According to the Unaudited Consolidated Interim Report for the first nine months of 2024, IPAS Indexo (hereinafter – INDEXO) posted a consolidated loss of EUR 3.56 million of which EUR 3.90 million are attributable to the investments in the opening of the INDEXO Bank and a profit of EUR 0.34 million to the pension management business. Excluding non-pension business expenses, such as bank development related costs, pension management business generated net profit of EUR 0.83 million during the reporting period.
INDEXO Pension business continues its strong and profitable growth
The assets under management (AUM) for both the 2nd and 3rd pillar pension plans have grown strongly in the reporting period to reach EUR 1.22 billion, a rise of 50% from 812 million in Q3 2023 and EUR 298 million, or 33%, since the end of 2023 when the AUM stood at EUR 917 million. The primary drivers of growth have been fund transfers from clients joining INDEXO, followed by monthly contributions and positive market returns. Notably, inflows from new clients have been the main contributor to Q3 AUM growth.
During the last 9 months, INDEXO customer number increased by 10 351, or 8%, bringing the total to 137 510. This again makes INDEXO the fastest-growing 2nd pillar fund manager in Latvia in absolute terms.
“We are one of the fastest growing pension savings managers in the Baltics. As the pension accounts at INDEXO grow, so does INDEXO’s revenue and profits. This has been a phenomenally good time for pension savers that has increased INDEXO average 2nd pillar client account close to 10 000 euros. We are also pleased with the run rate profitability of our pension business that allows us to invest money both into client growth and bank development,” says Henrik Karmo, Chairman of the Management Board of IPAS INDEXO and one of the founders.
Over the last 9 months, Latvian overall 2nd pillar AUM grew from EUR 7.06 billion to EUR 8.29 billion or by 17.4%. INDEXO AUM of the 2nd pillar pensions plans, meanwhile, grew 32.2% from EUR 896 million to EUR 1 183 million. This was due to new customer asset inflow and social tax contributions to our 2nd pillar customers’ pension accounts, as well as a positive return from the market growth.
The monthly 2nd pillar social tax contributions grew by 29%, rising from EUR 65.6 million in 9M 2023 to EUR 84.7 million in 9M 2024, driven by an increase in customer numbers and growing salaries. On a run rate monthly basis, INDEXO has broken the EUR 100-million annual inflow mark for 2nd pillar contributions.
At the end of Q3 2024, the 2nd pillar customers of INDEXO had the highest average AUM per customer, amounting to EUR 9,700, along with the highest annual growth rate of 31.4%. By the end of September, INDEXO had reached a 13% market share of AUM of the Latvian 2nd and 3rd pillar pension market, which is the highest level ever.
INDEXO Bank starts operations and quickly grows its customer base
On August 28 the INDEXO Bank started its operations and attracted more than 10 000 customers in its first month. In comparison, for IPAS INDEXO pension business, which at the end of reporting period has over 137 500 clients, it took more than a year to attract its first 10 000 customers.
“The results of the first month of operations of the new bank, as well as the pension business client base with more than 137 thousand clients, a well-recognized and liked brand, and a new, modern IT infrastructure ensures that we are in the right position to challenge the oligopolistic, risk-averse Latvian banking market,” says Valdis Siksnis, Chairman of the Management Board of INDEXO Bank and one of the founders.
It is planned, that the INDEXO Bank will start mortgage lending in the first quarter of 2025 and will start servicing small and medium business enterprises in the fourth quarter of next year. Additionally, INDEXO plans to introduce regular payments and make 2nd pillar pension available in the mobile app in Q4 2024, launch Google/ Apple Pay integration and introduce custody services in Q2 2025.
“Customer activity was especially high during the first weeks of the bank’s operations, and a strong inflow of new clients has continued since then. In October, the number of bank clients increased by 3 625, and the amount of deposits entrusted to the bank reached 17.8 million. As we continue to expand our range of services, we expect a similar pace of client acquisition in the coming months,” continues V. Siksnis.
As the Bank’s operations have just started and the bank has operated only for a month of the reporting period, INDEXO Bank does not generate any significant revenue, while at the same time, the company makes significant IT investments to continue enhancing and developing a wider range of banking services. Therefore, during the reporting period, INDEXO Bank incurred losses amounting to EUR 3.90 million.
Presentation and reports on the financial results for the first nine months of 2024 – unaudited Consolidated, IPAS Indexo and AS INDEXO Bank – are available here.
