Iute Group reports unaudited results for 12M/2024 – Journey towards fully digital banking group

Iute Group reports unaudited results for 12M/2024

Journey towards fully digital banking group

STRATEGIC HIGHLIGHTS

• Longer maturities and stronger customers are having an increasing effect in offsetting falling effective annual interest rates and rising interest costs as a result of growth.
• Number of active customers up 1,9% to 262 thousand (31 Dec. 2023: 257 thousand) with revenue per customer (LTM) up 9,9% to 432 EUR (12M/2023: 393 EUR).
• Total number of customers up 10,9% to 908 thousand (31 Dec. 2023: 819 thousand).
• Group consolidated balance sheet up 10,6% to 415,7 million EUR and equity up 16,7% to 74,5 million EUR as of 31 Dec. 2024.
• Increasing use of MyIute app – 1.191 thousand downloads as of 31 Dec. 2024 (31 Dec. 2023: 813 thousand).
• Wallet services and digital insurance intermediation continue to grow significantly faster than lending business – further acceleration expected.
• In July 2024, Fitch Ratings (Fitch) assigned a B- (Stable Outlook) Long-Term Issuer Default Rating (IDR) and a B- Senior Secured Debt Rating for EUR Bond 2021/2026.
• Activities started for the refinancing management of the outstanding 2021/2026 corporate bond, including the evaluation of possible capital measures to be carried out in the course of the 2025 financial year.

OPERATIONAL HIGHLIGHTS

• Loan payouts at already high levels showing further increased by 29,5% to 376,5 million EUR (12M/2023: 290,9 million EUR).
• Number of loans signed with 359 thousand well above prior-year level (12M/2023: 330 thousand).
• Cost of risk, expressed as net impairment charges to average gross loan portfolio, decreased to 9,1% (12M 2023: 9,5%), underlying trajectory to improvement of customer quality.
• Gross loan portfolio up 26,1% to 317,6 million EUR (31 Dec. 2023: 252,0 million EUR) of which principal amount of loans increased 27,6% to 296,3 million EUR (31 Dec. 2023: 232,2 million EUR).
• Repayment discipline (Customer Performance Index, CPI30) at 86,6% (12M/2023: 87,3%), reflecting the time lapse before recent loan repayments outweigh earlier loan repayments.
• 78 cardless ATMs operational (31 Dec. 2023: 75 ATMs).

FINANCIAL HIGHLIGHTS

• Interest and commission fee income up 1,9% to 93,1 million EUR (12M/2023: 91,4 million EUR) which is burdened to the lower income from Moldovan base rate and government bonds at Energbank.
• Interest and commission fee income adjusted for Energbank’s income from government bonds increased by 5,2 % to 91,2 million EUR (12M/2023: 86,6 million EUR).
• Net interest and commission fee income up 2,4% to 64,7 million EUR (12M/2023: 63,2 million EUR).
• Net interest and commission fee income adjusted for Energbank’s income from government bonds up 7,4% to 62,8 million EUR (12M/2023: 58,4 million EUR).
• Total revenue up 6,6% to 112,7 million EUR (12M/2023: 105,7 million EUR) – adjusted for Energbank’s income from government bonds up 9,7% to 110,7 million EUR (12M/2023: 101,1 million EUR).
• Adjusted cost-to-revenue ratio 39,7% (12M/2023: 38,5%) as a result of lower income from government bonds and central bank deposits at Energbank.
• EBITDA adjusted for FX up 2,2% to 47,7 million EUR (12M/2023: 46,7 million EUR adjusted for FX, one-off expenses of 1,6 million EUR related to changes in LGD calculation (IFRS 9), sale of properties at Energbank of 1,4 million EUR and one-off expenses related to new subsidiaries of 1,8 million EUR).
• Net profit at 9,0 million EUR compared to 10,3 million EUR, attributable to one-off expenses related to changes in LGD calculation (IFRS 9), while the prior-year period was influenced by stronger FX gains.
• Strong capitalization and profitability affected by discretionary strong growth efforts still in line with Eurobond covenants.

Tallinn, Estonia, 20 February 2025. Iute Group, a leading European personal finance group, reported today unaudited results for 12M/2024.

“Iute Group is oriented towards top performance and profit. Our DNA is entrepreneurial and customer-centric, intertwined with a systematic approach and the ability to learn from mistakes and adapt to changing environments.

We continued through 2024 to build loan, payment, and insurance value streams which combined constitute a fintech bank and money ecosystem for our customers. The Group achieved both quantitative growth and several qualitative advancements in its products and its operations. However, despite profitable growth, we fell short of our own even higher expectations:

• Customer pool (loan and wallet) target of over 260,000 reached at the end of 2024;
• Balance sheet 420 million EUR target was missed by 1%, reaching 415 million EUR;
• Revenue 120 million EUR target was missed by 6%, reaching 113 million EUR;
• Consolidated net profit 15 million EUR target was 40% short by reaching 9 million EUR, while the largest impact of 3,5 million EUR was due to FX (vs 12M23) and 1,6 million EUR due to change of LGD calculation logic (IFRS9);
• Targeted launch of business activities in at least one additional country was delayed to 2025.

From a top performance viewpoint, we can do better. Therefore, the key areas for management improvement in 2025 are internal alignment and planning, both before and during execution. With higher standards for skills and routines to manage the increasing complexity of business processes, we will deliver a more personalized experience to our customers. Delivering a more personalized experience in large scale requires us to execute on advanced digitalization and automatization improvements, and for the first time, apply artificial intelligence as part of Iute’s back-end operations. A significantly larger share of development resources will be dedicated to wallet and insurance intermediation value streams. We intend to monetize customer interactions we have with over one million people in the Balkans who have downloaded the MyIute app.

Regulatory pressures and changes remain both a threat and an opportunity. In general, we can expect increased complexity in business operations and therefore higher operating expenses, while loan revenues will become even more constrained. Therefore, the focus will be on customer creditworthiness and repayment quality.

Thanks to the joint efforts of the Iute team, the Group succeeded in improving the loan portfolio performance and operational efficiency. Interest and similar income grew from 91 million EUR to 93 million EUR despite changing and stricter regulations, while interest and similar expenses remained at the same level of 28 million EUR. The Group’s operating expenses increased from 47 million EUR to 48 million EUR while the Group’s total revenue rose from 106 million EUR to 113 million EUR.

In July 2024, Fitch Ratings (Fitch) assigned a B- (Stable Outlook) Long-Term Issuer Default Rating (IDR) and a B- Senior Secured Debt Rating for EUR Bond 2021/2026.

In 2025, the Group also intends to overcome the pressure on profitability and reach double-digit profit again. First, we will further improve the opex-to-revenue ratio by growing revenues without increasing operating expenses, or in some areas by cutting expenses without affecting the value delivered to our customers. Currently the non-bank business opex-to-revenue ratio is already below 40%, while the bank business opex-to-revenue ratio stands at over 60%. Second, we intend to increase of FX revenues by having more active Energbank services in our main FX-dependent market in Moldova. Third, the loan impairment provisioning ratios are expected to improve, in line with the better repayment quality of loans issued in the second half of 2024. In other words, the performing loan portfolio and its revenues are expected to grow faster than the provisions for loan losses created during the period. Fourth, the expenses made for business expansion are expected to bear fruit in actual expansion of the business on the map, which will eventually attract customers and generate revenues. By the end of 2025, management expects to have 300,000 active wallet, loan and insurance customers. The consolidated balance sheet should reach 500 million EUR, revenue should grow by at least 10% over 2024 and net profit should grow by 20% over 2024,” said Tarmo Sild, CEO of Iute Group.

The full unaudited report for 12M/2024 is available under www.iute.com/investor/reports-and-presentations.

Earnings Call:

CEO Tarmo Sild, CFO Kristel Kurvits, and CRO Tarvo Rahumägi will comment on the unaudited 12M/2024 results by means of a webcast presentation today, 20 February 2025, 10.00 CET. The webcast/call will be held in English.

Please register in time to participate in the webcast/call at:
Iute Group – Earnings Call 12M 2024.

The corresponding presentation will also be available on the Company's website prior to the earnings webcast/call.

Contact:

Kristel Kurvits, Group Chief Financial Officer (CFO)
Email: investor@iute.com
Phone: +372 622 9177

About Iute Group:

Iute Group is a fintech company established in 2008 in Estonia. The Group specializes in consumer finance, payment services, banking, and insurance products. It serves customers in Albania, Bulgaria, Moldova, and North Macedonia. Iute Group finances its loan portfolios with equity, deposits, and secured bonds on the Regulated Market of the Frankfurt Stock Exchange and the Nasdaq Baltic Main List.

www.iute.com