with international giant, Vodafone.
“We have signed a contract with Vodafone to help us plan and build a network. This will allow us to leverage their technologies and expertise to build a fixed and virtual mobile operator in Kazakhstan, and potentially create a full-fledged operator to implement our strategy, incorporating the strength of their brand, experience, and good relations with suppliers to be successful.” Turlov explained.
_________________________________________________________________________________________________________
YouTube: https://www.youtube.com/@eutoday1049