Freedom Holding Reports 36% Drop in Nine-Month Net Income Amid Regulatory Headwinds and Tax Changes
Summary
Freedom Holding Corp. reported a 36% decline in nine-month net income, influenced by new insurance regulations and reduced trading gains, despite overall asset growth and strategic expansion initiatives.
Key Events
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Nine-Month Net Income Decline
Net income attributable to common shareholders decreased by 36% to $145.4 million for the nine months ended December 31, 2025, compared to $227.3 million in the prior year.
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Regulatory Impact on Insurance Segment
Insurance premiums earned, net of reinsurance, decreased by 40% for the three months and 18% for the nine months, primarily due to a new regulatory cap on commissions to insurance agents.
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Kazakhstan Tax Code Changes
New tax legislation in Kazakhstan, effective January 1, 2026 (with 2025 impact), introduces an additional 10% corporate income tax on certain income for 2025 and increases the banking sector tax rate to 25% from 2026.
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Significant Balance Sheet Growth
Total assets increased by 25% to $12.4 billion as of December 31, 2025, driven by substantial increases in restricted cash and customer liabilities.
Analysis
Freedom Holding Corp. reported a significant 36% decrease in net income for the nine months ended December 31, 2025, primarily driven by a new regulatory cap on insurance commissions and lower net gains on trading securities. While overall revenue saw a modest decline, the company experienced substantial growth in its balance sheet, with total assets increasing by 25%. New tax legislation in Kazakhstan is expected to further impact the effective tax rate. The company continues its strategic expansion into telecommunications and is exploring a $2 billion AI Hub collaboration, alongside a positive governance move to discontinue purchasing loans from a related party. Investors should monitor the impact of regulatory changes and tax reforms on future profitability.
At the time of this filing, FRHC was trading at $122.16 on NASDAQ in the Crypto Assets sector, with a market capitalization of approximately $7.5B. The 52-week trading range was $111.85 to $194.01. This filing was assessed with negative market sentiment and an importance score of 7 out of 10.