Operational efficiency and profitability improve despite headwinds in customer growth

STRATEGIC HIGHLIGHTS

• Longer maturities, stronger customers and automation are increasingly offsetting falling effective annual interest rates and rising interest costs.
• Number of active customers down 1,6% to 258 thousand (31 Dec. 2024: 262 thousand) with revenue per customer (LTM) up 2,1% to 441 EUR (12M/2024: 432 EUR).
• Group consolidated balance sheet up 3,6% to 430,5 million EUR and equity up 2,7% to 76,5 million EUR as of 31 Mar. 2025.
• Energbank’s digitalization turnaround in progress, with corresponding increase in revenue and improvement of opex-to-revenue ratio starting in Q2 2025.
• Wallet services and digital insurance intermediation continue to grow significantly faster than lending business – further acceleration expected.
• After end of reporting period, partial refinancing of around EUR 78 million of EUR 2021/2026 Bonds completed ahead of schedule with successful issue of new Senior Secured EUR 2025/2030 Bonds with a total volume of EUR 140 million.

OPERATIONAL HIGHLIGHTS

• Loan payouts increased by 1,7% to 83,5 million EUR (3M/2024: 82,1 million EUR) – the overall focus remained on improved risk management and new regulations came into force in Albania.
• Number of loans signed with 83 thousand up 10,1% (3M/2024: 75 thousand).
• Group cost of risk, expressed as net impairment charges to average gross loan portfolio, decreased to 8,1% (12M 2023: 9,1%), underlying trajectory to improvement of customer quality.
• Gross loan portfolio at 319,0 million EUR (31 Dec. 2024: 317,6 million EUR) of which principal amount of 296,6 million EUR remained at previous year’s  level (31 Dec. 2024: 296,3 million EUR).
• Non-bank repayment discipline (Customer Performance Index, CPI30) at 87,9% (3M/2024: 86,4%), reflecting improved risk management through implementation of credit risk models, risk-based loan amount and loan duration management.
• 79 cardless ATMs operational (31 Dec. 2024: 78 ATMs).

FINANCIAL HIGHLIGHTS

• Interest and commission fee income up 8,6% to 24,3 million EUR (3M/2024: 22,4 million EUR).
• Net interest and commission fee income up 9,6% to 16,5 million EUR (3M/2024: 15,0 million EUR).
• Total revenue up 9,0% to 28,8 million EUR (3M/2024: 26,4 million EUR).
• Adjusted cost-to-revenue ratio 38,3% (3M/2024: 39,6%) with increased costs offset by rising interest income.
• EBITDA adjusted for solidarity tax in North Macedonia up 8,5% to 11,5 million EUR (3M/2024: 10,6 million EUR adjusted for FX).
• Net profit at 3,4 million EUR compared to 2,2 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, 02 June 2025. Iute Group, a leading European personal finance group, reported today unaudited results for 3M/2025.

“We are confident that the 2025 balance sheet target of 510 million EUR, the annual revenue target of 130 million EUR, and the consolidated net profit target of 13 million EUR will be achieved in spite of dynamic global environments. The growth of the active customer pool target, however, remains the most challenging. While we are seeing growing traction from wallet and insurance services in some markets, we also face increasing competition from traditional banks aiming to retain already acquired and committed customers.

In Q1 2025, all key performance indicators continued to rise – except for the number of active customers. Existing customers are using more of our financial services – loans, wallets, and insurance intermediation – and are also paying more for these services. Revenue grew faster than operating expenses, credit quality improved, and overall net profit increased year-over-year. We created more value for both our customers and investors. On the downside, we did not manage to grow the number of active customers at Group level. This reflects growing competitive pressure and demographic decline, requiring more effort to win over customer segments that are less tech-savvy or already loyal to traditional banks. As an organization, we are still learning how to create the ultimate customer experience, which is the driving force behind our growth.

Although Q1 is typically the weakest quarter of the year, total assets increased by 3,6% to 430 million EUR. Year-over-year, Iute Group’s revenue grew by 6,5% to 28,8 million EUR, while operating expenses rose by 5,4% to 11,0 million EUR.

The revenue structure is also becoming more diversified. In Q1 2025, 89,9% of total revenue came from loans, while wallet services contributed 4,5%, insurance intermediation 3,7%, and investments in fixed-income securities 1,9%. We remain committed to our long-term goal of generating 20% of total revenue from wallet and insurance services.

Profitability remains under pressure due to declining APRs and volatile capital markets. All Group loans issued in Q1 2025 carried a weighted average APR of 36,6%, down from 37,3% for full-year 2024. Nevertheless, we are confident that the positive effects of our measures to improve operational efficiency and credit quality outweigh the decline in loan yields.

Operational efficiency improved as we continue to benefit from past initiatives and pursue ongoing incremental gains. The cost-to-income ratio improved to 38,3%, compared to 39,6% in the previous year. Economies of scale and digitalization are becoming increasingly evident. Notably, Iute Group reduced its headcount to 900 as more customers shift to digital channels. The MyIute app has been downloaded over 1,3 million times. The number of Iute partners and agents rose to more than 4.200. Meanwhile, the branch network was reduced from 43 at the end of 2024 to 38. We have also implemented our first AI-driven operational function in the area of customer interactions quality assurance, which has already begun to reduce costs and improve our understanding of customer experience.

Profitability further benefited from improved credit risk management. Loan impairment charges declined by 3,8% year-over-year. This is also reflected in an improved CPI for non-bank loans, which increased to 87,9% from 86,8% in FY 2024.

Foreign exchange gains and losses were close to zero, whereas a solidarity tax of 1,3 million EUR was incurred in North Macedonia. As a result, Q1 2025 net profit reached 3,4 million EUR, aligning well with the annual target and representing a significant improvement compared to 2,2 million EUR in Q1 2024.

Looking ahead, we are increasingly prioritizing the evolution of value proposition for customers. Our goal is to deliver fully digital, personalized banking services via the MyIute SuperApp, aspiring to reach over one million active customers by the end of 2027,” said Tarmo Sild, CEO of Iute Group.

The full unaudited report for 3M/2025 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 3M/2025 results by means of a webcast presentation today, 02 June 2025, 11.00 CEST. The webcast/call will be held in English.

Please register in time to participate in the webcast/call at:
Iute Group – Earnings Call 3M 2025.

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