European Personal Finance Firm Iute Group Reports Latest Operational Results

Iute Group reports that its performing loans portfolio and revenue continued to grow in the 9 months of 2023.

The company has further shared the following financial and operational updates:

Number of active customers declined “to 282 thousand (31 Dec. 2022: 293 thousand) but the revenue per customer (LTM) increased to €377 compared to €346 in the previous period.”

Total number of customers increased “by 8.8% to 1 million (31 Dec. 2022: 928 thousand).
Group consolidated balance sheet up 12.8% to €363.7 million and equity up 24.5% to €69.9 million as of 30 Sep. 2023.”

Increasing use of MyIute app – 727 thousand downloads “as of 30 Sep. 2023 (31 Dec. 2022: 477 thousand).”

Launch of e-money institution IutePay in Albania “as a major milestone in the evolution of Wallet business.”

Other key highlights are as follows:

  • Loan payouts increased by 10.6% to €213.1 million (9M/2022: €192.7 million).
  • Number of loans signed down to 250 thousand (9M/2022: 264 thousand).
  • Gross loan portfolio up 12.6% to €242.7 million (31 Dec. 2022: €215.5 million), of which the principal amount of loans increased by 12.6% to €223.0 million (31 Dec. 2022: €198.1 million).
  • Repayment discipline (Customer Performance Index, CPI30) down to 87.3% (9M/2022: 90.5%).
  • Net loan portfolio up 14.1% to €221.2 million (31 Dec. 2022: €193.9 million).
  • 72 cardless ATMs operational (31 Dec. 2022: 71 ATMs).

Notable financial highlights include:

  • Interest and commission fee income up 21.4% to €68.8 million (9M/2022: €56.7 million) driven by Iute Non-Bank loan portfolio. Interest income from Energbank portfolio remained at the prior-year level considering consolidation as of Feb. 2022.
  • Net interest and commission fee income up 14.0% to €48.1 million (9M/2022: €42.2 million) driven by Iute Non-Bank loan portfolio.
  • Total revenue up 22.1% to €78.9 million (9M/2022: €64.6 million).
  • Net profit at €9.3 million compared to €7.4 million adjusted for one-off gains related to the acquisition of Energbank in the prior-year period.
  • Strong capitalization and profitability – Eurobond covenants exceeded.

As noted in the update:

“Iute Group had another successful quarter thanks to its customers and the Iute teams in the Balkans and Estonia. As management, we are very proud of the strong results achieved, given the current developments and trends on the capital markets, monetary policies, and overall macroeconomic and geopolitical situation.”

On the one hand, they saw a decline in “the absolute number of performing customers with whom they maintain active and profitable business relationships for the first time.”

Historically, the performing customer pool (PCP) has “always grown, but not this year, in which the PCP shrank by 11 thousand people or 3.7%. Moreover, there has been a decline in customers’ repayment discipline. Accordingly, the CPI30 fell from 90.5% to 87.3%.”

This means that during “the period €873 thousand out of every repayable million EUR were repaid on time or with a maximum delay of 30 days, whereas a year ago the number was €905 thousand out of every million. To cut a long story short: At the end of the nine-month period, they have fewer customers who are even worse at repaying their loans.”

In this context, the number of loan applications also “decreased slightly by 2% in Q3. More importantly, however, we tightened the loan approval criteria. As a result, the approval rate in Q3 fell to about 60%, compared to over 66% in the past.”

Ultimately, a decline in “the performing customer pool in conjunction with an increase in late repayments was intensified by slightly lower loan demand and a significantly lower approval rate.”

On the positive note, the performing loans portfolio and revenue “continued to grow, as we had planned – with fewer but better customers.”

The firm claims that it “is clearly paying off that we take larger exposure per performing customer: Revenues continued to increase.”

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