According to the Unaudited Consolidated Interim Report for the first six months of 2024, IPAS Indexo (hereinafter – INDEXO) posted a normalised1 profit of EUR 536 thousand for its pension business and a consolidated loss of EUR 1.96 million due to investments in the development of AS INDEXO Banka, a subsidiary of INDEXO. At the end of the first half of 2024, the company reached 134.7 thousand clients, marking a 19% increase year-on-year and assets under management grew to EUR 1.15 billion, representing a 53% increase compared to the previous year.
“The first half of 2024 is perhaps the most significant and successful period of INDEXO operations so far as the pension management arm of INDEXO continued to grow faster than the market and performed with considerable profitability, while the new INDEXO Banka received its licence and is nearing the beginning of its operations later this month. Thus, the INDEXO overall growth is on a strong footing as we expect further expansion in pension business and an imminent entry into the Latvian banking sector. The consolidated financial results show a loss, but it is due to major investments in building a completely new bank,” says Henrik Karmo, Chairman of the Management Board of IPAS INDEXO and one of the founders.
INDEXO pension business continues solid growth and posts record profit
During the first half of the year, INDEXO pension customer number increased by 7 567, or 6% compared to the beginning of the year, reaching 134 747, making the company as the fastest-growing 2nd pillar fund manager in Latvia in absolute terms. In this same period the assets under management have grown by EUR 233 million, or 25%, reaching EUR 1 150 million.
INDEXO pension management business continues to grow faster than the market and has reached 14.1% market share in 2nd pillar pension products at the end of the second quarter. A year ago, the market share in 2nd pillar was 11.6%.
Due to the growth of assets under management, the revenue of INDEXO has increased by 45% over the last 12 months to EUR 2.02 million. As the company revenue grows, the pension business profitability continued to improve. The pension management business generated normalized profit of EUR 1.55 million before client acquisition and EUR 536.6 thousand after client acquisition but excluding bank related costs. The net result of pension business during reporting period was EUR 154.6 thousand, which is the highest half-a-year pension business profit in the history of INDEXO operations.
The largest of INDEXO investment plans – Jauda (constituting approximately 73% of INDEXO assets under management), has performed well in the long term, beating both the competition and, most importantly, significantly outperforming inflation over a 5-year period leading to real wealth growth.
Voluntary 3rd pillar plans represent a small but important part of the overall INDEXO pension business. The assets under management in the 3rd pillar pensions continue growing fast. At the end of June 2024, the 3rd pillar assets comprised 2.6% of the total assets managed by INDEXO. During the preceding 12 months, 3rd pillar customer number increased by 3.7 thousand or 33%, and the assets under management grew from 15.1 million to 29.0 million or 92%.
INDEXO Banka results show a loss due to significant IT investments before commencement of operations on August 28
On May 15th, 2024, INDEXO Banka received its bank licence, which was the first bank to receive a bank licence in Latvia after joining the Eurozone. The new bank will start its operations on August 28.
“INDEXO Banka has been at a high level of readiness for a long time, and we have already practically tested all the main services – issued cards, made payments, and every day we test the mobile banking application in a real work environment, which will be the main tool of the bank. We will start with convenient and innovative services for individuals, but over time, the range of available products will gradually expand, and 6-9 months after the start of the bank’s operations, it is planned to start servicing small and medium-sized enterprises and legal entities. Our goal is to create a serious competitor in the banking market in all essential financial services, especially in lending, which is particularly important at a time when the Latvian economy has not been growing for some time,” says Valdis Siksnis, Chairman of the Management Board of INDEXO Banka and one of the founders.
As the Bank’s operations have not yet started, INDEXO Banka does not generate any significant revenue, while at the same time the company makes significant IT investments to continue enhancing and developing wider range of banking services. Therefore, during the reporting period, INDEXO Banka incurred losses amounting to EUR 2.11 million. As of June 30, 2024, INDEXO Banka complies with all regulatory requirements regarding liquidity and capital adequacy.
INDEXO Banka is a subsidiary of INDEXO, and the loss generated from the bank development contributed to the consolidated result of INDEXO and thus, at the end of the first half of 2024 the consolidated result of INDEXO was a loss of EUR 1.96 million.
