Good morning. Welcome to DelfinGroup Investor Webinar. We will start with the company's presentation, followed by a live Q&A session. Throughout the session, we'll be looking forward to receiving your questions. Please submit them through the Q&A window. For your convenience, we are recording the session, and replay will be available shortly after the call. That being said, I'm handing the call over to our hosts, the Chairman of the Management Board of DelfinGroup, Didzis Ādmīdiņš, and Member of the Management Board and CFO, Andrejs Aleksandrovičs. Gentlemen, please.
Thank you, Ieva. Hello, everybody. I'm Didzis Ādmīdiņš, CEO of DelfinGroup, and today I'm joined by Andrejs Aleksandrovič, our CFO and Management Board member. Today I will present you an audited result for 12 months. As always, I will start with key results and business highlights, and then Andrejs will join in with business performance, financials, and after that, there will be a questions and answers session. About our business results. In one sentence, I could say that last year was quite good in business performance, and as you see, our main business segment, consumer loans, has grown by 15% in loan issuance levels and pawn loans by 9% in loan issuance levels. Basically, that means that the credit portfolio has grown by an impressive 27%. Of course, this is the main driver for our revenue.
If you look on our third business line, which is retail of pre-owned goods, this business line has grown by 15%, and mainly that's driven by online sales. Online sales have grown very good last year, actually. If you look at our revenue, + 25%, I count this as a very impressive number. I also like looking at our profitability. Our profitability for the last quarter of last year was EUR 2.6 million, actually the best result in the history of the company. Also, year-to-year result is the best in the history of the company. Actually, the result of full year, EUR 9.4 million, was in line with our target in the guidance. That's basically about our key results, and later on, Andrejs will walk you through those results a bit deeper.
About business highlights, first of all, I want to start with Lithuania and about consumer loans. As you know, in June last year, we got the license from the Bank of Lithuania for consumer loan issuance, and in November last year, we started those operations. I can say that November and December were quite quiet in terms of issuance because we were testing different kinds of approaches, like different kinds of channels, different kinds of pricing, and so on. Actually, in January and February, we see quite good traction there, and we see that we can successfully compete with our competitors in this market. We will soon see results for this entrance.
Talking about capital markets and funding highlights, the last quarter was, let's say, quite impressive, and the year itself was very impressive because we had this public bond issuance in September, and we attracted EUR 15 million, and it was oversubscribed by almost 50%. It was impressive in terms of bond investor count because we attracted 2,700 bond investors. That's actually a very good number in the Baltics in terms of count of investors in bond issuance. Also, there was good news in terms of bank financing for our company because we raised EUR 4.5 million from Citadele Bank as an overdraft facility, and that actually allows us to decrease financing costs because we don't need so much free cash in our accounts.
Actually, this bond financing and also bank financing allowed us to a little bit decrease the P2P financing, and we decreased this from EUR 30 million to EUR 25 million. Actually, if it would be needed, we can increase this financing because we can attract from the P2P marketplace additional funds if it will be needed in the near future. About our branch network, first of all, you all know that we have an impressive branch network in Latvia, almost 90 branches and 7 branches in Vilnius, Lithuania. Actually, last year was quite full with events in branch networks because actually we did improvements in 16 branches of our branch network. We did 10 smaller upgrades in our branches and six large upgrades in our branches.
We opened two new Banknote XL Concepts in Daugavpils and Rēzekne in Latvia, and we totally rebuilt four other branches in Latvia and three branches only in the last quarter of last year. Look at the picture of the Valmiera branch, for example, you can see how the old branch looked and how the new branch looks right now. Actually, what we are doing by rebuilding those branches and relocating them, we are extending the shelf meters of those branches, and more shelf meters actually allow us to sell more items. That is actually the business case. Also, of course, we need to rebuild because that is our brand name. That is how we are looking.
Actually, we will continue this also this year, and we actually have an exact plan which branches we will rebuild, and we will also turn one existing branch in Liepāja to another XL branch. In the middle of this year, we will have already four Banknote XL branches in Latvia. Looking forward, we actually plan also to test some different approaches in different branch styles. For example, we will test a branch concept in a shopping mall. We have now this one branch in the Domina shopping mall, but we will test another shopping mall, and let's see how it will go. Another great news was that in the last quarter of last year, we improved our online store. Actually, we improved the UX for our customers and also UX for our employees because we decreased the time for listing.
Because you have to understand that we have more than 60,000 items in our webshop, and more or less, those are used items. Every item is quite unique, and it's very important for us to decrease time to listing. Doing that, we can decrease the working hours for our employees, which we need to invest to list all those items in our webshop. We did that by using some modern AI solutions, which allows us to get descriptions for those items much quicker. Actually, another great news is that we introduced this webshop also now in our mobile app. The mobile app itself is quite successful right now because already a significant part of our loan issuance, our consumer loan issuance, goes through our mobile app.
Another great news is that last year, actually, we changed our organizational structure, as I already informed our investors. Another good thing is that we changed this organizational structure, which allows us to better suit our strategy and to fulfill our targets. In August last year, Andrejs Aleksandrovičs joined us as CFO, and in December of last year, he was appointed by the Supervisory Board in the Management Board of the company. Andrejs has good experience in some well-known international companies. Yeah, Andrejs, let's jump in and introduce yourself.
All right, thank you, Didzis. Yeah, so my name is Andrejs Aleksandrovič. I'm very happy that I joined DelfinGroup, this very ambitious company and a great team. As Didzis mentioned, I joined last year's August, so I'm with the company six months, so time flies. During those six months, I have pretty well got acquainted with all the company and all the details. Let's jump into more details to review more details of the business performance. The first one we talk about is consumer loans. This is by far our largest product line. It comprises approximately 2/3 of the revenues of our company. As you can see, we've continued very strong growth. Didzis already mentioned, but in 2024, we've managed to grow our portfolio 28% year- on- year, which was following the previous year, which was also impressive of 33%.
The growth is continuous throughout the years, and we see a very, very strong demand for our product here. We also see that the average loans grow, the average amount of the loan grows by 27% year- on- year, as well as the average term of the loans have increased to 40.7 months, which represents a 15% increase. At the same time, we've managed to keep a very healthy portfolio, and our NPLs, or non-performing loan ratio, is only 2.4% at the end of 2024. The growth did not impact our NPL ratios much. All right, this is about consumer loans. Moving on to the phone loans, this is a very stable line of business of ours. While we have achieved 18%, quite impressive growth in phone loan portfolio, reaching EUR 4.9 million at the end of 2024, it was partly driven by two factors.
One is we've started to issue, and we worked in Lithuania, which accounted for part of the increase, as well as the price appreciation of items like, for example, gold, which increased over 20% in 2024 compared to 2023. This line of business we view as very stable. We do not expect this line of business to continue to grow 30% year- on- year, but at the same time, we do see this as a very stable part of our business, and we are market leaders in Latvia in this business and will continue to be so. All right, and the third one, last but not least, retail, retail segment. Also fairly impressive growth, 15% year-o n- year. Q4 2024 was a record month when total sales amounted to EUR 4.6 million. Big growth.
During the growth, we managed to sustain very healthy margins, which did not change from 2023, and it's around 40%. Growing but sustaining the margins. Also, as Didzis mentioned about the online, as you can see, online grew almost 50% through our innovations and investment into this sales channel. We see that this sales channel is where we could scale the most also going forward and are planning to scale retail in the future through this channel. All right, about the products that we sell. We sell across various items. The leading category in our sales is jewelry, representing 30% of our total sales, closely followed by smartphones. Together, they account for more than half of our total sales, but we also sell various other goods, which are computers, TVs. Under the other, we have smartwatches and household appliances.
We do have a workshop where all the goods are passing through, where we can improve them, repackage them, and really make them feel like new items. We do see a strong demand for pre-owned goods, and we plan to kind of grow this part of our business. We are also much more concentrating and wanting to grow the business through purchasing the items rather than pledges that have not been bought out. Purchasing, refurbishing, reselling. T his is about the split of our revenues. As I mentioned, the largest business is consumer loans, where we provide the service through two brands, Banknote and Vizia. Banknote being by far the largest, representing 52%. Banknote is consumer loans, representing 52% of our total sales, but also phones and retail of owned goods together accounting for more than a quarter of our revenues.
We do see that, as I mentioned, we do see that both consumer loans and retail are the segments that we see the most growth potential also going forward, but we also see that phone loans are very stable business lines of ours. Also, as you can see on the bottom right side of the slide, is a distribution of consumer loans by age category. We are accessible for all categories and quite evenly spread throughout the age groups. We do promote also the accessibility for senior citizens, and as you can see, it represents 15% and 12% of our clients. We do tailor-make the offers and do the better offers for our seniors as well. All right, yeah, income statement. Here, I want to spend a bit more time. As Didzis mentioned, very impressive 25% growth year- on- year, while profit before tax grew by 13%.
In absolute numbers, great. What I want to emphasize is that throughout 2024, we were establishing a business in Lithuania, so we were building out the business processes, teams, investment in technology, opening branches. We have seven branches now operating in Lithuania, and we've started also consumer loan in Q4 2024. Without Lithuania investment, so Latvia on a standalone comparable basis, revenue year on year grew by 24%, and profit before tax actually grew by 23%. We've managed to keep the profitability of the Latvian side of the business largely intact. One of the items in expense lines that grew outpaced, so to say, the revenue is credit loss expenses, while a lot of increase accounts for loan portfolio growth, but still the P&L impact outpaced the growth of portfolio, which was 28%. The one factor that impacted it the most is LGD or loss given default.
It means how can we recover defaulted loans. Here, to minimize our dependency on at what price, for example, we can sell non-performing loans, we are also building and strengthening our capability of in-house collection of those NPLs, non-performing loans, which should allow us to kind of more control this line of the cost. Other items, interest expenses, yeah, 28% year- on- year, but as you can see in last quarter, quarter on quarter, interest expense increased by 18%, considering that portfolio increased 28%. This is where we benefited partly from Euribor decrease, but also significant impact was from this credit line facility that Didzis mentioned from Citadele Bank, and we were able to manage our cash much more efficiently, to keep less cash, uninvested cash on our balance sheet. Yeah, I think I covered this one.
To the balance sheet itself, as expected, the vast majority of a balance sheet consists of one portfolio and on the liability side, interest-bearing debt to finance the one portfolio increase. We do have an increase in fixed assets and intangibles with our investments into the new looks of our branches, with investment into the Lithuanian branches that we've opened, and also investment into our backend systems to be able to scale the business more easily. Inventory, yeah, follows the retail largely, and the cash, this is what I've mentioned just a minute ago, is we keep way smaller cash balances because we can utilize our credit line facility, thus reducing our interest expense. We plan to continue that going forward.
The ratios, please keep in mind that what I mentioned with the income statement, that we did spend on scaling up Lithuanian business and investing and setting it up. Our EBITDA margin is fairly flat, so we've managed to cover the costs through the efficiencies, the cost of investment. Equity ratio, just I need to stress this is adjusted equity ratio, so it takes into account our subordinate loans, but increasing steadily, obviously impacted by dividend payouts. We're still with that, managing to increase equity ratio and return on equity. Again, also increases from quarter to quarter. We had a dip in Q4 2023, but that was largely because of this CIT or corporate income tax changes, where we accounted for tax for the whole 2023 in Q4 2023. Other than that, steady upward trend.
Cost-to-income ratio, similar to EBITDA margin, stable and slightly improving, and again, emphasizing that this all meanwhile investing into the Lithuanian market development. Interest-bearing liabilities, again, fairly flat, decreased from 2023 to the end of 2024, partly driven by Euribor decrease. We do have EUR 56 million of our loans with a floating Euribor rate, but also attracting loans at a slightly lower rate, our capability to do so through the bank and through the bonds issue. Interest coverage at solid number two, comfortably above our covenant at 1.5. Shortly about the capital structure. We are really kind of following that our capital structure is diverse, thus ensuring minimizing the risk. Equity representing 21%, P2P platform, Mintos is 20%, which we decreased by EUR 5 million through 2024. The rest is the banks and the bonds.
Again, repeating what Didzis said, we have had very successful floating of public bonds in Q3, which were oversubscribed by 50%. Also, this attraction of Citadele Bank credit facility of almost EUR 5 million. Currently, we have open five bonds, not repaid five bonds, active bonds, and the last one being this public offering that we have attracted EUR 15 million for us. Dividends. Q4 dividends, which is currently approved by the management and supervisory board of the company. Historic trademark, we have exceeded EUR 1 million in dividend payouts for a quarter, and our total planned dividend subject to shareholders' approvals, of course, but our planned dividend payout is EUR 1.012 million which is, as is our policy, 50% payout ratio from our profits.
If counted together all dividends, and including the last once approved, dividend yield for the year is almost 8% just on the dividends. And share performance. I n Q2 2024, we saw a dip in share price, which was driven by discount sales by one of our shareholders who sold shares at a discounted price of EUR 0.9. Since then, shares have slightly recovered and recently was at EUR 1.15, still slightly behind the market, but our price-to-earning ratios being at 6.5, we see that we are below the market financial industry average of 7.5, at the same time having the return on equity at a very formidable 35%. I guess that would cover for the share performance. Thank you, and on to Q&A.
Thank you for the presentation. Very insightful information. We're now opening the floor for questions. Please submit them in writing through the Q&A window. I see four have come in already, so please continue doing that. We'll start with the questions that have been submitted before the call. The first one of those is, will we see the Lithuanian loan portfolio dynamics and profitability for the market?
Yeah, I can cover this one. Yes, at some point, we will start to open this information. As I previously said, most likely that will happen in 2025. As I said, we just started our consumer loan issuance, and you have to understand that, for example, in Latvia, consumer loans correspond to almost 95% of our loan portfolio. That is the backbone of this business. In my opinion, Lithuania will be the same. Yes, at some point in 2025, we will start opening this information.
Thank you. Are you planning to expand also in Estonia?
We actually are researching different kinds of markets, and we are monitoring as well the situation in Estonia, but we do not have exact plans at the moment.
All right. What about future plans for bonds and shares?
Yeah, I'll take this one. Yeah, we will need additional financing this year. According to our guidance that is also available on our website, we plan to grow a portfolio further this year. We will need to attract the financing through all our channels. Also, the closest to maturity bonds are in February, and likely those will be also refinanced through an additional bond issue. Timing-wise, probably Q3 or Q4.
Thank you. Last spring, Mr. Voļskis resigned from the Supervisory Board. Then it was said that active process of recruiting new Supervisory Board member will be started. It is almost one year since that. Can you comment on this?
Actually, I don't know the current status of this, taking into account that this is like board matters, and shareholder will appoint this fifth board member. Yes, we have a nomination committee for that. I do not know current status. You can answer to this question later.
Thank you, Didzis. Q1 of 2025 is coming to end. Could you reveal some Lithuania loan issuance numbers for recently launched consumer loan segment?
Yes, as I said, we will start to open this information at some point in 2025. Of course, I cannot answer to this in this question and answer session.
Thank you. The respective ratios are well above covenant levels. Does the management plan to make additional yearly dividend recommendation for the shareholder meeting?
Yeah, the actual dividend practice for us is that we have these quarterly dividends, and then we have one annual dividend. Last year, it was in July. If everything will be all right and the covenants will be at the normal level, and it will be if we will see that we can pay out those dividends, we will suggest that to our shareholders. That will be after a shareholder voting.
Thank you. Continuing with the next question. Recently in news, there was information that some lenders in Latvia, including Banknote, apply commission for earlier issuance of consumer loans, which is not completely in line with the policy of PTAC or the Consumer Rights Protection Center. Do you see this as a risk for future income, and are there any plans to change this?
Actually, that was according to Consumer Rights Protection Center policy, and this practice was approved by Consumer Rights Protection Center in our company. Yes, there are planned changes in terms of this commission, and we have actually in process with Consumer Rights Protection Center dealing about this matter. There is not an administrative process for that or some fines about that. This practice was previously approved by Consumer Rights Protection Center.
All right. In Q4 2021, the credit expenses ratio to profit before tax was 43%. In Q4 2024, it is 156%. What's the conclusion from this?
I haven't looked at 2021 numbers, to be honest. We probably need to look at the overall profitability of the company, which is solid. In 2024, I mentioned that we did investments also in Lithuania, which slightly decreased our profitability and mentioned if excluding that investment, we would be 23% year- on- year.
Again, and also probably need to look at the business kind of split, how much is obviously the credit loss will grow with the significant growth of portfolio. So we need to also measure those two, one against the other. Lastly, I mentioned also about LGD that have increased this year, which we are focusing on and taking actions about the improving in-house collections as well.
Thank you, Andrejs. In Q4, cost of interest bearing liabilities by one percentage point are low year- over- year. Yet, the net interest income grows at a slower pace than net loan portfolio. Are there any pressure on the loan yields?
No, we've kept the loan yields the same throughout 2024. Also going forward, we don't expect particularly any decrease in that.
Yes, there is a small decrease, but actually, the yields for consumer loans are quite stable for already several years.
Yeah.
All right. As I do not see any more questions, we will slowly be closing the call today. Participants, I will remind that the recording of the webinar will soon be available online. Thus, follow DelfinGroup News. Thank you for spending this hour with us, and see you next time.
Thank you.
Thank you.