One Freedom customer represented 18% of liabilities amid high-cost funding and large special obligations

One non-related customer accounted for US$1.267 billion of Freedom Holding’s US$7.049 billion customer liabilities at 30 June 2026—about 18.0% of the total. Three months earlier the same disclosure category was US$2.369 billion, or roughly one-third of customer liabilities. The filing does not identify the customer or state that the balance was unstable, connected to misconduct or likely to leave. It does reveal a concentration that disappears inside the consolidated headline: a single depositor or brokerage counterparty remained large enough that its movement could materially change the group’s reported customer-liability total.[1]

The total customer-liability balance actually fell 0.8% during the quarter, from US$7.104 billion to US$7.049 billion, even as interest-bearing term deposits increased by US$510.6 million. Non-interest-bearing brokerage and customer accounts fell by US$565.8 million. The single large non-related balance declined by more than US$1.1 billion. Those movements do not prove a withdrawal; changes can reflect internal transfers, securities purchases, settlement or reclassification. They show why the total alone is inadequate: growth in bank deposits and contraction in brokerage cash occurred at the same time, with one customer representing a large part of the concentration disclosure.[1]

Freedom’s funding costs also rose sharply. The average balance of interest-bearing customer liabilities more than doubled to US$3.035 billion from US$1.381 billion, while the average rate remained near 12%. Interest expense on customer accounts and deposits increased 121% to US$86.9 million. Average debt securities outstanding rose from US$586.9 million to US$1.450 billion at a 9.5% average rate. Repurchase obligations carried an 18.0% average rate, up from 10.4%, although their average balance declined. The group’s funding model expanded through several high-rate channels rather than through low-cost deposits alone.[1]

Two unusual liabilities equalled more than half of equity

Freedom also reported a US$561.9 million liability arising from continuing involvement and a US$300 million unsettled private-placement liability. Together they equalled US$861.9 million. Against shareholders’ equity of approximately US$1.535 billion, the two items represented 56.1%. That calculation does not mean they are hidden debt of the same kind or that the company is undercapitalised. The private-placement amount was cash received before shares had been issued, so investors had no residual equity interest at the reporting date and the proceeds were correctly recorded as a liability. The continuing-involvement liability arises because transferred mortgage loans remained recognised as assets while proceeds received from a programme operator were recorded as an associated obligation.[1]

The two balances have different economic meanings. The private-placement liability was expected to convert into equity if the offering completed. The continuing-involvement liability accrued interest at 4.5% and moved with a mortgage programme where Freedom retained the loans on balance sheet. Adding them is useful only as a measure of how much reported equity could change or how much non-standard funding sat outside ordinary deposits and bonds. It would be misleading to call their sum conventional borrowing or to infer that both required immediate cash repayment.[1]

Funding cost rose across deposits, debt and repo markets

The filing’s average-balance table permits a more complete funding reconstruction. Interest-bearing customer liabilities, debt securities, repurchase obligations and margin-lending payables averaged US$6.089 billion in the quarter. Customer liabilities were the largest component at US$3.035 billion, followed by debt securities at US$1.450 billion and repos at US$1.139 billion. Interest expense across those four categories was US$175.2 million. Annualising a single quarter would be inappropriate because balances, currencies and rates move, but the table makes clear that funding cost is a central operating input rather than an incidental expense.[1]

The group operates mainly in markets where nominal interest rates can be much higher than in dollars or euros. Term-deposit rates ranged up to 19.81%, average repo rates reached 18%, and the filing says Freedom is particularly sensitive to Kazakhstan interest rates. High nominal funding cost can be matched by high-yielding local-currency assets, loans and securities. It cannot be judged from the liability rate alone. The relevant spread is the return on the matched asset after credit, currency, liquidity and operating costs. The quarter’s filing provides pieces of that calculation across several notes but not one consolidated spread bridge by funding source.[1]

Related-party balances are a separate concentration and must not be merged

Freedom separately disclosed that 14% of related-party customer liabilities were bank deposits from Turlov Family Office Securities, a private brokerage wholly owned by chief executive Timur Turlov. Another 0.5% came from ITS Central Securities Depository, an affiliate. Those percentages apply only to the related-party customer-liability subset, not to the US$7.049 billion consolidated total. They should not be added to the 18% non-related-customer concentration. The filing explicitly labels the large customer as non-related. Conflating the two would create a false related-party allegation.[1]

A constructive explanation for the group’s complex funding is the breadth of its business: brokerage, banking, insurance, mortgages, telecom and capital-markets operations create different cash pools and liability types. The company also raised US$300 million of equity subscription proceeds and reported total assets of roughly US$14.0 billion against US$12.5 billion of liabilities. The liability-to-asset ratio was about 89.1%, a structure normal for a group containing banks but not directly comparable with a pure broker. The presence of deposit insurance arrangements, segregated brokerage cash and secured funding further limits simple leverage comparisons.[1]

The single-customer disclosure is a concentration test, not a liquidity forecast. A large brokerage customer may hold cash temporarily for settlement; a corporate depositor may have a contractual term; an institutional counterparty may move balances as part of ordinary market activity. The filing gives an amount but not duration, currency, product or withdrawal terms. That missing information is precisely why the change from US$2.37 billion to US$1.27 billion should be reported without labelling it a run. The group’s ability to replace or retain that funding depends on facts outside the disclosed table.[1]

Currency further complicates the apparent rates. Freedom’s liabilities and earning assets span Kazakhstan tenge, dollars, euros, yuan and other currencies. A 12% deposit or 18% repo rate may be economically normal in one currency and extraordinarily expensive in another; foreign-exchange hedging can alter the effective cost. Consolidating them in US dollars makes scale comparable but not the underlying spread. A currency-by-currency asset-liability table, including hedges and duration, is required before concluding that high nominal funding costs compress or enhance group profitability.[1]

The balance-sheet total further shows why the private-placement liability should be followed after quarter-end. If the shares were subsequently issued, the US$300 million would move from liabilities into equity and materially reduce the combined special-liability ratio without a cash inflow at that later date. If completion failed, repayment terms would become more important. A later closing filing can therefore change the interpretation of the June snapshot even though the original accounting remains correct.[1]

The single-customer figure can likewise be stress-tested without predicting a withdrawal. A 25% reduction in the US$1.267 billion balance would remove about US$317 million, equal to roughly 4.5% of total customer liabilities. The actual liquidity effect could be smaller or larger depending on maturity, currency, collateral, settlement timing and matched assets. This scenario demonstrates why one depositor’s contractual terms matter; it does not establish that the customer intended to leave or that Freedom lacked resources to meet an outflow.[1]

The evidence proves that Freedom had material customer concentration, rapidly expanding high-cost funding, and two special liabilities that were large relative to equity. It also shows why those facts should not be turned into a single allegation. The concentrated customer was disclosed as non-related; the private-placement liability had a potential equity destination; and the continuing-involvement liability was paired with recognised mortgage assets. The next high-value reporting step is to trace the subsequent private-placement closing, identify the type—not necessarily the name—of the concentrated customer, and reconcile the asset yields supporting 9% to 18% funding costs. Until then, the defensible finding is concentration and complexity, not insolvency or concealment.[1]

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