February 20, 2025

Tarmo Sild
CEO of Iute Group

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.

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.