Hi, a very warm welcome to Indexo's webinar where we talk about our plans for the future and also touch upon our nine-month results. Before we get started, please be aware there's a lot of financial information, so you need to treat it extremely carefully. Make sure that you read all the appropriate materials about everything that we talk about. These will be issued on our investor relations website. Take an independent decision because this could be considered as an advertising for our share issue. Moving on. Today we have a nice team here talking about Indexo, including Dzintars, who is the Chairman of the Board of DelfinGroup, Valdis, who is heading our bank, and myself, who is heading the group and more pension side of the business. We'll try to give you a good holistic overview about everything that we do.
Without much ado, here is an agenda for our webinar. We'll talk about the reason why we are joining forces with DelfinGroup. We'll talk a little bit about the achievements that Indexo Group has had thus far, and then we will focus on that very interesting part, which is the DelfinGroup shareholder offer and the plan for the capital increase. Please, if you have any questions, we are here to answer absolutely any kind of information that you want to receive. Please do submit your questions, and we will leave ample time to answer every question that we get, hopefully, unless there will be thousands. First of all, this webinar is very much driven by a large transaction where Indexo is joining forces with DelfinGroup.
These are two publicly owned companies, so that's why we actually have a total of almost 16,000 shareholders. It is a very important piece of information for absolutely every shareholder of those two companies. Indexo will acquire 62% of DelfinGroup, where DelfinGroup larger shareholders will be swapping their shares into Indexo. We forecast that with the voluntary offer and mandatory offer that we will make to the DelfinGroup shareholders, we will assume that we'll reach about 65%-70% of DelfinGroup share ownership. Now, very important to know, DelfinGroup will remain stock-listed company, so shareholders who want to take part in DelfinGroup further development as shareholders and receive the dividends, they are most welcome to stay also on the DelfinGroup level.
Just for all of you who are going to go through these materials afterwards, all our financial forecasts that we have put forward in this presentation have been made based on the assumption that we will be receiving 65% of DelfinGroup shares. Everything that comes to consolidation of dividends or financial information related to DelfinGroup is, you should bear that in mind. Basically we then offer DelfinGroup shareholders to either swap shares and become Indexo shareholders or then remain DelfinGroup shareholders. What is the main aim of this transaction? We are two nicely growing companies that are operating in a Latvian market. We have both our successes, but we feel that the joint forces will actually create a proper local champion that will be able to change more dramatically the financial environment in Latvia.
First of all, from closing, Indexo Group will be profitable, so that is very important to understand if you are a shareholder of Indexo Group or consider buying Indexo Group shares, that there is a certain important milestone that we reach with this transaction. This self-sustainability through these profits and dividend flow that we'll be able to tap into through the DelfinGroup transaction will also mean that we have more flexibility in terms of how we want to handle our further capital raising, which is important for our shareholders again, because we have been in the market for quite a few times, and obviously that is an important way how to finance our future growth. There are further synergies that are related to refinancing DelfinGroup today's funding, which is quite expensive. There we would be able to generate extra profits for the group.
Of course, these things need to be aligned with the regulator, and there are certain considerations about how risk management is handled across group, which make it into a process that we actually think that these synergies will start really materializing only in 2027. Importantly also both of us together, DelfinGroup and Indexo, have large customer numbers. Indexo through the pension funds has 150,000 customers. On the banking side, 46,000 customers. DelfinGroup has 330,000 customer contacts with whom they have had some kind of a business activity over last years. That sort of a large customer base allows us to offer products to a wider group of people, and then hopefully get their attention and also action to work with us.
Importantly, I think for all the shareholders of both of those companies and then generally, as a commentary to the capital markets in the Baltics, is that bigger hopefully is better because it will give also more liquidity, more flow to the market. It is actually easier to buy, hold, and sell shares in this group. These are all nice ideals, but obviously we are rational investors, and then we want to see also how does that transform our financial performance or what we expect this group to be able to do jointly. First of all, very importantly, our credit portfolio already at the acquisition or closing of the acquisition will be close to EUR 200 million, which we see a very credible path of how to grow that further by rolling out new products.
DelfinGroup has had a very good track record of growing their credit portfolio, which Dziņš will afterwards comment. We will have also a nice diversified customer base, opportunities to enter new businesses. We really hope that with these new products and the scale and customer contacts, we are able to reach up to 8% of the Latvian households over the coming years. Very importantly, of course, looking at the financials, then we have a business case of group of different businesses that we hold in the group. DelfinGroup has been solidly profitable for years, has been a great source for dividends for many of its shareholders. Our pension company has also already second year in a row generating real profits and that profit has been growing, and we'll cover that as well.
The bank is also in its 14th month operations, is moving towards the profitability, which we will also talk about a little bit later. Basically, the good news is that as a group in 2026, we expect to be already profitable which will funnel our growth. We expect that through the synergies and further growth, we'll be able to drive those profits close and over to EUR 30 million by 2028. Maybe let's take this huge story into digestible parts. Then we could start with talking about Indexo as a pension fund manager, which was the first, let's say, leg of our business, of our story, how we came to the market. We started our business in 2017 with the idea of challenging the large banks in the pension savings market with a new approach with lower fees.
We have been very successful in doing that. Our growth has meant that a business that started in July 2017 with zero assets under management has by today grown into an over EUR 1.5 billion asset management business. As said, it is profitable. The net profit that you see on this slide is actually despite of all the capital market transaction fees and whatever we have paid, so actually the normalized pension profit is higher than what you can see here, and you can find that also in our reporting. The revenues are growing. We have lots of good ideas of how to grow those revenues further and how to be more valuable to our customers. Here is a snapshot that we ourselves really very much like. What are the sources of our growth? It sort of tells a story of a multiple, basically, growth engines.
The monthly contributions that come from the salary payments, the inflows from new clients. We do have customers who are not really 100% on board with Indexo, so they might choose to leave, but then there is also market returns and other, let's say, transactions we have done in 2025 where we added another asset management company. The most important thing for us and why we started this business is the mission to actually improve the pension savings and retirement savings for our customers. We are really happy to report that we have done, I think, a very good job for our customers. We have actually driven real growth in savings, which of course over a long time means that people have more money in their retirement.
We have also been one of the best performing funds in the Latvian market and overall beaten the Latvian pension index. With this, I would like to invite Valdis to the screen and talk a little bit about the bank.
Yeah. Thank you. Thank you, Henrik, and hello, everybody. Valdis, I'm heading the bank and one of the co-founders of Indexo. Talking about the bank, we are growing as well. The bank is growing in relative terms, since we are starting naturally from a lower base, the growth is even faster. We are adding customers, we are growing deposit volumes, and we are issuing more new loans. About loans, I want to speak particularly. Especially during last quarters and months, loan growth has been very impressive. One of the reasons for that is that we launched in early summer our mortgage refinancing product, which definitely drives the volumes. With lending, despite the fact we're still a very new institution, a new brand in the Latvian financial or at least in the banking sector, we already are having impact.
When we talk about the consumer loans, we are issuing approximately 10%, or actually a little more than 10% of newly issued consumer loans by Latvian banks. It's already notable volume. When we speak about the mortgage refinancing, we have impressive 70% in last couple of months. Meaning that seven out of 10 clients or transactions who are changing their banks, looking for better terms, more attractive housing loan deals, are moving exactly to the Indexo. Actually it shouldn't be so for a so young player in the market and that just demonstrates the passivity of our main competitors, and that just shows that there are much more opportunities like that. There are much more undeserved pockets where we really can make a difference.
This is not only about the impact on the market, this is also profitability and it is our path to profitability to grow revenues. Like our loan portfolio, also our revenues have increased with rapid speed. That is about net interest income and that is also about net commission income because large part of our net commission income is related to the lending activity. That drives also our net interest margin because proportion of productive assets, meaning primarily our loan portfolio, is increasing in our balance sheet. Of course, to be able to do all this, we need deposits, we need to attract the customer funding, and we are doing that also successfully. We are the best payer when it comes to current accounts, payment vaults or term deposits. We are paying better than our main competitors in all the product categories.
Nevertheless, average weighted cost of funding is still very attractive and as you saw before, that enables us to be also competitive in the lending market. For a new player, new bank, of course, product development is a top priority. We started with the basic offering. We have gradually added new products, new features, but there is still a lot of work to be done and probably that is something what will never be over. In the nearest future, our top priorities is a home equity product. Currently, we are only refinancing mortgages with a possibility to increase the loan amount. We will add a home equity, which is some sort of a novelty. I can't say that it's non-existent in the Latvian market, but this is not really addressed very well in our opinion. We can make the difference and we are adding that product.
We're going to pilot already first transactions this year and launching early next year. Custody business, we've been speaking about that a lot, primarily providing custody services to our pension management company. Those are large volumes, large fee potential. We have all IT systems in place. We have all essential regulatory approvals in place. We just need to complete this fundraising round and we'll be able to proceed with all the formalities and actually start providing that service in the beginning of the next year. We have to do, and we are doing certain things, widening our card product offering. Consumer lending, of course, there is always endless smaller and bigger improvements, which we have done and which is going on.
Junior account, we've been speaking already for some time, but unfortunately, we have pushed the implementation time forward mainly because we were focusing in recent months on our lending products, which are essential to reach breakeven for the bank and profitability for the bank. Of course, that's not over and we have bigger tasks ahead of us. Of course, we will need to diversify our mortgage product offering and card products. We still have some ideas and getting customer feedback. New investment products because of our roots where we are coming from as an asset manager, I think we almost have a responsibility to offer new investment products also to our bank customers outside the pension product wrapping and implementation of custody services will be a good foundation for that. There I'm talking about products like ETFs and securities accounts, et cetera.
SME services, of course, is another extension which we have postponed also several times. Next year, especially after successful completion of the DelfinGroup transaction when the group will be profitable, we'll be better equipped to really push forward with that product. Now I'd like to give word to Didzis Ādmīdiņš, Head of the DelfinGroup to tell more about the DelfinGroup and the offering. Yeah.
Thank you, Valdis. Thank you, Henrik for great presentation. Yes. As the main object for today's presentation is DelfinGroup and Indexo shareholders have to understand what DelfinGroup are doing and what are our results. DelfinGroup is established in 2009. Me, myself, I'm with company already for 15 years, since 2010, and the CEO since 2021. Quite a long period of time and I have seen this company grow from small apartment-based company to a stock exchange-listed company. What DelfinGroup are doing, DelfinGroup is basically we have three business lines. First of all, there is consumer loans, which is our most important revenue driver, corresponds about 75% of our revenue.
There is pawn loans, which is basically loan against collateral, and it could be from a couple EUR to a couple thousand EUR and as collateral, we are taking electronics, basically phones, computers, power tools and things like that. The other big part is gold and jewelry. There is retail of pre-owned goods. Basically, we are buying and selling pre-owned goods. One part is we are selling those items which is from obligations when clients didn't fill their obligation to pay back loan, we are selling the collateral, but other 50% of what we are selling is items which we have bought directly from our customers. Talking about geographies, we are operating in Latvia. That's our biggest market and Lithuania is our new market where we are operating with consumer loans.
Just very briefly about our consumer loan product, that is basically loan without collateral up to EUR 10,000 and up to 7 years in term. Talking about our capital market activities and funding, we have altogether more than 9,000 shareholders and more than 3,000 bondholders. Basically, we have quite a large footprint if you look at Latvian capital markets. Not talking only about this, we have more than a couple of tens of thousands investors from investment platforms as well. Talking about results and there I could say that numbers talk for themselves. For example, we have managed to increase credit portfolio. At period of IPO, the credit portfolio was less than EUR 40 million. Now it's more than EUR 140 million. In these last years, we have significantly increased our revenue, our profitability, and also dividends which we are sharing to our shareholders.
Talking about just the latest quarter, we as well managed to significantly increase our profitability. We increased profitability by 23% quarter if you compare it to corresponding quarter previous year. Basically, it was driven mostly by revenue growth and also we managed to decrease our costs by decreasing administrative costs. Actually, I'm quite happy about this result of last quarter. We have also guidance for this year and next year. According to our guidance, we are waiting that this last quarter will be even better than third quarter. Talking about options which we have to all our shareholders. Basically, there are three main options. The option number one is to exchange your DelfinGroup shares to Indexo shares, and this ratio is 1 Indexo share to 7.3 DelfinGroup shares.
Me, myself, I choose this option for myself, and I already changed 98% of my shares to Indexo shares. There is option number 2, to do basically nothing and to continue to receive dividends and remain with full exposure to DelfinGroup. Option number 3 is to sell these shares for EUR 1.30 for one share. Let's dive a little bit into the two main options, of which one is to swap. The point is that in both options, you get exposure to DelfinGroup. If you swap the shares, you basically get around, Valdis already explained, around 65% of DelfinGroup shares will be owned by Indexo. And because of that, you will get exposure to DelfinGroup. This first option for me, myself, I see more like growth option because I trust the story.
I trust that in future we can build together a very strong financial group and to gain from these synergies. Other significant option is stay, and that basically means do nothing, and that option is good if you want to receive dividends. We are not planning to change our great dividend policy, which we established before IPO, that basically says that we are paying dividends every quarter, and we have stuck to this dividend policy very strong. In both options, you get exposure to DelfinGroup, and in both options, actually, you gain from synergies of this deal. I will give screen to Henrik.
Thank you, Dzintars. Indeed, I just want to say again, what a great company it is from a financial point of view. Running over 30% return on equity and growing steadily is really an amazing story. We are all very happy to join shareholders into that story. As a small shareholder of DelfinGroup myself, I'm also swapping the shares. Let's do talk a little bit about the plan for the capital increase. We understand what is on the table right now. We plan to issue up to 740,000 new shares that will be issued at a price of EUR 10.15 per share. These proceeds will be used to fund partially the bank growth and development, and also to do let's say cash settlements with any DelfinGroup shareholders that decide to sell the shares for EUR 1.3 per share.
The growth or the capital that we will receive from DelfinGroup as Dzintars pointed out, it will come in form of dividends, which we will be receiving quarterly, which is very important for the Indexo Group growth story. It will give us a nice platform to grow to our first target, which is reaching EUR 100 million credit portfolio in the bank and also further on reaching basically a break even before loan losses on the bank side by the end of 2026. We would have actually three businesses, a very nice profitable high return on equity DelfinGroup, a nice profitable high return on equity if we think how much we need the capital in pension business, and also actually a bank that is already really growing into a profitable territory. That's the target for 2026.
The most important thing, just to reiterate it, is this self-reliance. We need to be able to weather the storms on stock markets and be more independent in the way how we finance our growth. The dividend flow is exactly that opportunity for us to be more flexible in how we need to issue capital or do we need to issue capital, and it's a very important consideration for all Indexo shareholders going forward, and today. As we talked before, we of course intend to grow the synergies and also the bank credit portfolio and DelfinGroup will grow, and that all will lead to significant profits. Just to make sure also that all of our shareholders, because many of us actually here are shareholders as well, are understanding that would also mean that we will actually, at some point of time, start paying out dividends.
We intend to support the motion at the 2026 annual shareholder meeting to approve a forward-looking dividend policy once certain milestones are reached. This is just a reminder. Why we talk about dividends, why we talk about the self-sustainable growth is that actually starting from next year, or actually starting from the closing of the deal, we are a profitable group and we will be able to fund a lot of our growth from our own resources. We hope to reach EUR 30 million profit by 2028. Some important dates and considerations still to go over. The public offering of Indexo new shares started yesterday, and you can put in the orders until 5th of December. There are 740,000 shares at EUR 10.15, and the minimum investment is one share. Why is the pricing at EUR 10.15?
Well, that has been the price at which we have already issued shares in the past rounds of capital. We have a substantial, let's say, larger interest from some of the potential investors. We use that also, we needed a point of accounting for the DelfinGroup offer. That was also used in that calibration of the swap rate. The most important information also, of course, is that some of this new share issue is already underwritten, so this is going to be a kind of comfortable position to go to market from. Now, what does it mean to become an Indexo shareholder? As a co-founder, I have been Indexo shareholder from day one. I've been part of this journey. We have successfully grown one business out of the idea that we had.
We had a pivoting moment where we decided that we have an opportunity, and we try to grow also the banking business out of our brand recognition and out the customer base that we have. Together with this DelfinGroup, that growth story will become much more credible. Becoming a shareholder, so you will own part of Indexo. You will be able to profit if and when the Indexo value grows. Also be able to receive the dividends in the future that we would be paying out once we reach the profitability that we target. Obviously, every shareholder in our company can participate in all the annual shareholder meetings. We try to make them open to and welcoming for everybody.
We definitely try to be transparent and even if you were from anywhere else, you will always be able to access our webinars and get information from us. We are a bit of a mission-driven company as Indexo, so we do like to think that we have a positive impact on the country and the society and on the financial, let's say, environment in this country. We have definitely shown that with our pension business. We also believe that really the fundamentals of the financial market in Latvia will benefit from our long-term view to help people to buy more homes, get better rates on their deposits and so on and so forth. With that change also, people then will trust us with more of their business.
To drive a little bit of that also feeling that we are an important part of, like I said, people's lives. If you are going to become a shareholder at Indexo and you would like to get an offer from us for mortgage finance, which I must say is a really seamless, fast process you can do in our mobile app, it's quite unique, I must say, in the Baltic context, then you will be able to also receive a free property valuation, which will make it easier for you to decide whether you would want to actually get an offer from us and from anyone else. That offer will be in force until the end of April of 2026.
There is further instructions how to transact with these different options that you have on the table, then you should go to the internet bank where your DelfinGroup shares are held and select the appropriate order from the list of current offers, and then decide whether you would like to exchange or sell the shares. These internet banks and visuals slightly differ from bank to bank, so make sure that you take good care of making sure that all the details are correct. Now, at the same time, while we are raising capital to close the DelfinGroup transaction and also fund the bank growth, we are then also as I said, swapping the shares so that the voluntary offer itself for the share swap is going to be ending on the 8th of December.
It also started yesterday, and the settlement of these transactions either then swap or cash or if you decided not to do anything, then it doesn't concern you. You will just wait for the dividends to come next quarter that will end on the 15th of December. Yeah. We are super excited about this growth opportunity. I think as Dzintars mentioned, and as all the other Indexo shareholders are fully committed to unrolling this opportunity and making Indexo great again, if I may paraphrase one famous public speaker, then we invite everybody to join our story. Please do check our Indexo website for instructions how to sign up for our new shares. There should be simple instructions available. Please do, if you have any questions, submit them using the QR code.
Thank you for the presentation. We do in fact have a couple of questions, and so I will just go over them in terms of popularity. There are not many, but a few. The first one is actually about DelfinGroup. The question reads: Is it planned that DelfinGroup will leave stock exchange?
No. There are no such intentions to leave the stock exchange and also to change significant parts, for example, dividend policy or things like that.
Yeah. I can just add that, as we mentioned also during the webinar, actually, it's a very good way for us to recycle capital from DelfinGroup into the group and to be able to use that to fund the growth in other businesses. We are interested as Indexo Group in dividends. We hope that also some of those synergies will lead to increased profitability on the DelfinGroup side and mean that we can pay out also more in absolute terms because of that. Everything, all the sort of obviously the management of the company post controlling stake from Indexo side will be arm's length appropriate to any publicly listed company, in our management of DelfinGroup and how we will handle that.
Thank you. Okay, moving on. Does Indexo intend to have a liquidity provider on the stock exchange? For example, DelfinGroup has one.
I think we will make definitely a much better effort in terms of being visible, maybe initiating coverage, meeting our investors in different conferences and beef up a little bit our information work. I think we were a little bit in a sort of a startup mode in the last year and a half or two years, where we maybe sometimes lacked all the confidence of knowing exactly what to tell about our exact growth, still understanding that we have an exciting story on our hands. I think with that overhaul of communication, we hope that we can spark more interest and more volume and then definitely we will also think about how to basically structure it so that the liquidity would improve.
Because Dzintars mentioned earlier, of course, that DelfinGroup itself has been quite a good liquid asset in comparison with many other in Nasdaq Riga, so we also have something to learn.
Okay. Currently, the last question is: The stock exchange price is lower. Why buy Indexo shares in the public offering?
Because the answer sort of a little bit goes together with the previous question. I think our liquidity is quite low. I think the vote of confidence for us is that those people who are buying larger volumes are valuing the company at the EUR 10.15 per share that we have set as issue price and yeah. I think we can all a little bit moan about the state of the stock exchange, where good companies like DelfinGroup or some other financial stocks in the Baltic market are maybe in the sort of a hostage situation of a geopolitical situation that we have on our hands. Our task is to grow the value of the company, and I think this transaction actually is a big step forward to that credible value growth.
Okay. Next question is: Why choose a share swap when Indexo still has growth potential, maybe, while DelfinGroup is already profitable? How I read it is probably exchanging potential for guaranteed profitability.
That I can start and maybe you can.
You had this decision, so you can talk about it from your own perspective, right?
Yeah. From my perspective, as I said, I see potential here. I see that and I trust the story, basically. Anyway, I will get exposure to DelfinGroup, the company which I'm managing. Basically, this swap option is a growth story, and there will not be dividends next year or 2027. As you already said that dividends will be after 2028, and I can assume that in a later stage of the development of Indexo, the split will be higher than staying with DelfinGroup. DelfinGroup is a very good dividend-paying company. Dividend payout ratio is about 8%. That's actually very great for stock exchange of Baltic states. I see, yeah, this is a growth story with high potential to grow faster in the future.
Yeah, I think you absolutely nailed it in a sense that these are two different options. In a way, are you a little bit more conservative type of investor that really values the quarterly cash flow, and you see this as an alternative to some other investments? Or you are a little bit maybe slightly more risk-seeking although understanding that actually with this transaction, your risk is decreased significantly and you see actually that the market opportunity, which we did not cover maybe in that much of a detail in this webinar, but you can definitely go back to our presentation back from 5th of September, where we also have this sort of a larger point of macro story in Latvia about under-credited economy, under-credited households with high rates and which really is the main, let's say, driver of this thinking process.
Of course, there is a synergy value also in this transaction, which is only attainable when you are an Indexo shareholder. Some of it will be for Delfin shareholders when they will be receiving higher profits if the funding cost is decreased. Predominantly, the shareholders that will get this synergy value will be Indexo Group shareholders. Again, to get all the synergies in, there is a regulatory process that we are working on.
All right. That is currently it. I don't see any new questions, so maybe let's wait a minute if something pops up. In the meanwhile, Henrik, Didzi, Valdi, do you have anything you want to close the webinar on?
I already said everything. Thank you. Thank you, Henrik. Thank you, Valdi.
No, thanks, Didzis. Thanks, Valdis. I think the time is now to think about it, make your decisions. I think it's a very transformational moment for Indexo Group. We have a lot of, I think, materials out there. I think keep an eye on really our growth on the banking side that we have been able to deliver in the last months and which really show that this sort of a transformation from very early stage startup to somebody who is actually more scaling business is an important consideration also to figure out whether you believe in the growth story. From pension side, if anyone is still or listening from us from Latvia and doesn't have a third pillar with Indexo, then please join us. We'll do a good job for you.
Thank you.
Thank you.
Thank you.