Good morning. Welcome to DelfinGroup Investor Webinar. We will begin with the company's presentation, after which we will address the questions submitted by participants. You're kindly invited to submit them in writing through the Q&A window below the presentation, or raise your hand and be unmuted after the presentation is over. For your convenience, the webinar is being recorded and replay will be available shortly after the session. Now, let me introduce today's hosts. Didzis Ādmīdiņš, Chairman of the Management Board, and Andrejs Aleksandrovičs, Member of the Management Board and the CFO. Please, the floor is yours.
Yes, thank you. Hello, everybody. I'm Didzis Ādmīdiņš, and today with me here is Andrejs, our CFO, and I will present you our audited results for 2025. I will start with business performance, and later Andrejs will continue with financial results. As always, we will answer to your questions at the end of presentations. Okay, I will start with key results. Basically about 2025, the year itself was quite good, if we talk about business performance and financial performance and revenue increased by 24% and profit before tax grew by 35%. That resulted on a return on equity of 35% and the cost-income ratio was down to 40%.
About the last year, also there was the starting from second quarter, we placed additional focus on cost discipline and operational efficiency, which further strengthened our profitability. That's basically how we achieved this result. In parallel of that, we completed an unique transaction in Baltic Capital Markets with DelfinGroup becoming the part of INDEXO. We believe that that will like strengthen our like strategic positioning looking forward. Let me briefly walk you through like our key financials of 2025. If we talk about loan issuance, and there you see loan issuance of both our credit business lines and both countries.
The loan issuance reached EUR 134.8 million, and it was up by 29% on a year-on-year basis, reflecting on strong demand across Latvia and Lithuania. As a result of that, credit portfolio increased to EUR 144 million, and that was up by 27%. That actually exceeded our guidance by around 5%. Going further about revenue grew, and that was in line with portfolio expansion, and that reached EUR 78.2 million, and that was up by 24%. If you look at profit before tax, it was at record level of EUR 12.4 million and up by 35% on a year-on-year basis.
You see that there is around like EUR 1 million one-time item in our profit before tax. Even excluding that, the run rate is significantly above like previous quarters. Now I will move to business highlights and what will explain how we achieve these results. I will start with like cost-income ratio and cost discipline of last year. As I mentioned from second quarter, we introduced some measures to improve our efficiency. What we did, we basically closed our branch network in Lithuania. We had seven branches across, not across Lithuania, it was all in Vilnius. Altogether in Latvia and Lithuania together, we reduced our headcount by 42 FTEs.
More or less, we shifted our focus more to consumer loans and we take a bit of focus from pawn and the retail operations. Nevertheless, we are still focused on that segment, but we shift our focus a bit to consumer loans and we more of, mostly those personal decrease was in retail operations. As a result of that, we basically decrease our administrative cost. If we compare year-on-year basis, it was up by 4%. If we compare quarter four to quarter four, it was down to 9%. That led actually to like improvement in cost-income ratio to 40.2%. Now I will move to our consumer loan segment and that this is like backbone of our business.
This slide corresponds to like both countries in consumer loan segment. In this segment, we increased our issuance by 31% on a year-on-year basis, and it was at EUR 136.4 million level. The growth was mainly supported by higher average loan size and longer terms in portfolio and at issuance level as well. Actually, we get this increase in issuance and increase in portfolio in both our countries. If we talk about portfolio quality and non-performing loan levels, it was at 4.3% level. Actually, I can comment that it's below our, like, comfort level, which stands at around like 7% and now it's, like, below even the 5%.
Going further to Lithuania, and this slide corresponds to consumer loans only in Latvia. Previous slide was both our countries. In Lithuania, our credit portfolio grew to EUR 7.7 million and I count that it's quite good first year. As you know, 2025 was first full year of operations in Lithuania in consumer lending space. Talking about loan issuance levels, at the end of the year, it was at a level of EUR 3.6 million. At the moment, we are still calibrating our business model and our risk models. After that, when we will be ready, we will push harder and increase our issuance levels.
Going further to our pawn loan segment and talking about pawn loans, they remained quite stable in 2025. DelfinGroup continues to be a clear market leader in Latvia. At the moment, we have around like 53% of market share in this segment. The portfolio for us was stable last year and I could say that pawn is like a steady and reliable part of our business. Also, you can see that in last year, the average loan amount increased, and that was mainly supported by gold price increase. As you know that gold price was up by more than 50% during last year, and actually it's continues to grow.
Our focus on this segment is not so much on aggressive growth, but improving, like, profitability and operational efficiency. This part is like stabilizing part for our business and for our branch network as well. Going further to like retail of pre-owned goods. In this segment, we delivered a quite solid growth in 2025, and the total sales was up by around 15%. This growth was mostly supported by both, like, parts of this business, offline sales and also online sales, but mostly by online sales, because online sales was up by around 25%.
In the year of 2025, online sales now corresponds about like 25% of total sales. Also in last year, we sold a lot of gold scrap and, of course, like this like high gold price was we were favorable of that. We actually like sell gold by EUR 4.5 million, and that actually helped us to like unlock free cash, which we can then later invest in credit portfolio or like for inventory. Yes, going further to our branch network and talking about branch network, as you know, we are like operating extensive branch network across Latvia.
Altogether, we have 88 branches and in 38 towns and cities. Last year was actually quite impressive with the like relocating, renovating or opening new branch concepts. For example, we converted one of our branch in Liepāja to Banknote XL branch. Altogether, we now have four Banknote XL branches. What does it mean Banknote XL? That basically is the branch with the larger floor space and we can sell more like do more sales in these kind of branches. As well, we like renovated some smaller branches or relocated them.
For example, we renovated the branch in Ogre, Tukums and relocated the branches in Cēsis and Valmiera. About the guidance of 2026 and going and beyond. More or less our focus for years going beyond is to build the larger loan portfolio in both our countries in Latvia and Lithuania. As you know that our backbone of our business is consumer lending, and mainly we will build this portfolio on this consumer lending space. Also we are plan to like introduce a new type of loan and this is like home equity loan.
Actually we plan to issue first loans in very near term. Actually, I think we will issue first loans even in March this year, that will be one of our new loan segments, which we will start very soon. Yeah. Another new segment for us which we are still like looking how to develop and how to go into this market is the consumer loans to lower risk level clients that basically means like larger loan amounts to lower risk profile clients.
Also like talking about our guidance and our strategy, our aim is to be cost efficient and keep our cost-income ratio below 45% or even below 40% and to keep our equity like return on equity level above 30%. Now talking about our shareholder structure as you know in December and January in INDEXO completed both like voluntary and mandatory share offering of DelfinGroup shares. Now INDEXO Group holds 71.52% of DelfinGroup. Today we have almost 8,000 shareholders and I could say that being a part of Delfin of INDEXO Group of course like delivers us like broader platform and like strategic synergies of both those groups.
Also I forget one thing that in this like guidance slide that this like guidance doesn't actually include like potential synergies of both companies in like let's say DelfinGroup in INDEXO Group and we see that as like potential upside. Okay. With that I will now hand over to our CFO, Andrejs, who will walk you through the financial performance in more detail.
All right. Thank you, Didzis. Good morning, everyone. Didzis did cover the main events in the business in 2025. Let's have a bit closer look how it reflects in our numbers. Very strong year for DelfinGroup. We exceeded the guidance which was 25% growth, and seemed fairly ambitious goal when it was set and reported. Top line grew by 24%. Our largest business line is consumer lending which constitutes around 70%-71% in 2025 of our total revenues. That part of the business increased by 25% year-on-year. Also we had an increase in pawn and retail businesses which combined increased by 21% in 2025. Well, cost of sales increased 38%.
This is only due to the mix of sales where larger part this year comprised of the gold scrap sales and those gold scrap sales doubled the amount in 2025 versus the 2024. Obviously those sales have a significantly lower however still very healthy margin. If excluded the gold scrap sales the margin on the other sales remained very stable did not decrease. In fact, it slightly increased in 2025 compared to previous year. I think increase about 1% increase in the margin. Credit loss expenses. Yeah, this line of expenses did exceed both increase in portfolio growth and consumer loan income.
However, we see already improvement of this position in second part of the year and we expect we will maintain this positive momentum also into and through 2026. Interest expenses, financing costs show favorable trend increase of 17%, but compared to the increase in consumer lending of 25% and portfolio of 27%. Our cost of interest bearing liability has really decreased this year and we will see that in a later slide when we look at the financial ratio slide. Didzis already mentioned our cost discipline, something that we worked on in 2025 a lot. Selling and admin lines are the ones affected the most.
We became much leaner organization and that really helped us to increase our operating leverage which ultimately resulted in profit growth by 35% year-on-year as to compared for the gross profit which increased only by 16%. There were two larger one-offs that we wanted to highlight. The first one is VAT or value-added tax refund for the prior periods starting from 2022. We worked during the 2025 with the advisors from one of the Big Four advisor companies. We consulted the State Revenue Service. We actually got a refund cash in bank during Q4, that was one of that.
The second one-off is really a correction of a phasing of our revenues for 2025, which resulted in a one-off positive impact in Q4 again. Even excluding those one-offs, DelfinGroup did record best ever result for both full year as well as one quarter in Q4. Quick look at the balance sheet. Total assets up 28%, mainly driven by net loan portfolio, which increased 27%. Inventory is down 26%, but that's largely on a sale of gold scrap. I mentioned already, also we have a continuous focus on increasing our retail efficiency and the stock turnover.
The increase in assets were financed by both really by our equity increase, which increased by solid 21%. Retained earnings up 39% driven on the exceptional Q4, obviously. Also funded by interest bearing debt or interest-bearing liabilities where we actually have achieved some reduction in costs. I mentioned that in the income statement, also we're gonna see that in our financial ratios on the next slide. Financial ratios. Let's jump straight to the cost of interest of bearing liabilities. This ratio now at the end of 2025 sits at the 10.1%, which is down from 11.1 % at the end of 2024.
Really a reduction of 9%, from 11 % to 10%, which further allows us to improve our leverage. All the ratios, all the remaining ratios are calculated on the 12 months figures, and all of them improved, suggesting that we have managed to course correct during 2025. Our EBITDA up to 35% for the year. Return on equity also reached 35%, while interest coverage ratio is at comfortable 2.1 % and equity ratio closing on 25% with both well above our covenants, which are 1.5 % and 20% respectively. Cost-income ratio already discussed by Didzis.
Moving on. Capital markets still three major pillars of our external funding. First, the bonds. In 2025, we launched a new EUR 25 million bond in September, which we finalized in early this year and already listed on the exchange, currently trading at a small premium. We also redeemed in full bonds maturing in February 2026. Not on the slide, but mentioned in our financial statements post balance sheet events, we had EUR 1.2 million put options exercised by our bondholders after change of our shareholders which triggered change of control clause. I must say only EUR 1.2 million in options, put options out of possible EUR 30 million.
We want to express our gratitude toward the investors who maintain the and showed confidence and showed trust in our company and remained invested with us. We will settle those EUR 1.2 million put options later this week. Banks, we renewed and extended our cooperation with our good partners from Multitude Bank and our total exposure is almost EUR 30 million as of today. Of course Mintos slightly decreased in position. We had some excess liquidity and we just managing financing costs, we reduced our position there. However, Mintos remain a significant partner for us. We see this continue going forward. Sorry.
Our capital structure on the left side did slightly change due to the events I just mentioned. If we jump to the schedule of maturities, excluding Mintos, we had maturities of EUR 35 million, almost EUR 36 million this year. EUR 11 million bank loan we already refinanced with the Multitude Bank and maturity moved to 2028. We redeemed EUR 10 million of bonds, leaving EUR 15 million with maturity this year. Actually after this week, when we redeem the puts, we will have a little less than EUR 40 million maturities remaining. Already by now we have cleared more than a half of debt maturing in 2026.
Of course, we're gonna be working on putting clients to refinance remaining amount. Actually we already started, and in 2027 we will have 1 bond in total amount of EUR 25 million to refinance. We have now five active bonds remaining, all listed on the exchange. Dividends, yes. Since we had a record profit for a quarter, keeping to our dividend policy, we will pay, or at least we'll propose to pay a record high dividend payout to our shareholders for Q4, 2025, which will bring total dividend yield to 8.9% this year.
Dividends for the last quarter is almost EUR 0.04. None of our previous dividends had even come close to this. Next largest were actually last quarter in the Q3, 2025 and were around little more than EUR 0.025. About our share performance. Yes, obviously also impacted by the change in shareholders with us joining INDEXO Group. The price offered by INDEXO in voluntary and then mandatory offering was EUR 1.3 per share. Positive for investors who kept DelfinGroup shares. Also that price have remained and even slightly appreciated since then.
Plus current shareholders can reasonably expect that almost EUR 0.04 per share in dividends can be paid in Q2, 2025. Yeah. I guess then I'm through my slides and we can go to Q&A session.
Thank you. Yes, indeed. Let's start the interactive part of our call, the Q&A. Participants, please submit your questions either in writing through the Q&A window or raise your hand and be unmuted. We will start with the questions submitted prior the call, then we'll prioritize the audio questions and finally continue with those submitted in writing. Our first question: Are there any plans to expand to Estonia, Poland, or other countries?
Okay. I will cover this one. At the moment we are with licensing process in Romania. That actually not covered in our guidance and we don't have any, like, plans to open about, like, to open about other countries at the moment.
Thank you. Can you comment on the taxes for a resident of Latvia?
All right. On the dividends we don't withhold any taxes. And similar regarding the bonds, when we pay the coupons to investment accounts, we don't withhold any taxes. However, if paid to the security account, we have to withhold income tax. If you have investment account, then there is no tax. Well, withheld by us.
Thank you. About dividends, will dividend policy stay the same with the new majority shareholder, INDEXO? What amount is planned to be distributed in dividends for Q4 2025?
Okay. Andrejs already covered about dividends for quarter four, and it will be close to EUR 0.04 for share. About the dividend policy, as mentioned during, like, this share offering from INDEXO, they don't have any plans to change the dividend policy and it remains as it is.
Thank you. As I don't see any raised hands, we will continue with the questions submitted in writing. What are the main drivers for Q4 loan volume decrease? Are those internal decisions or external factors?
Yeah, yeah. I will cover this. We can look in other side of this, for example, quarter three was actually not like a ordinary quarter, but it was extremely good quarter for us. The quarter four was a bit lower than quarter three, and there was some months in quarter three, especially in Latvia, where we had special promotions to issue loans. That was the reason why the quarter three was exceptionally good. Then quarter four was back to the route where we are developing our issuance. That's more like that.
Thank you. Continuing with the questions submitted by the participants, is there any update on the potential banking tax refund in Latvia? Will this tax still be present in 2026?
If this is meant that, about paying the tax on the profit, then, we don't anticipate any changes. At least I haven't heard of any developments that it could be canceled in 2026 or in foreseeable future.
Mm-hmm. Thank you. Do you plan to scale down the retail branch network further in 2026?
We don't have exact plans to scale down the branch network, but we don't plan to increase the count of shares. Sorry, the count of branches. There could be some that we close some branches in some smaller towns, but not. That decrease will not be like significant. Maybe we will close some one or two branches.
Thank you. We have received several questions on the same topic, so synergies between DelfinGroup and INDEXO. Have there already been any actions from DelfinGroup or INDEXO to unlock synergies between the two companies? If so, could you elaborate a bit on these?
Yeah
Also, how will this affect your cost of capital and when could that be?
I will start and maybe then Andrejs will continue with cost of capital. About the synergies, yes, we already are, like, doing some, like, cross-sell activities, and we actually see quite okay development in terms of that. Basically that works like that INDEXO are offering their service to our customer base. As you know, we have a quite large customer base, which we have developed since the beginning of DelfinGroup. Yes, we are offering like INDEXO, like, services to our clients. Maybe you can.
About financing
Yeah
Cost of capital. Yes. Well, this is obvious synergy to be expected when we join the INDEXO Group, right? We are working towards it. We don't have already any synergies in place. We do expect some in 2026, probably in second part of the year, and then, grow, increasing, for the years to come. Yeah, obvious something that the place where we're gonna look for the synergies for sure.
Mm-hmm. Thank you. A follow-up on the same topic. Will those synergies be mainly on INDEXO side or DelfinGroup? If INDEXO and DelfinGroup will share clients' data, how will you decide who will issue a loan to the customer, INDEXO or DelfinGroup?
I could say from—it could be more that we will like offer like INDEXO products to DelfinGroup customers. If you look from a customer perspective, I think that should work, and I believe that will work like that we need to offer for client what needed for client. If client needed like mortgage loan, which is like something similar to large banking product, then of course it's more like a INDEXO product. If it's like a smaller consumer loan, the product which we are offering that it could be on our side.
Yeah, that's mainly what's beneficial for customer and what needed for customer because our products are not so similar. We are both operating in a lending space. We both now have like real estate loans. We both have consumer loans, but the products itself is not so similar, and we are like operating in different spaces actually.
Yeah. Just to add about the synergies and the financing, whether it's gonna fall on INDEXO or DelfinGroup side, I trust it's gonna be on both. It's gonna be both beneficial for INDEXO for be able to finance us as well as us will benefit from the fact that we expect to get this financing at the better rates. Yes.
Thank you. There's also a follow-up question, the potential impact on the P&L from the merger?
It could be on both sides, because, for example, if in the future, if INDEXO will fund our company, it will be on both sides because we can decrease the capital cost and, for INDEXO it will be a very good place where to invest.
About the funding, will INDEXO help you with funding of the company? Do you expect to refinance existing bonds prematurely? If not, are there any plans to issue new bonds this year?
Yeah, I'll take this one. We don't have a plans now, as we said, to refinance any bonds prematurely from INDEXO funding. We plan for the issuance of the new bond this year to refinance the bonds that we have maturing in the February 2026. Obviously the company expects also to grow, not only to refinance existing bonds. INDEXO financing will help in for us in achieving that, right? They will finance also the growth of the company, more focusing on that.
I see. There have been quite significant savings for operating expenses in the last two quarters. How do you see OpEx development going forward?
I'll take this one, Didzis.
Yeah.
Yeah. We definitely gonna keep working on our costs. While cost might increase going forward, there is an inflation and all those and all that, but we definitely expect that we will increase our operating leverage by costs increasing slower than we can grow our business.
Thank you. Currently, the final question that we have received at this moment, credit loss expense decreased quarter-over-quarter. What were the drivers for this decrease?
There are two. One is really the phasing of the revenue that I mentioned, that impacted it a little. However, also the actual cost of this cost decreased because we managed to improve our LGD or loss given default. We do sell certain non-performing loans, we improved the contracts regarding the sale of these loans. Actually to add to this, we were kind of prudent in the approach. The improvement came in the second quarter or second half of the year, while we still when calculating the provision, we've calculated 12 months average. Improvement. We took only improvement for the couple of months of 2025. This is where.
This is why I said that we expect this level to be stable and improve through, into 2026 and throughout 2026.
Thank you. All questions have been answered. That concludes our Q&A session. We appreciate your time and interest. We will be looking forward to welcoming you in our future events.
Thank you. Okay. Thank you, everybody.