Good morning and welcome to INDEXO presentation where we cover our three-year financial forecast and also talk about the strategy update which all should lead to an accelerating growth, which is very exciting news to all of us working at INDEXO and hopefully also for our shareholders. Today will be presenting myself and Valdis Siksnis, who is the CEO of INDEXO Bank. I invite everybody to ask questions, submit them using the QR code, and we will leave ample time to answer your questions and also listen to your comments. Where does INDEXO stand right now? We, I think in our history, have reached new levels of success.
I am extremely proud to say that our loan book growth has really accelerated this year, and we are right now already close to EUR 131 million loans issued in the bank side, which makes us the fastest growing bank in Latvia. Of course, it comes from a low base. We also have reached 70,000 customers and it is growing every day. Our pension business continues very well. It has over 160,000 customers and close to EUR 1.8 billion assets under management. What I think is extremely important to understand is that we have found also a very good niche to work in.
Today already, our group is holding 11% of the consumer lending market share in Latvia, which is a very profitable part of the lending market. We are actually having a real impact in the market with our lending. That is mostly also combining the effect of DelfinGroup, which is the largest non-bank lender in Latvia and INDEXO Group bank together. I think we really like to talk about the growth because that is what drives our financial performance.
If we look at the achievement, what we have had over the last 12 months, then you really can see how the bank has accelerated. We have increased our revenues by 9.5x . As of first half of 2026, our revenue hit EUR 2.6 million in the bank. As we talked already about the bank loan book growth, but also the group loan book growth has grown 1.8x in one year's time. Most of that growth has come from the bank. Our group consists of three businesses. As you know, it is the Pensions, DelfinGroup and the bank.
DelfinGroup and Pensions are actually delivering also quite good growth and do that in a very profitable way, which gives us confidence that we have also capital from those operations that we can invest back into the bank and help the bank to grow its loan book. As of this year, the group overall is profitable, which is very important from the point of view of stability of our business and the ability to cover and finance our costs. With that said, I would like to hand over the microphone to Valdis, who will talk about the lending business which is driving our growth.
Thank you, Henrik. Since we started to work on INDEXO Bank projects, before the bank was even founded, we saw the biggest opportunity, if we speak about Latvia specifically in the lending market. In Latvia, it's least leveraged. Loans to GDP is the lowest in the whole Eurozone, and at that moment, market was also quite stagnant. Today, it remains least leveraged, but growth has resumed and market is growing again. We definitely see opportunities in all market segments and the total market is over EUR 15 billion. We see what we can do in all the segments.
Today, I will focus more on consumer lending, because that is the area where we are already succeeding and that is the market segment where we, as a new bank, new challenger bank sees the biggest potential in the nearest future and I will explain why in the following slides. The bank, as has been mentioned before, is the main group's growth driver and the lending is the main driver driving the bank's income. Our loan book growth, it's impressive almost 4x growth during last 12 months and that pushes our monthly revenue up and we are well on track to achieve our previously communicated target to achieve EUR 1 million monthly revenue by the end of this year.
It's primarily driven by lending. During the second half of this year, custody services fee income also helps because we start to provide that service to our asset management company at the end of June. Naturally, our customer base is also growing, and this is already a rather impressive 70,000 customers. As I said before, we see opportunities everywhere. We see opportunities also in a mortgage lending. For instance, I think that impressive 64% that in Latvia, from all the customers who are switching their mortgage lender, their bank, actually switching from one bank to another, and 64% are coming to INDEXO Bank, to this new bank, which has been in market a little more than two years.
That is impressive result. We also are finding some other market pockets. For instance, we are developing quite actively home equity product, which is some sort of a novelty for a Latvian market. However, plain vanilla new mortgage lending is something where we are not focusing right now, specifically because that requires a larger, more stable and cheap transaction account-based funding base. We are building that gradually. We see opportunity going forward also there, but that is not our prime focus.
Our prime focus currently is consumer lending, and there we are also achieving very good results, very impressive growth, and growth in volumes and growth in revenues. That is not just accident, it's by design because our product is our UX, speed of the product, speed of decision-making, which is fully automated, is at par or better than for most of the competition here and maybe in the region. At the same time, our pricing for consumer loans allows us to compete almost with anybody, including incumbent banks. Why it suits us so well, what's the explanation why it's so successful? First of all, Latvia is highly digitalized economy.
There is very good information, positive and negative, about the credit history, and that allows us to fully automate the product, which allows us to scale virtually with any additional variable costs. The market is also large. As mentioned before, it's almost EUR 2 billion, and the market is growing. It has more than doubled during last five years. Latvian consumers remain one of the least leveraged in Europe, Eurozone, and the market growth is also supported by fast-growing average income or wages, which has been around 10% during last five years. Risk-reward is also good. We also see opportunity to compete, at least in part of the non-bank lender territory where the yields are extremely high.
What is good in Latvia, there is active market for non-performing loans. Non-performing loans can be offloaded from the balance sheet at good price. All of that provides us good risk-adjusted return. Currently, our loan portfolio grows at the speed of EUR 10 million per month, roughly, a little more maybe already. We believe that we can and should double that growth and why we believe it's possible. First of all, we are entering a corporate lending segment, and we have issued our very first corporate loan. Based on that experience, we are smoothening, updating our procedures and processes, and in coming weeks and months, there will be more corporate loans issued.
I think the next year we will be already quite active market participant in that segment. Mortgages, I spoke about. We looking for all sort of pockets of opportunities, and we'll become more and more active in that segment as our cheap funding base will grow, and it is already growing. Operations, of course, needs to be improved, more automation, more smoother processes will increase efficiency, lower costs, and, of course, improve customer experience. The main focus will be on consumer lending, and there we see opportunities to develop, first of all, new products like credit line, car loans.
The very big thing we believe will be consolidation of consumer loans or automated refinancing solution in an elegant way because within our existing customer base, we already know that there is tens of millions of loans our customers have, more expensive loans our customers have somewhere with the competitors and we would be happy to consolidate. Consumer lending is also a product which is possible to roll out in other markets easier than many other banking products. We are looking at those opportunities as well. DelfinGroup is important part of our group. This is growing volumes, growing revenue, but it has a stable customer base around 60,000 customers.
Most importantly, it is for the group very reliable capital generator and pays dividends, which can be redeployed to support the bank's growth and strengthen bank's capital. Of course, to grow faster in lending, to lend more, we need also more funding. We are already very active in retail deposits, retail funding market. We are the best payers for the money customers entrust us. We pay for the current account balances, vaults, term deposits. We have the best rates, and we will keep advertising and continue to get that inflow. As I mentioned, we issued the first corporate loan.
In the coming weeks, I believe we'll also take in the first corporate term deposit and then gradually develop other daily transactional services during the next year for the corporate customers. Deposit platforms also in coming weeks, we will start to attract deposits in German market. That will help us to compensate if there will be a deficit from our customers. This is also some sort of a risk mitigator. This is alternative funding source, which we are happy to have developed and keep ready whenever it is needed. Of course, new daily banking services should stimulate more active use of our accounts, payments, cards, that leads to more cheaper funding and also to some fee income. Here I would like to give word back to Henrik.
Yes. Valdis already mentioned one of the important drivers of growth that is funding, the other one, of course, being capital available for the bank because any loan book growth comes with also a need to put capital aside to mitigate the risks for our depositors. Just to give you a recap, we have already, as of date, invested EUR 36 million into the bank. To get through the first phases of development, pre-licensing and also drive the build phase of the bank, which has led us to this position where we are now growing fast and actually really mostly consuming the capital for increasing our loan book.
We understand that to materialize the business plan that we have for the next three years, we will need around another EUR 30 million- EUR 40 million, which mostly will be funded from our internal resources. Several times we have mentioned the importance of DelfinGroup in our group as a capital generator, as a good cash conversion business. Partially that will be financed from DelfinGroup dividends.
Then we have pension business that will contribute to that EUR 23 million, EUR 25 million that we are investing internally. Then obviously bank getting into the profitability by the end of next year will also start contributing itself internally capital for financing the growth. That said, we still need external dilutive capital, which will affect all the shareholders. That will be in the amount of EUR 10 million- EUR 13 million. The ways how we plan to finance that are the following. We are planning to do, as announced before to the market, we plan to do a listing in Stockholm.
That is still to be finalized exactly the dates of that listing, but it should be somewhere towards the end of the fourth quarter, market conditions permitting. Also we are going to do slightly smaller private placements just to make sure that we have the flexibility to choose the best opportune moment for public placement. Totally all of that comes to around EUR 70 million- EUR 74 million of investment into the bank that we see for this business plan. That will be also accompanied by other instruments which will be non-dilutive, but which is a normal course of business for banks to issue like subordinated bonds or AT1 bonds and which will help to drive the efficiency of our capital use.
That is going to be enough for getting through this next cycle of growth, which I will come in projection slides that talk more about it. Before we go to the projection slides, I will just say a very brief words about the pension savings. It is an important part of our business. Asset management is where INDEXO built its brand. We managed to connect to customers with our mission to improve the Latvian financial markets by offering relevant good design products, bringing transparency to the market. The market is growing. It is a EUR 12 billion addressable market where we are the third largest player, both in the second and third pillar, which are the mandatory and voluntary savings accounts.
Especially we are happy with the growth what we have had in the voluntary accounts, which is our focus where our assets under management are growing very fast and we are opening every day new accounts that really drive our long-term business. Our assets under management already are reaching EUR 1.8 billion, and our asset management business is a very good return on equity, highly scalable business that is granular and thus quite stable and allows us to plan the cash flows that we reach from that to invest into the bank growth story. With this, we would like to go ahead and talk a little bit about the three-year forecast.
We published our previous three-year forecast about a year ago when we were stepping into the DelfinGroup transaction. This is an update to the same forecast, and really the main message that we try to convey today is that we are really focusing on long-term growth and long-term shareholder value. We see the opportunity to grow. Our bank, over the last 12 months, has really shown that we have a niche, we have a good unit economy on the things that we can do in the retail lending side, and that basically also drives our focus on the investments and the growth going forward.
Whereas previously we had stated, let us say, quite precise numbers on the loan book growth, then right now we see that we actually will be able to reach higher targets. The result of this loan book growth then is a sort of a split of credits where by 2029, we expect 55% of the loan book to consist of consumer loans, about 32% mortgages and home equity loans, and about 13% business loans. Although our focus for the next 24- 36 months is going to be consumer loans, we are very much keen and investing into also developing the other loan writing, because we feel that it is very important to have a well-balanced portfolio, so that it will be also resistant to any changes in the cycles that the economy may have.
All in all, we think that we have a great opportunity, and we will be able to hopefully deliver more than what we expected initially. But that comes a little bit at a cost of sacrificing short-term profits because the consumer loan growth really needs the provisions first. It means that while the loan book grows very fast, we will be front-loading provisions. That means that our expectation for the 2027 year profit is slightly lower than what we expected before. It will start evening out in 2028 and then already deliver a very strong result by 2029.
Also what makes this forecast slightly different from the previous figures that we published is that we had communicated a very clear path to the synergies in the intragroup financing. We are still working on those, and we will be disclosing that information where exactly they land once we get closer to understanding the structure. But it is a regulated process or involving a regulator, and that means that in our current forecast, we are a little bit more cautious in terms of timing those synergies and maybe distributing these expectations into the future in a more granular and spread out way.
But these, anyway, will remain an increase of our profits in the nearest couple of years. An important message that really comes out of this is that the group is going through a transformation phase. We have DelfinGroup and Pension that are really already delivering profits. By the end of the cycle that we are looking right now in the forward planning, we actually do expect that the bank will be contributing more than half of our group profits. We really believe that that's really only a start of the story.
There is many more opportunities that we'll be working on, and the longer-term cycle will look very good for us indeed. Also, I think internal discussions have been that we will try to make these forecasts something that we will update regularly. We'll try to at least once a year provide you guidance where we are and so everybody has a good understanding where we are moving. Now I'd like to give over the microphone to Valdis to talk a little bit about the overall situation then.
Yeah. Thank you, Henrik. Thank you. The main message today is actually that the bank has proven its case. It's growing fast. It's growing volumes, growing revenue, and there is no doubts that the bank next year will break even first before provisions and after provisions soon after. The consumer lending provides us an excellent opportunity. It has worked for us well. We will believe it will work for us also in the nearest future, and we are grabbing that opportunity. We know how to deliver this plan. We have a clear plan how to deliver this result, and we are aiming for EUR 40 million net profit in 2029, where bank should contribute at least half of it.
But then today there is another important piece of news, and that is that we are strengthening our team with a very relevant experience, specifically in consumer lending area. During last couple of years, licensing and launching the bank was kind of the strategic project for the INDEXO Group. Now bank is growing rapidly. It starts to generate significant income. The group has grown significantly, and with that, my role is also evolving. I decided this summer that I want to be more involved in a strategic development of the group. I believe it is a time to hand over operational management of the bank to the new person, another person going forward.
I am very glad that our ex-Supervisory Board or council member, Jānis Pizičs, has agreed to join our team. I think Jānis has all the skills, professional experience to succeed in his role, but he also has a personality that very well fits our values. I think he will become a very good leader, very good manager for our banking operation. Here I would like to emphasize that this management change is still subject to regulatory approval. To ensure very smooth, organized management transition, we believe that transition will take several more months. Here I would like to ask Jānis, who has joined us, to say a few words about himself and how he sees this opportunity.
Good morning, everyone. Thank you, Valdis. First of all, I would want to say big thank you to Valdis, Henrik and actually all the other Supervisory Board members for giving me this opportunity. I am very excited and I believe in this INDEXO Bank story and budget and all the great things that INDEXO can achieve. I am very eager to start working, and cannot wait actually to get my hands on and then start delivering some results. I will not maybe go in too much detail about my CV or previous experience, but few things to stress.
I did spend three, four years in Finko Group delivering several markets and opening new markets across the globe and taking the company for very few employees to more than 1,000 employees. Scaling lending businesses is something definitely not new to me. That is something I also want to bring to INDEXO. I have been for last five years also a member of Supervisory Board in DelfinGroup, where I continued being involved in Latvian market and in Latvian consumer lending. In that case, non-banking, but very relevant.
For last four years, I actually have been in Merito Partners, one of four partners where I have seen the banking industry from the client perspective and been part of a team raising more than EUR 100 million financing. I have also now experience with cooperating with several banks in Latvia as a client. Of course, last year, yes, I have joined Supervisory Board in INDEXO. I have been involved already before that, trying to help INDEXO Bank with the lending products. I am very excited to continue this cooperation, and I am sure we can actually achieve very great results. Thank you, Valdis.
Yeah. Thank you. That concludes our today's presentation. There is another chance to scan QR code and submit questions. While you are doing that, we will start answering questions we have already received.
Yeah. Thank you, Valdis. It seems that we have been conveying our message very clearly. We have just a few questions. First one, does INDEXO Bank plan to expand into the Baltic markets and offer its banking products there?
We see it as opportunity on specifically consumer lending. I think it's no secret that through DelfinGroup, we already are present in a Lithuanian market. Most likely that would be the place to start, but there is no specific plans yet. That is a opportunity we assess.
I think maybe to add to this then, on a funding side as well, our European license means that several markets or any market in the Eurozone is basically addressable by us. We have started through the deposit platforms to explore the market in Germany. We will definitely have an opportunistic mindset in looking where else we will be able to find appropriately priced funding.
Thank you, Henrik. Are there any plans on giving cash back from purchases with debit card?
Well, we first of all have credit card product only, technically. Yes, we are looking at many ways how to improve our card product. I would not like to reveal any specifics of new potential designs, but the cashbacks is something we consider as well.
What do you see as main benefits of DelfinGroup acquisition?
First of all, I straight away think that as shareholders of INDEXO Group, we all have benefited from the fact that we have bought a great lending business that delivers very good return on equity. So I think that's already a victory there. On the other hand, we also see that a lot of our account opening activity is driven by interests from also DelfinGroup customer base. So, that's a sort of steady flow that allows us to increase the reach to the customers with whom we have our conversations about the products that we offer.
Obviously, the fact that DelfinGroup dividends come in quarterly has really helped us to manage our capital better. Let's not make any secret about it. A small bank going through this initial phase of growth, and having a high cash burn rate to launch the activities needs constantly capital. DelfinGroup has been really a stabilizing factor for us in terms of providing through the profits, our ability to invest back, then obviously the pension is also helping there as well.
I think, overall, DelfinGroup acquisition has been a very good match for us. There is also obviously other types of cooperations that go on a daily basis in figuring out what are the best practices in lending and so on, so forth. They have been in the market since 2009, so they have a lot of experience in this organization, which we can borrow from. All in all, a very valuable addition to our group, also, I think there will be a lot of opportunities to do things in the group together in the future.
Will INDEXO consumer loans overlap with DelfinGroup?
I think we see that we are working with slightly different audiences. I think it's no secret that our average APR is much lower, so we are really prime and maybe getting a little bit closer to near prime in some of our product offers. But really much lower APR and lower risk type of products, is what INDEXO is offering. DelfinGroup has the rest of the riskier part of that tree. But over time also, they are able to move towards the near prime. So we generally believe in competition. I think it's a healthy thing also, when we have a little overlap in the market, that means that both organizations, Bank and DelfinGroup, will work better. Valdis, maybe you want to add something.
No, I think it's a very good answer. Always there is some overlap, but I think we have a good mutually complementary coexistence.
How do you plan to differentiate two businesses and ensure that growth of INDEXO complements rather than negatively affects DelfinGroup's loan portfolio and profit?
Okay. No, I think already we have a year of coexistence and I think there is not any evidence that we are stepping, not at least much on each other toes. As Henrik mentioned, there is cross sales going on, more cross-selling INDEXO Bank's product to and INDEXO pension management products to DelfinGroup customer base. Both companies growing, in both sides, loan portfolio growing, Bank and DelfinGroup fulfilling their targets. So, we haven't experienced that risk materializing, and we believe it's manageable also going forward.
But if I may add here, then I think you need to see it really that the size of the market opportunity is a function of the price of both your funding and that which you can lend and type of the risks you can take. Obviously the banking business is driven by cheapest possible funding being available to this financial institution, and that obviously comes with a cost of regulation and the capital requirements that you have. And that means that also what we try to convey in our presentation is that we really see Bank driving the growth, right? DelfinGroup has published their own financial forecast to the market.
I think you can see that the opportunity to grow for them is slightly more limited because of the cost of funding that they have and the type of customers who are ready to pay higher interest rate for the funding they take. Yeah, these are complementary different sort of segments of the market, but clearly the growth opportunity comes from a sort of a segment which is prime and near prime, for any sort of financial markets, or financial services market.
Is INDEXO ready and able to refinance all of the DelfinGroup debts?
That is a question that really takes quite a lot of regulatory calibration. Also, because what we talked about before, for us to single-handedly refinance the DelfinGroup funding portfolio, would take quite a lot of capital at the current stage and also a lot of funding, which we would have to raise as INDEXO Bank.
We are looking at different alternatives of how to reduce the cost of funding for DelfinGroup and whether INDEXO will participate in this or will be the sole partner, will depend a lot on the type of structure that finally we will put in place. As I said, we are doing preparatory work in understanding what works best for the group. And obviously duly, once we have a roadmap that we are going to start to execute, we will also disclose that to the market.
In addition to equity capital, does the strategy period foresee the need to raise Tier Two and additional Tier One capital?
Yes, it does. That's a normal part of funding the, let's say, bank organization. We have some subordinated bond issues planned for next year and some other capital instruments as well coming next year and years after. We will be in the market, definitely. Those investors who want to buy our subordinated bonds, we will inform everybody once we know exact timing and terms of those issues.
What is the current requirement for the bank's CET1 ratio and what buffer do you target? I will take that.
Yes, please.
We are exactly right now in our first supervisory review and evaluation process. We will be soon finalizing the ratios as required by the regulator. As soon as we will have that, we will then come out with the public announcement regarding our regulatory ratios.
That voice behind the screen was Ivita, who is our CFO. Thank you, Ivita.
Please comment share split decision.
The share split decision really is driven by the fact that we want maximum liquidity, anticipating the listing process, which we have announced regarding the Stockholm listing. We wanted to create a base that really makes sense from a retail investor perspective. That is really the notion that drives that decision.
Any forecast how probable is that Latvian pension system follows Estonian and Lithuanian second pillar reform ideas of making money free?
You mean that people would get access to their savings prior to their retirement date? We don't really know what is the probability of that. I think, first of all, there is a new parliament elected, so they will be in place. The coalition that will be formed to rule the country will decide on the policies that will affect the future of such large and important decisions, like how to save for the retirement in Latvia. What we sort of did from our own perspective though, and which we have communicated also earlier, is really to focus mostly on the voluntary savings part, because we understand that as the disposable income of the population grows, that is really the part that should grow alongside.
I think it's still quite early days in that sort of saving cycle, in Latvia. We can be a very impactful player in that, and we already are the third largest player also in that segment. That means that we are really looking at already sort of a voluntary approach from our savers. We like that idea that the people who are participating in that market, that they know why they save, and they most probably stick on that saving path. Anything can happen in the future. Nobody is safe from regulatory changes, whether it comes to pensions or banks or whatever.
Actually, that was also one of our early considerations when we decided to launch a sort of wider financial services group, is to have that business that is supporting each other in terms of customer needs, overlapping customer base, and that can build revenues from different pockets. I think we are well on a path to create that group and organization that does not only depend on the performance of one or another product. Valdis, you want to add something?
Yeah. Exactly what you said. Definitely the sensitivity of any decisions concerning one specific product has decreased, in our case, considerably because of the diversification of the group. Okay, of course, politicians need to make policy decisions, and we shouldn't speculate on that. We don't calculate any probabilities, but my personal humble opinion is that the existing coalition, with some changes, has been reelected, and the immediate likelihood of any drastic actions taken is not high. Then again, we are less sensitive to any decisions affecting one specific product.
For example, Banknote is offering 5% discount by paying with INDEXO card. Which company pays this 5%?
Well, it's a joint decision. I think primarily it's attracting the bank's customers, so the bank is taking the majority of that pain, but we belong in one group, so we are making joint decisions on that.
Just to add here, I think this is a very good sign of how we work. We understand that very few customers end up in INDEXO just randomly. They are either driven right now by the fact that they find good deposit rates with us, so they want to bring their money and safekeep it with INDEXO Bank, which is great. We find our customers who borrow from us through our own mobile app or then through the comparison sites where people go, and we are ready to pay for the service that actually people give us leads.
DelfinGroup in a sort of similar way, that if there is a lead that will create a new customer account with us where we expect to make longer term financial gain from that customer, then that's a normal unit economics calculation that we are ready to pay for that. We are constantly exploring this type of funnel creation, understand where we can work well, what leads to great customer engagement, and that's very kind of a normal part of our business.
Are consumer loans issued by INDEXO fixed or floating rate? Mostly our consumer loans are issued at a fixed rate. Then the next question, what's the wider strategy and rationale around increasing consolidation loan offering? Won't it just start a price war between the banks without long-term benefit?
First of all, I think the largest opportunity we see to refinance more expensive non-bank lenders, and as I mentioned, we have already a significant opportunity within our existing customer base. I think this will be first such product of a kind, so we will be first movers in the market, and we believe at least immediately it will help us to increase, improve our yields than another way around.
If I may add to this, I think that opportunity underpins this wider kind of a view that we have on the market opportunities that our story is really supported by this great data that we can have access to, right? In a way, every time we give out a loan product, we actually more or less see what are the liabilities of the customer, according to regulation, of course.
That gives us an opportunity to proactively engage with those customers, and that proactiveness is really what drives our growth. I think here we can materially be better than the incumbent banks, and also then equipped with our own low funding costs compared to the non-bank lenders, to reiterate what Valdis already said, that is really the kind of a good mix proactiveness data that allows us to reach for new customers with improved offers.
The final question that we have is, as you have now the mandate for voluntary buyback of DelfinGroup shares, what would this mean for the regulatory capital needs at group level?
Keeping our regulatory capital, let us say, under check or in line with the central bank expectations is obviously important and key to our business. Everything that we will do will stem from the fact that we will meet those regulatory capital requirements. As we have indicated to the market and the mandate that we seeked, this was to give us the tool set to look at the voluntary buyout offer if we find the market terms attractive.
Obviously when we get to that stage that we have actually decided to go into the market with a specific offer, then we will also talk about what that could mean from our capital perspective. Again, underlining the most important thing that you should know is that we always start from understanding that we are not risking, let us say, our license by not meeting capital requirements.
Yeah, Ivita, maybe you can help on that as well. Of course, putting aside a little bit dilution and share issue and those things that strictly from a capital adequacy calculation rules, the bigger stake in DelfinGroup would strengthen our position, because currently we need to consolidate all risk-weighted assets and fulfill the requirements only with our share of the equity. So the bigger stake would help us two ways. That will be a bigger share of the equity we can consolidate, and the second would be also a bigger share of the future dividend payments.
To add to Valdis and Henrik, of course, whenever we will make this decision, we will make sure that the funding structure we prepare for that takes into account that we, at all times, fulfill our regulatory capital ratios. In the meantime, few more questions have come in. In regards of net profit estimate for the strategy period, did you previously misjudge the credit loss expenses, or is it due to the loan portfolio mix?
It is really mostly due to the loan portfolio mix, because I think we are an agile company that only started discovering the opportunity set that we have last year, right? I think our expectation was to have a slightly larger impact in the refinancing market, which means that these are also larger tickets. To lend EUR 1 million most probably would take around 15 credits or 10 credits, whereas in consumer loan, you are really talking about much more granular contracts.
We expected that actually that volume of the home equity loans or mortgage refinancing loans to be higher. Instead, we have found a really great opportunity in the consumer lending, where we actually could drive growth. You have most probably noticed in our press releases as well that we constantly increase, on a monthly basis almost, the consumer lending share we have. That then drives that front-loaded provisioning, which actually impacts the profitability of the company.
Yeah.
Valdis, you want to—
Yeah, just one illustration, maybe somewhat funny example, but a little bit deja vu feeling what I have when we launched or started our pension management business. We also invested a lot in customer acquisition, and the story was the same, that we booked the customer acquisition expenses upfront, but the revenue will come later, and it has worked spectacularly well. The pension business is a very profitable business, exactly because we were brave and we invested a lot in a customer acquisition in the early days, early years.
Same logic, to a large extent, also applies now to consumer lending. When you issue consumer loans, basically on today's portfolio, we will need to book expected credit losses upfront, but portfolio will live for several years. The average life will be three plus years. That revenue will come gradually over a three year period, but the credit losses, we need to book upfront. It is especially painful when you rapidly grow portfolio, and that is a development stage we are in right now.
But I would expand actually a little bit also into the ECL discussion, I think, and the quality of the loan. I think, again, of course, when you start a lending business, then you have a higher concentration of your credit portfolio. As the portfolio number and contracts increases, by default, basically also the risk kind of improves, as long as your risk handling inside the organization is correct. I think over the last year, so compared to where we were in 2025, looking at the sort of granularity of our portfolio, there has been a significant growth.
That is great for all of us. I think also we are having a much better information about the cohorts and the performance of those cohorts. I think there's still, of course, as we move forward in our development path, we will have better and better cohort data and better and better risk rating data. Also, as of this year, we have now installed our own credit analysis and risk analysis tools inside, where initially, by regulation, we had to rely on outside service providers for risk assessment. I think there is a really good understanding where we're headed in terms of risk rating, and it is improving all the time. We're paying a lot of attention to make sure that we get it right and improve it.
The final question, what is the logic of adding Stockholm listing, and how it will benefit current shareholders in the long term?
Definitely. The logic for Stockholm listing is one, and that is we are a publicly listed company, and we want to give all our shareholders best possible liquidity. Liquidity is also an important factor in price formation and price discovery. We feel that INDEXO, where it is, having now transformed from a startup really into already a substantial financial group, needs a good liquid share, because that benefits our shareholders.
It also gives us an opportunity set that adds a tool to our toolbox. If we were to find excellent growth opportunities where we could actually deploy more capital, then an adequate and proper share price will protect existing shareholders from excess dilution. We really want to be a properly liquid share with best possible price formation. Why Stockholm? Stockholm is actually the most active retail market in Europe, most probably.
Maybe there is somebody else, but it's definitely one of the two most active markets. There is a huge retail interest towards shares. I think our story as a challenger bank competing with some of the incumbents in the Baltic market that originate from Stockholm also means that our story is relevant to the shareholders who already own financial instruments in the Swedish market. I think that's really why we are looking at Stockholm as a good path for our shareholders to have a long-term value growth and also liquidity.
Thank you, Henrik. That concludes our Q&A session today. Valdis, any concluding remarks?
No. First of all, thank you very much for participating and very valuable, interesting comments. The main key messages is to summarize, we have an excellent opportunity. Bank has proven its business, has proven its case. We are growing fast, volumes and revenues, and we are heading towards our three-year goal of group net profit of EUR 40 million. To hear more about us, then I'd like to invite also you to join our Q3 webinar in early November.
Yeah, I'd just like to add also that our growth plan really depends on a great team working together. Today we have had here Valdis, Ivita, myself, and then you also got a first chance to get acquainted with Jānis. Jānis, as he told himself, has been involved with INDEXO Group for a while now and also with DelfinGroup.
We really are not only, let's say, looking at the opportunity set, but also making sure that we have the skill set to execute on it. I think if compared to really where we were a year ago in terms of our understanding of everything, we knew the opportunity exists, but we are really getting, I think, quite good at also taking this opportunity and making it a business. I'm very excited with all the developments that are going on with us.