S&P Global affirms ratings of Freedom Holding and its core subsidiaries

S&P Global Ratings has affirmed the long-term credit rating of Freedom Holding at B-, as well as the long-term and short-term credit ratings of its subsidiaries: Freedom Finance, Freedom Finance Europe, Freedom Finance Global and Freedom Bank at B/B. Freedom Bank’s national ratings are affirmed at kzBB+. In addition, the holding and its core subsidiaries are no longer in CreditWatch Negative, where they had been since the end of August 2023.

“Our ratings on Freedom Holding Corp. and its core subsidiaries balance the group’s strengths as a growing, increasingly diversified, and profitable financial services entity with the high risks inherent to the markets it serves and its organizational arrangements,” S&P Global said in a statement.

According to the holding, even when the company was included in CreditWatch Negative, market participants maintained their business relations with the group. In addition, Freedom Holding Corp.’s customer base mostly comprises citizens of Kazakhstan, Ukraine, the EU and unsanctioned Russians and their diaspora, who have nothing to do with sanctions. Retail and corporate deposits at Bank Freedom Finance Kazakhstan remained stable between August and October 2023.

The agency expects that Freedom Holding Corp. will continue to generate most of its revenues from its Kazakhstani operations over the next two years. The company’s business in Kazakhstani accounted for well over half of the group’s total revenues over the past 15 months. At the same time, the contribution of Cyprus-based Freedom Finance Europe Ltd. lessened to about 15% of total revenues over the same period. The Belizean entity’s share of fees and commissions in the total group’s commissions (including brokerage, banking, and investment banking services) progressively declined from more than 60% to 8% in the quarter ending June 30, 2023.

«Therefore, Freedom Holding will now be subject to the anchor for Kazakh securities firms, which is two notches below the anchor for banks operating in Kazakhstan,» the press service of the holding said.

S&P Global Ratings will revise the outlook on the holding company and the operating subsidiaries from negative to stable over the next twelve months if they have sufficient confidence that steps to strengthen the group’s governance and risk management are enduring. At the same time, their RAC ratio would have to stabilize at the current level, supported by strong earnings generation and limited acquisitions.