Good morning, everybody who has found time to join and listen to our first quarter results. I welcome you all. I think we have a very in-interesting and exciting story to tell about INDEXO's first quarter. This is the first time we are actually showing consolidated results on a group level after finalizing DelfinGroup acquisition in January. Today I will be joined by Valdis Siksnis, who is our Bank Chairman, and also Ivita Asare, who is our CFO, who will take part of the slides to discuss either the bank-related developments and plans and also the financial reporting that we are showing.
Most importantly, just before we get going, this information here is really like more like storytelling material to highlight the most important things about our group development from our point of view. Please do refer to also our published report for much more detailed analysis and, let's say, more comprehensive picture of our business line development. These resources are available on our investor relationship website. Also, when we talk about DelfinGroup, then please be aware also that DelfinGroup has published their results for the first quarter and all the information regarding them also in more detailed manner can be found there.
Before we also then start the story itself, do please be aware that you can submit questions. We are more than happy, make ample time available to answer your questions. We are interested in dialogue. We are interested to hear what you like about us or don't like about us or where we can improve our reporting so to provide a more transparent and better picture for you to understand our story. Just to remind you about a little bit why INDEXO was overall created was to really bring competition and positive change to the banking environment.
In Latvia, we have been now operating as a pension fund manager close to nine years and as a bank also more than 1.5 Years. These all these things matter to us a lot and we really kind of internally keep track on what we achieve for our customers. These highlights of how much we have, you know, paid to our customers in interest because we're offering the best deposit and funding rates in our mobile application are important. We have managed to already help many customers get a better mortgage rate by getting an offer first from us and then talking to the bank.
Of course, like on pensions, we really want to create that positive return to our customers over long term so that they when they go to the retirement phase of their lives, they would have ample savings to take care of themselves. There is, we will be referring to a lot of abbreviations in our presentation, so this is a good reference material to go back to if you don't understand any short abbreviation. There is information available for you. Now the most important slide really from our story perspective, the last year's strategic acquisition for acquisition of DelfinGroup shares has transformed our group. We are reporting first quarter net profit.
Our total revenue, consolidated revenue was EUR 12.7 million. Our loan portfolio is almost quarter a billion of EUR 248 million. Again, to describe our reach, this is not like active customers at this moment, but the reach we have is to 546,000 customer accounts that our companies have in one way or another touched in Latvia. That's really large part of Latvian economically active population. This really gives us a very good base to sell our products and to offer our products to different customers.
Very important to understand also, like, from our story perspective, and especially in comparison with last year, is that we have two profitable businesses that are really allowing us to redeploy that free cash flow and that profit in developing INDEXO Banka, which is very fast scaling at this moment. Uses capital to cover the operating losses still and also to grow the volume of the credits that we are extending to customer base. Really looking at it from a perspective of INDEXO Group which our shareholders are the shareholders of INDEXO Group, then you can already see that we have our pension business continued to be profitable by generating almost EUR 500,000 of profit.
Our share of DelfinGroup profits is EUR 1.9 million, and INDEXO, because of predominantly or the large, very fast loan book growth, is making still losses. We will further cover also how we see these loss profile changing and how we are actually delivering on the scaling guide that we have been promising to our shareholders. Also, like, the sort of group consolidated picture from point of view of liquidity and capital looks, you know, much better in a group level after the transaction with DelfinGroup has closed. With that, I will also invite Ivita, our CFO, to come and talk a little bit about this consolidated view of the group from a financial perspective.
Thank you, Henrik. If you look at the group's balance sheet, we can really say that the strengths of the group is its scalable lending business, which ensures sustainable long-term income. We see that the loans went up from EUR 224 million to almost EUR 250 million in the first quarter, and that reports 11% quarter-on-quarter increase. We can also see that really the business is very focused as the lending portfolio constitutes more than 80% of the total assets. On the liability side, how do we fund this loan portfolio? We can see that the group actually has quite diversified funding sources. We can see that the customer deposits has been growing percentage-wise faster than the loan book.
Of course, that is the cheapest and most stable funding source. The direction is right, even if deposits still only cover 36% of the loan book, then the obvious increase in the deposit volumes, which we will talk more on the bank side, is really obvious. However, on the other hand, there is still quite a lot of the wholesale market funding, and of course, that is more expensive and less sticky than the deposits and that is the opportunity that we see in the group, how we can continue to improve the profitability and scale even more the net interest income for the group.
Overall, we see that the balance sheet is, like, somehow in the growth mode as 76% around of the liabilities are covered by the capital base, which from one hand is still quite conservative. We can see that to achieve the better returns, there basically are two things that we can do. We can grow deposits, the customer deposits to replace the expensive wholesale funding sources, then of course continue to scale the loan book to continue to generate higher total revenue. Of course, we will be working on both of those directions to continue to improve the profitability.
As Henrik mentioned, we can really say that the INDEXO Group is now really well capitalized and has a very solid capital ratios. As you can see that the total capital adequacy is around 25%, the common equity Tier 1 ratio is also above the 20%. The ratios are really solid and strong, of course, we see slight decrease as the lending portfolio increases and as majority of this lending portfolio increase comes from consumer loans, they are a bit more heavy on the capital usage compared for example, to the mortgage loans. Profitable parts of the group continue to strengthen the bank while the bank is getting on its own profitability level. Of course, we can see that also healthy liquidity situation supports that.
We are experiencing very solid liquidity coverage ratios and also the Net Stable Funding Ratio is pretty stable at around 120%. Of course, also there, this slight decrease is a direct, like, directly linked to the fast increase in the loan portfolio as, of course, the consumer loans and especially mortgage loans have very long asset maturities. So to stress once again, INDEXO Group has become profitable. That is the main, the main message for the Q1. We can see that the net interest income is really the cornerstone of the group's, of the group's total revenues as out from EUR 12.7 total revenues, almost EUR 11 million comes from net interest income. We can say that the group's business model is very clear.
Loans generate interest income, and this is how it is working. Then parallelly, of course, as I already mentioned, the continued focus on decreasing the funding costs will help to continue to improve the net interest income. The cost-to-income ratio of 60% is maybe not something that we are proud of, but this is just a starting point. I think that in our story, it's much more important the direction and the pace, not the absolute numbers. If the revenues will continue to grow and we will continue to control our costs, then the obvious direction to decreasing also that ratio is very obvious. We also see the specific of the lending business on the group's P&L about the front-loaded provisions.
As you can see, the Q1 provisions have been EUR 5 million, which is a relatively large number if we compare it to EUR 7 million, which were total expenses, so almost both positions are similar. As I mentioned, this is specifically related to lending business and the fact that with such a strong credit portfolio growth, and according to IFRS rules that we need to do the provisions right at the day when we disburse the new loans, the first reporting periods get this negative hit from that. Of course, as the business scales and the profitability improves, we are definite that also return on equity and return of assets will show much better numbers going forward. Now I will invite Henrik back to talk about the pension business.
Thank you, Ivita. Let's focus in then on our pension business first and look at the results what we have achieved there. Most importantly, obviously the overall reminder of our business is that we really try to engage people with long-term savings. We want people to save both in second and third pillar, but because the third pillar is a voluntary business, voluntary choice to save, these customers are extremely valuable for us. We really try to put more emphasis on educating people and helping them to save more in the voluntary saving product.
The local environment here gives extremely good tax incentives, both personal ones to choose to save by individual choice. Also, there are actually really great tax incentives from the employer side to pay into customers or their employees' savings accounts so that the employees would really turbocharge the savings with all the tax incentives that have put in place. The system is great. We should all take good advantage of that. Now talking about the overall picture, what we see. Pension business has already been for many quarters profitable.
We started to scale fast some four, five years into our, you know, operations, and that basically leads to a pretty predictable business line that with the AUM growth also grows revenues, which were at the first quarter EUR 1.35 million. And that delivered a net profit of close to EUR 500,000 in non-normalized terms. And if we then take away the group expenses that are related to all sort of capital market events and group option program, then the pension business itself was delivering a profit of over EUR 570,000. We generally measure across board customer accounts.
In that customer accounts number, we are close to 160,000. The change over quarter has not been that great, but that also is a balance between our second pillar and third pillar customer accounts, where in the second pillar we are a little bit losing customers at the moment. Our focus has shifted to the third pillar, there we're growing very strongly. The AUM overall and the revenues were affected by the first quarter market volatility, but they're now a business that is normal. There are markets, there are quarters when the markets go down, there are quarters when markets go up. We are interested in the long-term development of this business and also the long-term growth of our customer assets.
This is a very good insight into how our business is growing. We do get regular contributions both from second and third pillar customers, which then is supplemented by inflows of new customers who bring over also their balances from other asset managers. That being invested into the markets gives market returns. We separate still for the transparency so that you would see the acquisition that we made in the second half of last year of a company pension fund manager called VAIRO. We do have the churn figure, which we will tell you on the next slide about a little bit more detail. That gives us the net result for year-on-year assets growth.
We do have a problem with customers leaving us. We are not trying to hide it. The VAIRO acquisition where the client relationship with asset manager was weaker than in INDEXO's case, weighs also additionally on our numbers. Basically, the fact of the matter and of the market is that there are people who choose to make an active choice of the manager because they are well informed about the different, you know, investment strategies that the asset managers provide or like, you know, about the long-term returns. There is a part of the population that is open always to have a conversation with whoever is promoting their product at the moment.
Because we did use the sort of active sales as a way to scale our business initially, so now that we have, you know, tuned down the investment into that active sale, this volatile part of our client base, leaving is still a way, is weighing on us. We do pay attention to this. We try to really address it from a point of view that we want to improve the customer's knowledge about the product, about the long-term effect of saving, and, for that, we take different actions that have been mentioned on this slide. Most importantly for us and for our customers, we continue to provide real returns to our customers.
That means that, over the inflation, our customers who are saving with us on long term see their assets improving, which then gives them the confidence that, by the time they are at the end of the saving cycle and start withdrawing from those assets, they will have a significant buffer to pull from. We are also like directing our sales more to risk-taking. Everyone who is actually entering the saving phase or are like still in an active saving phase, we believe should be invested significantly into equity markets. That also is then the case on our customer base where, most of our customers also because they tend to be, in that age group, are in equity funds.
A little bit about our focus on the third pillar, I think that's the voluntary savings. That's really where we dedicate a lot of effort, and we try to constantly think like how to improve customer journey in our mobile app. What are other tools can we give to our customers to engage in the savings? Again, underlying that it is extremely tax efficient, both from an individual perspective of putting money aside because there is a tax rebate by the offered by the government and also from an employee-employer perspective that who can pay in into customer accounts with extremely low tax implications.
We are really glad to report that a lot of our customers have noticed that. With our help, they are actually increasing the payments into their third pillar accounts. Also many more people are becoming aware of it, joining also our product, which is the best in the market from a point of view that we take away another important consideration from a customer, which is like, how shall I allocate my assets first in equity or debt, or how should I change over time? We have the automated balancing, age-related balancing product which actually helps people to not to have to worry about it.
We'll take care of everybody, and we are investing it to the low fees funds as we do it in the second pillar. We also are glad to say that we have actually reduced the fees on our third pillar, so to make it more attractive for the customers to save. That all should lead into, in a long-term cumulative growth, what we have seen also like in the second pillar. We are in the early days, but we are really adding actively customers. Customers are saving, that will lead to long-term good results. Quickly going over the financial highlights. The total revenue, as I said, was generally affected by the AUM difference between the first and last quarter.
An important thing to remember when you look at our financial results is that the last year also the second pillar fee was decreased. That sort of takes away some part of the growth we would have otherwise naturally seen. Our administrative costs overall have increased year-over-year. I think we're in line with whatever the market, let's say, costs or market assumes the cost to be. We don't see too much inflation in that going forward. Yeah, it's a nicely scaled business that really brings a good net profit to our group.
And, and, of course, like, with the normalized profits, that shows the true, let's say, implication of the, of the, let's say, financial performance of our pension business. With that, I would, like to invite Valdis to join us and talk a little bit about what we achieved in the bank.
Thank you, Henrik. Yeah. Indeed, also in the bank, we definitely appreciate the financial strengths of the group and support of the group because right now we have much more confidence to invest in new product development, in marketing, in customer acquisition, and to grow in order also to achieve the breaking point of our own in the bank. We are growing. We are increasing customer number. We are increasing deposit volumes. We are increasing loan portfolio. With that also our total income revenue is growing fast. We are growing so fast that year-on-year comparisons are becoming almost meaningless.
If we focus just on quarterly growth, even there in all the key indicators, we see impressive over 30%, over 20% growth from end of the year situation to the situation at the end of the March. When it comes to the lending, which is also main driver to support our net interest income and the revenues in general, we had a record quarter. Never ever before INDEXO Bank has issued so many loans than in the first quarter of this year. That was helped also to some extent by launching a new products. For instance, our home equity product, which is received very well by the market.
I would even dare to say that demand is definitely there and even faster growth was initially constrained by our internal resources, which we are resolving. We will, we are going to promote that product even more actively going forward. As mentioned, loan growth of the loan portfolio is key.
Is key to grow our revenue and in our case, that has been combined also with the improvements in net interest margin. That is mainly due to the fact that within our loan portfolio, a proportion of higher yielding, higher margin products is increasing. That is a consumer loan and that is also a home equity product which has a higher margin than the standard mortgage loan and especially mortgage refinancing loan where we are more in direct competition with existing lender of the customer. To lend, we need customer funding, we need funding, and we need deposits and also there we have a good news. We had impressive deposit growth also in the first quarter.
We see growth in all kind of deposit products starting from a current account, savings vault, and different maturity term deposits. We are rewarding our clients very well for the money they deposit with us, better than the market. That's not the only reason. We also see customers choosing us because of the convenience and ease of use of our services, our mobile app, our nice modern digital distribution. Coming back again to the revenues, you see that the net interest income is extremely important. This is 96% of our revenue, that is mainly thanks to the growing loan book. Net commission income is positive, but in the last quarter its proportion has decreased and also it has decreased in absolute figures, that is mainly due to the fact that we decided not to charge our loyal customers for any monthly fees for using our services.
That's now a unique proposition in the Latvian market, we see paying off because we see customer activity growing, we see customers keeping more money with us and growing a deposit base, which permits us to lend and which permits us to grow our net interest income. Our net commission income will also grow in the future once we launch custody service. The date is set. It's at the end of the June, so the income mostly will start coming in July, and that will be a significant jump in our net commission income. More details to tell about our costs and other financial aspects of our results. I invite Ivita to continue.
Yeah. Thank you. As you have seen, we had a very great income development, and then if we now look at the costs, then also there we have a great development in the sense that already for three quarters in a row, we have been able to keep our costs flat at EUR 2.6 million and with the income growth that Valdis has been talking about, so we can really see that the bank is scaling up and we have a very, very good journey on continuing to increase the profitability. Revenue has been growing at 30% quarter-on-quarter, and while the cost is flat, so it's the great operating leverage that we can see in our numbers.
This is clear evidence that the business model that we have built is clearly working. There are two, I think, distinct functions where we are continuing to increase our investments. One is that the Bank has been still hiring people especially in the business functions, so that we can continue to increase our lending capacity. We have been moving and taking some of the IT capacities internally, meaning shifting away from external vendors to building this IT capacity internally and these are the two investment streams which will continue.
Nevertheless, all these movements have been still under control, have been performed under controlled manner, and we have been able to keep our costs flat, as I mentioned already, for this, for the three quarters. Despite the fact, I would like also to mention that we will also continue to invest in customer acquisition and customer activation, and this is also the cost item, other costs that you can see on the slide, which mainly involves the marketing costs. We have been very active out in the market, both talking about our new product launches and also both in Q4 and also in Q1 we have been having deposit campaigns to attract customer funding and that will continue.
We have talked about the income, we have talked about expenses, what has been the total P&L for the bank? As we have already been mentioning, the net interest income has been the major driver of the bank's total income, and you can see that both the quarterly development and yearly development are outstanding, and the total income has been increasing 30% quarter-on-quarter, while the costs have been staying flat. This has helped us to decrease the operating loss compared to the previous quarter by more than 10%. With the continuing of loan scaling, then of course, the net interest income will continue its growth. However, one thing that I would like to highlight is the increase in the provisions that you can see.
The first quarter provisions have increased by around EUR 260,000, which is 60% quarter-over-quarter, and this is a direct implication of our fast growth in the lending business, as according to international accounting standards, we basically need to front-load the loan provisions when we disburse the loan. Which means that in the short term, there is a negative hit to P&L account from such a high growth in the lending portfolio. Of course then the obvious next question is that with the such high growth in the loan portfolio, what has been happening with our asset quality?
Also there we can see that the development is very promising. 96% of our loan portfolio is in Stage 1, which means that these are the performing loans with no payment difficulties, and the customers are meeting their payment obligations according to the schedule. At the same time, we can see in the chart that Stage 3 proportion has been decreasing over the five quarters, and in the Q1, it has been now at 2.4%. We can also see that if we count together the Stage 2 and Stage 3 loans as proportion of our total portfolio, then also that has been decreasing in Q1 to 3.9% from 4.4% in Q4.
In general, during last year, we have been spending quite a lot of time to elaborate our credit risk assessment approach since we have very distinctive proportions in our portfolio. We have consumer loans, which we lend to different types of the customers, which is a bit more riskier product segment. We have mortgage loans with very good LTVs, which are quite with a low risk. We needed to elaborate our credit risk assessment to take into account these two nuances in both of the products. Of course, we also have to admit that our portfolio is also still very young.
Our largest portfolio growth started only in Q3 last year, which means that only relatively small part of our portfolio is yet one year old, if we can say so, which means that we also ourselves expect that there will be a slight increase in non-performing loans going forward. You can see also in the chart that Stage 3 loans have increased from 1% at the end of the Q4 to 1.5% now in Stage 1. Of course, all these risks are prudently priced in already at the moment when we disburse the loans to the respective customers.
All this development that we have been telling you on the bank side is a clear indication that we are, as a bank, on track to our monthly break-even, which we have been communicating that we will be achieving that at the end of this year. As you can see from the slide, then the development has been great. If we started last year in March, and our income was covering only around 5% of our expenses, then now in this year, in March, we already are covering almost half of our expenses on a monthly basis.
Assuming that we are delivering on our volume growth ambition, then at the end of the year in December, we expect that our total income, total monthly income already will be higher than our monthly expenses. Also on the bank side, we have a very solid and strong capital position. As you can see that the Total Capital Adequacy Ratio is around 20%, and during the last six months, we also have been diversifying our capital instruments and started to issue subordinated Tier 2 instruments. In Q4 and Q1, this was in the form of subordinated deposits.
As you might know, in April, the bank did a subordinated bond issue to further strengthen our capital position and basically be able to continue to scale our loan portfolio, as the main driver currently is the consumer loans, which are a bit more heavy on the capital usage that they require. Capital position is supported also by the very strong liquidity situation for the bank. As you can see the both liquidity coverage ratio and Net Stable Funding Ratio for the bank are well above the regulatory requirements.
Also there, specifically on NSFR side, you can see the downward trend, which is directly linked again to the fact that with the such fast growing loan portfolio, where the asset maturities are longer than the funding that we are attracting, the net stable funding ratio has been decreasing over the last quarters.
At the same time, also the loan-to-deposit ratio shows the same story of very strong loan growth, which we have been trying also to match with the funding increase, and this we have been able to achieve, and this will be our priority going forward, both to continue to attract the deposits from the local market and also diversify our funding sources, with the help of some new products that we will be adding and also going into new segments. I will ask Valdis to talk more about our product initiatives.
Thank you, Ivita. Indeed, the product development is really a big task ahead of us in coming months and actually, many quarters ahead. So far, basically everything what we have done, customers like it and customers use it and the feedback we are receiving, we like how we have done it, what we have done it and how we have done it. Customers appreciate our super fast and convenient onboarding process. They like our fully automated consumer lending product. They like automated mortgage lending solutions, different savings solutions, savings vaults and term deposits.
At the same time, the feedback we are receiving is that, "Hey guys, we need more and we can't switch over to you if you don't have one, a second or third product, which is available in other banks currently." We need to do with the same quality, we need to deliver more and we are active quarter probably the most visible to customers was our home equity product, which again was fully automated, very nice addition to our loan portfolio. Custody services is almost there. We have a launch date for our pension manager at the end of June.
Internal credit scoring is also on the way of its final stages and that will help us. Basically, initially we had to rely only on external models, on external data. Now we have accumulated enough statistical data to combine external sources with internal to first of all, better assess credit risk and also make better pricing decisions, which will help us with all our consumer lending products and mortgages. A marketing module, which is also in an implementation process, will help us to make our communication more individualized, more meaningful to individual clients.
Family accounts we have spoken a lot about, and we have postponed the implementation several times, but now it's ongoing and should be delivered towards end of the June, early July. Consumer consolidation is another product which we believe will boost our consumer lending volumes because we have one of the most attractive prices in the market and we believe that out there in the market also within our existing customer base, there are people which much higher, much more expensive consumer loans, which clients consolidating through the easy and nice process with us, can achieve significant savings.
Deposit platforms will not be visible of course for our retail customers here, but it will help us to boost our, increase our deposit volumes, which will help us to play even more active role in the lending market and unified onboarding for third pillar on the bank is also something that will improve the efficiency and the customer experience. Legal entities, we have hired a team leader who is working full speed to gradually start rolling out products to legal entities already this year. I remind that currently we're serving only physical persons and basically bank is not fully launched before we start serving legal entities.
Securities accounts is also something we have heard a lot about, specifically for a higher, wealthier customers, who are saying that is the, one of the obstacles to fully consolidate their business, with, within INDEXO Bank. Further I invite Henrik to continue. Yeah.
Hello. Back again. Quickly, before we dive into the DelfinGroup numbers, just want to remind everybody that DelfinGroup detailed reports are available on the investor relations website, so you will get definitely more information there. We just cover, let's say, the top line figures, more or less and maybe important to understand also how we as a group manage our work in DelfinGroup is that we have appointed INDEXO members to DelfinGroup Supervisory Board. The companies run on an arm's length basis as should be fit for a publicly managed company, so no changes in the management apart from the fact that we give strategic direction through the council.
Of course, like on a day-to-day level, we are discussing a lot of projects, opportunities that, allow us to then, implement, let's say, cross sales, and improvements, in our, in our processes that would benefit, both, INDEXO Group shareholders and then also DelfinGroup shareholders. Important to understand that it is a, a separate entity, and that is also why we let them do their, the storytelling, still, by themselves, and that's why you should refer to that, deck. From INDEXO Group shareholders' point of view, the good news is, the, this big work that was done by DelfinGroup last year to, reduce the cost base and to become more efficient is delivering results.
We do not see that cost cutting has anyhow impacted the revenue generation, the loan book growth or the profitability. Well, profitability obviously has improved. Overall, they had a very strong quarter in terms of loan issuance. The net portfolio increased. The total revenue is EUR 14.5 million, and they delivered a nice net profit of EUR 2.8 million.
As you know, from INDEXO's perspective, this net profit figure is extremely important because half of that will be paid out in terms of dividends, as agreed on the shareholders' meeting of DelfinGroup, and that is actually a direct impact also for INDEXO Group in a way of its ability to contribute to develop the bank further by making a capital infusion into bank equity. One really important part of the DelfinGroup, let's say, overall financial performance throughout the year and going forward is the funding cost part.
As you know, DelfinGroup, as a non-bank lender, does not have the enviable position that INDEXO has in terms of having access to the cheapest possible customer funding there is in the market, which is the deposits and account balances of retail customers. They fund their operations mostly through bond issues or bilateral agreements with banks who basically allow them to extend credits to their customer base. Over the year, DelfinGroup management has done a good job in terms of, you know, weeding out the more expensive sources of capital and replacing them with cheaper funding. That has already helped to decrease the funding cost from over 11% to 9.9%.
There is definitely a bigger opportunity here that we know about, which is related to our group strategy, funding strategy, and how we would be able to also bring some of that cheaper funding that we have on a bank side for the usage of group. There are multiple different ways which we are exploring, and once we get further confidence on what is the path that we're choosing to go forward, we'll definitely report about that to all our investors on both sides, INDEXO Group and also DelfinGroup. That's a very high priority project for us.
Basically, I think, if we look at then the overall financial picture from DelfinGroup, sort of as shareholders of DelfinGroup, then it's a good solid business that has delivered year -after -year, nice, you know, not maybe as spectacular growth as INDEXO Bank right now is doing. It is a predictable business where the team is writing risk at an appropriate level of income, which allows them to basically get a nice net profit. It's a very efficient company.
They have really driven down the cost in their in this last year's reorganizations, which really provides a great return on equity, which from a group perspective is absolutely fantastic for for INDEXO shareholders. If I would then go further to events after the reporting period, then we have all put this out to the to the stock exchange. Just so that everybody remembers, we increased our ownership in DelfinGroup a little bit to just get more, again, access to the same dividend flow and and the great performance that the management team there is delivering. Our ownership of DelfinGroup at the end of April was 72.07%.
Then we had a fantastic success with our subordinated loan issuance. It was the first proper public issue of subordinated debt by INDEXO Banka, so we really wanted it to really establish as a benchmark our risk. So we had our finance team was leading the project so that we could actually take maximum also educational opportunity out of it. And with the help of our co-arrangers in Latvia, Estonia, and in Lithuania, we managed to get our initial target oversubscribed by 3.6 x, which also allowed us then to increase the money that we took in through the subordinate debt and, you know, improve our capital balance beyond, let's say, our initial target.
Which is again great news. It allows us to lend more, and it also built a very nice base of over 800 customers or investors who hopefully will now follow our story and also engage with us across also maybe possibly shares or the next subordinate issues that we'll be doing. For bank. Issuing subordinate debt is a very important part of capital development. It is cheaper than equity, even if the headline, you know, interest rate seems high, then that is a very valuable way how we can plan our growth. As Valdis already mentioned, we have, we are constantly beefing up our team to roll out new products.
The focus of this year is going to also becoming better at rolling out products, doing it faster, and all those product rollouts always mean that they need to have a team that actually sells them, these products, and really pushes the this, let's say, market adoption better. That's the great news. We're very happy with the person who has joined us and are expecting to start rolling out, like, different corporate entity-related products in a fast pace. As a milestone, we obviously Milestones are important for our internal culture and also for our shareholders to see the progress, so we did reach EUR 100 million customer deposits in April, which is a great result.
I hope that we will soon be able to report the EUR 200 million customer deposits, which is our next target. And we also did discuss through the in the financial statements that we did decide to reward our loyal customers with more, like, free services just to kind of drive the adoption. We think that we are providing good value. We want people to notice that. We are in a position that as the net interest income is a very important part of our revenue, that we can make a certain omissions on the commission side to help our customers adopt and bring over more of the daily banking also to us.
Last but not least, a very important part is to see how we are progressing on a monthly basis. As you can see, the quarterly results shows the strong growth. We're very happy to report that also April was a fantastic month on the bank side, where our net deposits grew by EUR 10.8 million, and we issued EUR 11.6 million loans.
The customer base growth also continues, so this builds a very good base to what is really the key message, I think, for all our shareholders, which also Ivita was touching upon before, which is reaching this operational break-even point by the end of the year and having, like, a real credible story to tell that next year is all about already, like, driving also our Group profitability with the Bank profits and delivering the results that we have been talking about in our forward-looking statements. With that, I would like to then ask some of my colleagues to to see what sort of questions we have so that we can answer in detail if we have any.
Hi. Yes, we do have. I'll read them in the order of popularity, I guess.
Sure.
The first one is, are you planning to start paying dividends?
Absolutely. This has been approved by our shareholder meeting. The plan is that up until 2028, we will not pay dividends because we see, like, how we can use the capital that we're generating across different group enterprise to drive that fast growth that will help us to, you know, scale the businesses and deliver the return on equity target that we are expecting to deliver. As of 2028, the net profit then, which we will generate during 2028, in 2029, we'll pay 20% of that out as dividends.
Okay, moving on. Will there be another bond issue?
Definitely. That I can promise. I just won't tell you exactly when and at what terms. As I said before, subordinate bonds is, and also AT1 products are, like, a natural way how a bank balances the equity capital, makes sure that as a blended rate it is attractive for, from the cost point of view and drives the long-term equity holders' returns.
Currently the last question we have, so please feel free to add more. What are the biggest challenges for INDEXO Group?
The biggest challenges, I would say, is to do everything that we have, all the ideas that we have, to do everything so that we can roll them out faster. Basically, I think we have a really great dedicated team working across different product lines that really drives that sort of growth plan that we have. Obviously, as any kind of organization that scales also in terms of people, in terms of, you know, attention, we just need to be able to, you know, execute all these different ideas. We definitely don't lack ideas.
We kind of show that we are also able to. These ideas are well thought through so that when we launch products, they become successful. They are meaningful for our shareholders. Main challenge is to reach that execution level in our organization that would drive like even further growth than what we have shown to our shareholders. Second, I think, is just to reach that break-even point so that we know that all the capital and the free cash flow that we generate as a group goes really to drive that shareholder return across different businesses in a way where the capital is invested, where it brings best returns.
Thank you for now. I don't have any more questions online.
Thank you everybody who listened in. I hope you found that first quarter report interesting. This was a sort of transformational 1st time where we looked at the consolidated results and please do subscribe to all our investor news. We are constantly having new things that are happening in our fast-paced development. That will help you to keep in touch. You know, the month-on-month, quarter-on-quarter growth that you can see really means that you can tune in and see how we are delivering what we try to achieve. Thanks for the team who helped to put this presentation together and to Valdis and Ivita for presenting. Thank you. Bye-bye.