Freedom Bank's Half-Year Turnaround: From T27.7bn Loss to T11.6bn Profit

Freedom Bank, the Kazakh lender ultimately controlled by businessman Timur Turlov, moved back into profit in the first six months of 2026. According to financial statements published on the Kazakhstan Stock Exchange (KASE), the bank earned 11.6 billion tenge in January–June 2026, compared with a loss of 27.7 billion tenge in the same period of 2025.

The swing was driven largely by trading and fair-value results. Freedom Bank booked a profit of 77.5 billion tenge on financial instruments measured at fair value through profit or loss, reversing a 36.3 billion tenge loss a year earlier. At the same time, non-interest income rose 2.4 times to 57.2 billion tenge, helping offset a 42.7 per cent fall in net interest income to 17 billion tenge.

Costs and the balance sheet also changed materially. Operating expenses rose 73.7 per cent to 57.7 billion tenge, with personnel costs up 56.7 per cent to 31.3 billion tenge and administrative and other operating expenses doubling to 26.4 billion tenge. Assets reached 2.94 trillion tenge, up 13.9 per cent, as the bank expanded securities operations rather than ordinary lending.

That shift comes with credit-quality pressure. The loan book fell 2.1 per cent to 975.2 billion tenge, but Stage 3 loans showing signs of impairment rose 81.5 per cent to 40.4 billion tenge and expected credit loss reserves increased 43.7 per cent to 41.5 billion tenge.

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Inside Freedom Bank's H1 2026: Fair-Value Gains, Higher Costs and Stage 3 Loan Risks

The profit engine is now the fair-value book, not lending

Freedom Bank's result is dominated by the 77.5 billion tenge gain on financial instruments carried at fair value. That contrasts with the 36.3 billion tenge loss on the same line a year earlier. Meanwhile, net interest income fell 42.7 per cent to 17 billion tenge, indicating that traditional lending income is playing a smaller role in the bank's earnings mix.

Cost growth is outpacing core banking income

Even in a profitable half, the bank's operating leverage remains challenging. Total expenses rose 73.7 per cent to 57.7 billion tenge, driven by a 56.7 per cent increase in personnel costs to 31.3 billion tenge and a doubling of administrative and other operating expenses to 26.4 billion tenge. With net interest income declining and the loan book shrinking, more of the bank's profitability now depends on market-sensitive fair-value gains.

Asset quality is deteriorating inside a smaller loan portfolio

The loan book contracted 2.1 per cent to 975.2 billion tenge, yet Stage 3 impaired loans jumped 81.5 per cent to 40.4 billion tenge. Expected credit loss reserves rose from 28.9 billion tenge to 41.5 billion tenge, an increase of 43.7 per cent. This suggests that credit risk is concentrated in a shrinking pool of exposures, though the disclosure does not identify which sectors or borrowers are driving the increase.

Funding and assets are increasingly securities-led

Client funds rose 17.4 per cent to 1.77 trillion tenge, while repo liabilities grew 12.8 per cent to 531.1 billion tenge. On the asset side, trading securities increased 27.8 per cent to 611.2 billion tenge, securities transferred under repo rose 2.2 times to 251.9 billion tenge, and investment securities grew 2.2 times to 191.5 billion tenge. Freedom Bank is therefore expanding a securities-heavy balance sheet funded by deposits and repo borrowing, rather than prioritizing ordinary loan growth.

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Reading Freedom Bank's H1 2026 Results for Investors and Counterparties

Freedom Bank's H1 2026 statements give investors, funding providers and counterparties specific points to test before the next disclosure.

  • Assess the sustainability of the fair-value gain. The 77.5 billion tenge profit on financial instruments at fair value is the single largest swing factor, compared with a 36.3 billion tenge loss a year earlier; future results will depend heavily on whether this trading performance can be repeated.
  • Compare cost growth with declining lending income. Personnel costs rose 56.7 per cent to 31.3 billion tenge and administrative and other operating expenses doubled to 26.4 billion tenge, while net interest income fell 42.7 per cent to 17 billion tenge.
  • Track the Stage 3 loan trend. Impaired loans increased 81.5 per cent to 40.4 billion tenge and expected credit loss reserves rose 43.7 per cent to 41.5 billion tenge even as the total loan book shrank 2.1 per cent.
  • For current and prospective funders: client funding grew 17.4 per cent to 1.77 trillion tenge and repo liabilities reached 531.1 billion tenge, linking more of the bank's funding profile to securities collateral values and market liquidity.

Risk & Opportunity Assessment

Commercial RiskMediumThe profit swing relies heavily on fair-value gains of 77.5 billion tenge versus a prior-year loss of 36.3 billion tenge, while net interest income fell 42.7 per cent and operating expenses grew 73.7 per cent.
Competitive RiskMediumThe loan portfolio contracted 2.1 per cent while the bank expanded securities and repo operations, suggesting a shift away from core commercial lending even as lending income declined.
Regulatory RiskMediumStage 3 impaired loans rose 81.5 per cent to 40.4 billion tenge and expected credit loss reserves increased to 41.5 billion tenge in a shrinking loan book, a combination likely to attract supervisory attention on credit risk management.
Reputation RiskLowReturning to profitability after a prior-year loss supports the bank's reporting narrative, and the published statements do not disclose a damaging reputational event.
Technology DisruptionLowThe H1 2026 results show shifts in the securities and lending mix rather than a disclosed technology-driven disruption to the bank's business model.
Commercial OpportunityMediumThe bank demonstrated a substantial fair-value gain and attracted 17.4 per cent growth in client funds to 1.77 trillion tenge, but the opportunity remains sensitive to market conditions and rising costs.