CEO’s latest message
February 21, 2024
Tarmo Sild
CEO of Iute Group
Operating in a relatively stable regulatory environment, free from political interference, unaffected by macroeconomic fluctuations and geopolitical tensions, and benefiting only from technological progress seems to remain a dream for the coming years. The key to actual success is adaptation: recognizing reality as it is, and constantly seeking opportunities while remaining true to the Company’s DNA and strategic objectives.
Iute Group’s DNA is ever entrepreneurial and customer-oriented intertwined with a systematic approach and the ability to not only cope with setbacks but learn from mistakes.
On the strategical level, we continued to build loan, payment, and Insurance value streams which combined constitute a fintech bank and money ecosystem for our customers. Our strategic endeavors were successful: Iute Group achieved growth and profit, while the focus remained heavily on modus operandi with quality being more important than quantity in 2023.
In its endeavor for operational excellence, Iute Group pushed forward the deeper integration of data science into its business processes. Various predictive models at the service of customer experience and loan portfolio reduced sales costs and lowered credit risk costs. In contrast, the digitalization and turnaround of Energbank did not meet our expectations, even though the bank is profitable and the organizational challenges of the restructuring have been resolved. We expect the bank to solve the remaining challenges under the management in place since January 2024 with its multi-stage strategy 2026. Clearly more successful is the integration of Iute’s credit and payment solutions into e-commerce. IutePay continues on its path of attracting more customers in the Balkans, while the scope of services and geographical markets coverage are to expanded in 2024.
On the financing side, Iute Group was achieved refinancing of its maturing EUR bond even in an environment with continuously increasing base interest rates and bond yields. In view of a very solidly financed capital base until October 2026, we aim to grow our revenue and net profit on average by at least 20% per year until then.
Looking at the pure figures, Iute Group exceeded its growth targets for 2023. At 376 million EUR, the balance sheet exceeded the forecast of 355 million EUR, as did revenue, which at 106 million EUR exceeded the target threshold of 100 million EUR. It is unfortunate that we fell short of the net profit target of 12 million EUR with 10 million EUR because of the above-mentioned interference beyond our control, in addition to exchange rate fluctuations. In this context, Macedonia unexpectedly imposed a one-off solidarity tax on national TOP100 companies, which burdened Iute Group with 1.4 million in Q4 2023.
Speaking of the aforementioned, considering our DNA, attracting high-performing customers is crucial to the success of the Iute Group. The modest growth achieved in this respect, with 227,000 performing individual customers at the end of 2023, does not live up to our ambitions. Taking customer orientation to heart, we all at Group need to work harder and use the most advanced technologies to understand customer needs and build long-term relationships.
Accordingly, we have set ourselves the following targets for 2024:
- Performing Customer Pool (Loan and Wallet) of over 260,000 individuals,
- Balance sheet total of over 420 Million EUR,
- Revenue of over 120 Million EUR,
- Consolidated net profit of over 15 Million EUR,
- Launch of business activities in at least one additional country, and
- Return on Equity of at least 25% per year.
Iute’s transformation goes hand in hand with the changing environments in which we operate. As progress stems from change, we are convinced that the best of Iute Group lies ahead of us as we transform.
