Eleving Group S.A. (ELEVR.RG) Earnings Call Transcript & Summary

Good day, everyone. Welcome to Eleving Group's 6 Months' 2025 Earnings Call. We will start with the company's presentation, followed by a live Q&A session. We are looking forward to receiving your questions. [Operator Instructions] For your convenience, we are recording this session, and a replay will be available shortly after the call. That being said, I'm turning the call over to our host, Eleving Group CEO, Modestas Sudnius; and CFO, Maris Kreics. The floor is yours.

Thank you very much. Good day, everyone. First of all, welcome, everyone, for joining Eleving Earnings Call for first 6 months of 2025. So my name is Modestas Sudnius, I'm the CEO of Eleving Group. Alongside we also have our CFO Maris Kreics. And today, traditionally, we're going to go through the latest company results and not only that, we'll look into the recent operational developments, business developments as well as look at the share price and basically we'll cover all the latest company news. Before jumping into the presentation, maybe a quick intro of what to expect today. Overall, for our company, first 6 months have been very successful operational -- from an operational perspective, reached many milestones and already see good traction of projects which we launched in the first quarter. We see that very nicely developing in the second quarter. However, also we need to admit that on some KPIs, we're slightly lagging behind. We will also touch upon that. So yes, so now I suggest to start with Slide #4, which is group performance where we'll touch upon 2 main KPIs, net portfolio and net profit. Let's start with the net portfolio development. As you can see from the slide, in the first 6 months of the year, our net loan portfolio has grown from EUR 371 million to EUR 375 million. So just a slight growth, slightly below to what was expected for the year. If we deep dive into the reasons for that, then we need to look at the right hand of status bars where we see how the growth would look if we would look at constant currency rates. And here, we already see that the growth rate is way by. The portfolio stands at EUR 391 million. So with this graph, we want to address how the macroeconomic station in the world with a little bit uncertain U.S. tariff rates have kind of affected our business indirectly because U.S. dollar has lost quite a lot of value actually 13% in first 6 months. So quite unprecedented movement versus euro. And that had some effect to some of our currencies because from here market currencies tend to follow dollar movement. So that's what we see from net loan portfolio development. But that being said, us having rather effective hedging instruments in place that allows us to have -- to absorb it in P&L quite successful and that we can see in the net profit results. If you look at first 6 months of this year, so our net profit before ForEx effect was close to EUR 21 million -- EUR 20.9 million, which is significantly above last year result, which was at EUR 17 million. And also, if we would look post-ForEx fluctuation results, they were better than the last year and stood at EUR 15.2 million. Overall, Here, we're well on track to reach profitability estimations for the year. If we look at before ForEx effect, as our estimations were slightly above EUR 40 million, and we're already halfway there. Also worth to mention another positive news is that we have won the appeal against the Romanian tax authority, which I guess we've -- in last quarter of last year, we've announced that we had to pay EUR 3.4 million gross of the liability. So the appeal was successful and that's very positive -- good positive news for the Romanian market. And it just once again proves that the company is able to find a productive dialogue with local authorities. Now let's move to next slide. Let's take a look at a little bit more into the growth achievements. Let's start with sales. So first of all, a milestone of EUR 100 million per quarter issuances have been reached. In the first 6 months, we have issued EUR 200 million worth of loans which is a big lead compared to the same period last year, almost 20%. Two main reasons for that. So one is that demand for our product is stable and then actually growing, that can be seen in a number of applications received, which exceeded 1 million of applications first time. And the other reason is that we're offering customers more and more data tailored product to -- product needs in our existing markets this way to adjusting to customer needs. And that we can see in the profit segment. Some of you may recall that in the first quarter of this year, we have launched consumer loan products in our existing vehicle finance markets, 3 of markets, which is Latvia, Romanian and Estonia. And already, we see some nice traction. The core focus for now is to offer these products to existing customer database, so to do upsells, customer retention and we already see tangible results. And first -- in second quarter, just in these 3 markets, EUR 7 million gross worth of loans have been issued. So we plan to continue the strategy going forward to further scale this product in these 3 new markets and as well as most likely add additional markets in the nearest quarters. So those would be Lithuania, Armenia. Another exciting development is our smartphone financing product, which we launched just as a first part of second quarter in Uganda. So already in first quarter, we managed to issue more than -- managed to finance more than 7,000 smartphones which is very encouraging result, especially taking into account the project still is in a pilot phase. And here, our focus is mainly our existing motorcycle taxi driver database, which actually allows these motorcycle drivers to improve the unit economics because they can start using ride-hailing gaps to generate revenue as well and as well a very quickly growing dealer network, which we already have more than 500 onboarded. So -- and the first results, what we see from risk factors and similar metrics are also very encouraging. So following that, we also launched in June, similar pilot project in Kenya. So we'll be tracking the results and then we'll be -- we see actually that this could be a very nice additional revenue stream for Kenya and Uganda markets. And just as a reminder, that every phone, which we finance it has a proprietary Eleving app installed and which allows us not only to inform customers about upcoming payments to actually initiate the payments, but also in case of customer nonpayment, this app can block part or even full smartphone functions. So it's really a tech-driven product. And lastly, talking about expansion. So our plans to launch 1 to 2 new markets this year have not changed. We already have good traction. And we believe that already in the third quarter we'll not only announce which market has received the license, but also we'll announce that the new loans started being issued in that market. So we'll keep post everyone on that. So summing up, you see that a lot of new developments have been initiated in first quarter and second quarter and in the remaining 6 months of the year, we should see a sizable contribution to our net loan portfolio revenue and profitability coming from these new products because all of them are on the existing, I would say, existing -- cost base existing infrastructure. With that, let's move to the next slide, Slide #6, our traditional slide. So global footprint. Let's start from the pie chart on the left, where we can see how our portfolio is being split between different products. Here, I would say not many changes, very similar split in place to the previous quarter. So consumer finance non-collateralized products are 1/3 of our overall net loan portfolio and 2/3 are split between secured products, whether it's a traditional vehicle finance or flexible and subscription-based products. When it comes to vehicle finance markets, getting very equal, very well diversified kind of split between the markets with no very significant deviations probably if I would need to mention markets with the biggest growth in second quarter, that would be like, especially including the Primero brand, and just a reminder, Primero brand is being -- it's a joint venture with a local bank. So at the end of second quarter, net loan portfolio stands at close to EUR 48 million. And a very similar portfolio, a very nice growth throughout all this year is in Romania, also at EUR 48 million. On consumer finance side, worth mentioned to markets with the biggest growth in terms of additional new loan portfolio added, this would be Botswana, which actually first time overtook North Macedonia and now it's almost at EUR 22 million of net loan portfolio and Namibia, which is also approaching EUR 15 million. But of course, here, the market which traditionally stands out the most is Albania, which -- where we have close to EUR 40 million of net loan portfolio. So a combination of that, all these markets, you can see that the split -- risk split between the portfolios is quite well diversified across product lines and then in different markets. Now let's turn to the Slide #7, non-financial KPIs. Let's start from the right side, applications received. So first time in 1 quarter, we received more than 0.5 million of applications and then throughout first half of the year, as already mentioned, above 1 million applications. We see still a big growth in applications received for vehicle financial products, so more than 13% growth. And also, we saw a slight decline in applications received on consumer finance product, almost 7%. This is mainly -- it can be explained by our own strategy implemented in Balkan markets where we really put majority of our marketing efforts into customer retention. That means working with our own database and cut down some of the most expensive kind of marketing activities on -- to attract new customers, such as [ TV ] because we do see that the traction and work with our existing portfolio is enough to and of sustained reasonable growth rates. When it comes to conversion rates for both products, nothing new here, quite stable rates. They've been for vehicle finance partly been fluctuating between 8% and 9% lately and similar stations in consumer finance, where we're at around 42%, 43% there. But most importantly, when it comes to unit-wise vehicles financed and then the consumer loans issued still growth has been observed in both product lines. Of course, for vehicle finance it's way more significant. But on the consumer finance side, even though it's kind of almost flat, but the average size of the tickets are growing quarter-over-quarter. So with that, I'd like to finish this part of the presentation and now turning to our CFO, Maris Kreics to walk you through financial highlights.

Thank you, and hello, everyone on the call. It is also my pleasure to be here with you today and present financials. So starting off with Slide 8, financial highlights. Let's get off with the revenue. So for the first 6 months of this year, we managed to achieve EUR 117.5 million in total revenue, which is slightly more than 10% increase if we compare it to the same period in year 2024. And if you look specifically on the revenue generating lines, so our subscription and flexible products, together with the consumer financing products of both, each of them increased by more than 10%, so 17% and 11%, respectively. And the traditional finance product segment has increased its revenue by close to 6%. So there is nice growth in total top line across all the major revenue-generating streams. If you look now at EBITDA and adjusted EBITDA in our specific case, so for the first 6 months of this year, we're looking at EUR 45.3 million, which is close to 4% higher figure than it was achieved for the first 6 months of the year 2024. Here, you'll notice the disconnect. So our EBITDA has grown at a slightly lower rate than our top line. Essentially, this is not unusual, especially in a case where -- like ours, where we are building up operations for new products, new market launches as well as trying to increase the loan portfolio. So this naturally comes with a slightly upfront based expenses, general operating expenses as well as impairment expenses. Again, this is not unusual, and we feel like this is in good control as of this moment. Now if we look at the equity development for the first 6 months of this year, naturally, we see that we have added EUR 14.5 million as a means of total net profit. In addition to that, you'll notice dividend payment. So during the month of June of this year, we made EUR 15 million dividend payment for a full previous year, and that was actually first dividend payout for us being publicly listed entity after IPO. You'll notice also a slight difference between EUR 18.2 million and EUR 15 million that were distributed to our shareholders. The difference essentially is the fact that we need to upstream the dividend payouts from our subsidiaries -- operational subsidiaries after the Luxembourg [ level ]. And once we do that, there's also certain payments made, minority shareholders. Speaking on that, we have also made a strategic capital allocation decision. We have repurchased part of minority shares. So we're doing that, we are actually making sure that there is more future profits left for the majority shareholders mainly, meaning all of the Luxembourg shareholders, including public shareholders. And lastly, the ForEx translation reserve, so this was a negative impact. This is the ForEx impact that is being accounted within the equity directly, and you'll find that in the other comprehensive income. So on the ForEx movement in general, as explained previously by Modestas, we faced basically headwinds in terms of euro-USD currency movements, quite unprecedented. But nevertheless, with that, we can see how our business model and our financial results show that we are able to absorb that. So all-in-all, our equity as of end of June compared to the equity as of the beginning of the year has decreased slightly. But again, it's worth to mention that majority of this equity decrease actually went for the benefit of our shareholders. Nevertheless, our equity to total assets ratio remains to be high. It was 20.1% as of end of June of this year. Simultaneously, our return on equity ratio remains to be above 30%, specifically 31.6% for the first 6 months of this year, which is largely in line with our historical averages. If you compare that to the first 6 months of year 2024, you'll see -- you'll notice a slight decrease. This is normal as for the first 6 months of 2024, that result does not take into account any IPO proceeds. We did an IPO in October of last year. So that's why it's natural that for the [ return on equity ] to decrease immediately post IPO in the short term. And lastly, on the cost-to-income ratio, we're pleased to see that we are at 36.3% for the first 6 months of this year. But here, we need to also, of course, admit that there is a positive tailwind, and that comes in the form of Romanian VAT case, which we successfully won in the appeal. As of this moment, the money is returned into our tax accounts, and we are working together with tax authority to make the final step, which would actually mean the cash will be received in the bank accounts as well. So we are getting there. Now let's move to the next slide, please. So in this slide, we have our interest-bearing liabilities breakdown. Without any surprises, almost 2/3 of our interest-bearing liabilities would be concentrated into our issued Eurobonds. So EUR 150 million bond, which is maturing in year 2026 and EUR 90 million Eurobond, which is maturing in year 2028. We, as a company, we're especially pleased to see where these bonds are trading in the secondary markets. So notably, both bonds have yield to maturity below 10%, so somewhere in between 9.8%, 9.9%. And this is a nice development. And here, actually, it is worth to link it also with the developments on the Mintos platform. So currently, we have more than EUR 50 million attracted funds through Mintos platform, and we are attracting funds in the platform currently at 8.8%. So all taken together, we can take it as a good proxy where the market currently assesses Eleving's cost of credit, so in a range of 8% to 9%. So this positive development, together also with the positive news from our Fitch Ratings agency, where we had recently improved rating from B with a stable outlook to B with a positive outlook and also together with a very stable financial situation, which you can see on the lower part of the slide in terms of our financial covenants. As you can see there, in almost every single covenant, we're almost 2x at a better level than we are -- that we need to maintain at any given moment. So all this taken together, puts us in a quite comfortable position to start assessing a potential EUR 150 million bond refinance that might happen sometime during this year. So as of this moment, we have started preparatory works in terms of legal assignments as well as discussions with our potential partners, banks, brokers, also market player selling. So all this has been commenced basically, and we are -- all-in-all, we're in preparatory phase to assess the refinance opportunity, which might happen sometime during the fourth quarter of this year. More, of course, information will follow in the next few months. In addition to the bonds also and Mintos, it's worth to mention our very successful local fundraising activities. So as of this moment, we have slightly more than EUR 50 million attracted through local sources in our subsidiaries and most importantly, in local currencies. So this is a vital source of financing for us and very important because this helps to mitigate the open foreign currency position for our business. And in addition to that, we also have already a EUR 15 million pipeline for potential deals that we expect to close in the upcoming few weeks, maybe a month. Now let's turn to the next slide, please. So on this slide, we're looking at our portfolio quality. Our portfolio quality remains to be strong. If you look at our net -- our vehicle business segment and the net loan portfolio breakdown there, we can see that NPLs are at 5.5% with a 35 days overdue definition. And on our consumer business segment, our NPLs are at 4.4% with a 90-plus days overdue definition. On the right-hand side of the slide, you can see our gross before provisions and net after provisions, NPLs development over the last 4 years. You can see how starting year 2022, we are no longer showing the NPLs within our Ukrainian portfolio, which we had at the time. Actually, while we are on this topic, it's worth to mention that during this quarter, we have fully sold all the assets and legal entity of our Ukrainian business, and we no longer have any exposure there. Moving on to next slide. So here on this slide, we have a bit more details about our share price and share performance. So our share has been trading relatively stable at or slightly below IPO price. So as of the end of July, share price was at EUR 1.65 per share in the most liquid market, which is Nasdaq Baltics for our share. Our share is also being traded in Frankfurt, that share price is EUR 1.7. But if you come back and if you look at the Nasdaq share price, which is EUR 1.65 per share, I believe as of this moment, it already has improved to EUR 1.68. But that still, of course, is a slight decrease when we compare to IPO price, up to 3%. However, it is very important, and this is what we would like to highlight here is also a year-to-date dividend yield, which is 7.5%. This is something which we managed to pay to our shareholders in the form of dividend, as mentioned before, EUR 15 million paid in the month of June. So all-in-all, our shareholders have made money by investing in our share, and there is still positive total return for our shareholders. And here, an important aspect is that this dividend yield for the year still does not account the future dividend, which we plan to distribute in November also this year. The specific amounts will follow sometime as of end of September, beginning of October. But all that is expected to improve the total return for our shareholders and increase the dividend yield of our share. And lastly, as per analysts covering our share, we can see that they have not changed their target price levels. And as per their assessments, our share remains to be substantially undervalued compared to their calculation of the share fair value. This would be it from my side. I'll turn back to Modestas now.

Thank you, Maris. So last slide of today's presentation, business outlook and then financial KPIs. Maybe before jumping into that, a bit of a summary, what do we see from first 6 months of this year. So as already presented across multiple operational KPIs, it was a very successful first 6 months. And even despite some slightly higher-than-expected ForEx volatility headwinds, still even on profitability level, it was a strong half year for the business, and then we managed to absorb all the bumps. And to top that, all the developments which have been done so far up-to-date, they will be contributing to overall growth of the business and profitability of the business in upcoming 6 months as well. And this is a good transition, I believe, to business outlook. So probably repeating myself when it comes to products and markets, core focus for this year is utilizing our existing customer base, our existing infrastructure and focusing on organic growth, first and foremost, as well as launching new products such as mobile phone financing, smartphone financing in some markets, consumer financing in vehicle financing markets as well as increasing existing customer exposure. So all of that remains the biggest emphasis for the business and then the biggest source of growth. But nonetheless, as already mentioned, we do plan to launch at least to one new market this year. When it comes to capital management, I guess Maris very well mentioned that absolutely top priority is our 2026 bond refinancing and then most likely even raising more money. And we're already in preparatory stage with first -- with goal to refinance the bond well in advance to its maturity. And lastly, if we look at the financial KPIs, so just as a reminder, these are all publicly kind of shared the financial KPIs at the beginning of the year. So if we look at the net portfolio development in midyear, we're at EUR 375 million. So we're still quite a gap to the target of EUR 432 million, reasons we've already discussed, but we do believe and anticipate that this gap until the actual target will become way smaller or even fully covered in the upcoming 6 quarters and similar stations with revenue, which portfolio is the main source of revenue. And currently, we stand at EUR 116 million and our overall target is EUR 263 million. So we might be slightly below that target at the end of the day, but we do see that revenue is growing on a monthly basis and the gap should be reached -- and the gap should be decreased. And -- but what's important that on net profit for ForEx, we're actually doing very well. We're well on track, EUR 21 million at the midyear. So very close to -- basically, we're midway to the EUR 44 million target. So with that, I'm stopping here and now turning back to the operator for Q&A session.

[Operator Instructions] We will start with the questions submitted prior to the call, then prioritize the audio questions, and then continue with those submitted in writing. So first question, is there any update on the refinancing of the 2026 bond or issuance of new bond?

Yes. So thank you for the question. I believe we already at least 2 times mentioned the developments there. So yes, we are assessing the possibility to refinance 2026 bond. And if the transaction will come to the market, it most likely will happen during the -- closer to the end of the year, most likely sometime during the fourth quarter. As of this moment, this is all we can disclose publicly.

Next question, do you plan to introduce any stock buybacks?

Yes. When it comes to public stock, so far, we don't have such plans. We just had not so long time ago an IPO. So basically, it's not in our strategy, but we do selectively buy back some of the minority shareholders on a below Luxembourg level entities, which essentially improves the return of Luxembourg shareholders. So that will stay in place.

Have you prolonged the time when the largest stakeholders can sell their shares?

No. But actually, the largest shareholders already had rather restrictive non-sale clauses, and they cannot sell their shares first 2 years after IPO. So still more than 1 year left. So no changes here.

Are you still paying dividends? And when will the next dividend payment be made?

Thank you for the question. So interesting question. If we -- just 1 month after the previous dividend payout or slightly more than that. So yes, we're paying dividends. So last dividend payout did happen in the month of June. We anticipate to have next one in November. And yes, on the specific amounts, please do wait for the more details that will be announced during end of September, beginning of October.

The next question, do you plan to lend out internal cash? Or is lowering interest rates on bonds the long-term goal? Mix of both and benefits.

So our business basically is lending out cash as much as possible. So ideally, we would not -- we would have 0 cash on the balance sheet. Unfortunately, that's impossible. So the cash that we have currently in the balance sheet in the range of, let's say, EUR 20 million to EUR 30 million, given our total balance sheet of close to EUR 0.5 billion is quite optimal, if not on a lower side, I would say. So this cash level allows us effectively to service our debt, service our liability commitments and ensure the growth of our loan portfolio. And we expect that to remain this way. So all-in-all, the cash you see right now in the balance sheet would be for operational purposes. But of course, we're lending out to the -- our customers as much as possible.

Impairment expense grew significantly above loan portfolio. Is it due to cell phone financing? And can we expect such level onwards?

So the increased impairment in the absolute terms is not related to cell phone financing. Cell phone financing, although in unit terms looks quite impressive in the euro terms, it's still growing and it's still not too material for our total business. So the increase in the impairment expenses is actually in this quarter relates mainly to the -- to our consumer lending business and specifically a few market specifics in the Balkan region, we see that we are able to not sell bad loans at the same level as we would -- we were used to be selling it before in terms of amounts and prices. So we need to tweak our debt collection capabilities and service more debt in-house. And also, we have also different, let's say, temporarily challenges, especially in our African markets, while we are still tweaking our customer service and debt collection strategies in order to service the debt. So this is not the level we would see going forward. This is, I would say, temporarily increase going forward, probably will be something that you saw in the previous quarters. But maybe here, I still wanted to also add that in absolute terms, please do expect that the impairment expense will or might increase in the future because we do focus on growing our net loan portfolio as the net loan portfolio will grow, the impairment expense will follow.

And the last question from pre-submitted ones. So what equity ratio post-dividends and what target dividend payout ratio should we expect at the end of this year?

So we should expect more than 20% of equity to total assets ratio post-dividend payouts. And we will be targeting up to have the profits to be distributed in dividends. Again, more details will follow in the upcoming few months.

So next, we will follow-up with the audio questions. I see that Frank has raised hand. So now you should be able to ask your question.

Absolutely. Thank you for the report. Two questions, and I'm not asking about the refinancing, by the way, for the first time. The #1 question, and I'm not sure I have the hypothesis in the right order. When the FX gets weak, the dollar gets weak, let's stay with the dollar. If the dollar gets weaker to the euro. This time, you argued that you had to absorb some costs on that. I always thought that the weaker dollar is good for the emerging markets where you're active in, like Africa, like Eastern Europe, et cetera, et cetera, and you might get some benefits out of a cheaper dollar. If you can touch on that. And my second question, a very simple one. I saw that you have about 30 client contacts because before you conclude one trade and the car financing, so something like a 3% success rate. Would it not be a point where you might want to have a look at some of your competitors' portfolios, buy them up together with the clients and spare yourself that hustle in finding the clients yourself, particularly if the market is as competitive as it appears because only 1 out of 30 kind of closes with you?

So thanks, Frank, for the question. I'll answer the first one, probably will leave the second to Modestas. So the first question on the ForEx. So actually, if you look at the emerging markets, actual -- countries themselves, they probably do benefit from the cheaper USD. But as economies in whole, and you can actually -- and we also see that as a business that the markets where we operate, there's nothing wrong with the markets themselves. Of course, there is this global trade uncertainty. I think each market, each country is dealing with that separately with the U.S., which is -- which happens to be a major trading partner for almost every country in the globe. So -- but nevertheless, the markets themselves, they are in good shape. If you look at our markets [ in those ] cases, we have not seen such low default or delinquency rates as we have them currently. So they are at the historically lowest level. Economies themselves, they are in really good shape. However, where the painful part, weaker dollar comes in, it comes in through the fact that we need to reevaluate our business back into our reporting currency, which is euro. So all the -- let's say, all the assets, all the net assets that we have in all the countries, which are kind of largely following dollar now being revaluated back to euro are, let's say, of a lesser value. So this is the impact that we see in our financials in the profit and loss and balance sheet essentially.

And in terms of second question then, Frank. So in terms of buying competitors, our competitor portfolios, of course, this is something which would be very logical, especially on vehicle finance side. And we're every now and then looking at potential opportunities in the market. But I guess we've already multiple times discussed that we actually don't have a very strong competitors with a significant portfolio. We have many smaller players. And sometimes it's to do a due diligence on a EUR 5 million, EUR 7 million portfolio, it takes time, and it's not always logical to do it. So that's why we have not been too successful in finding such potential acquisitions or portfolio acquisitions. And as you mentioned, like we have to raise this portfolio ourselves. But nonetheless, we are not disregarding that. And every now and then, we're getting some interesting offers at least to take a look at.

If you allow me one more question, and that is, from your point of view, where you sit and you have these 16 markets and you're planning 1 or 2 more in 2025. Where do you see the best opportunities for this kind of lending -- and is it -- in which regions would that be? Are we more looking into EU, Eastern Europe or countries like Bulgaria, Romania? Are we more looking to Africa? Are we more looking into the consumer finance in some of these markets? What would be your 1 and 2 or 3 best markets you see the best potential in the next 6 to 12 months?

Sure. So first of all, I think overall, consumer lending, I think, is going through rather good times across many markets. It's not only multiple companies are showing strong results. We managed to fight off banks competition in maybe European markets. There's plenty of new population to finance in African markets. So as an industry, I think it's doing well for us. We tend maybe not to [ call out ] the market, but still I'll do it this time. I think definitely, Romania is one market which has been showing good potential. And I think it's a huge market where we're near to what we could be. Portfolio has really potential to grow there. Second, maybe not calling out specific market, but still adding consumer loans to vehicle finance markets. And here, our biggest growth would come from Baltics, which we were -- last 10 years, we've been purely focused only on car financing. And I think we financed the majority of the population, which we could. Of course, they are changing their cars and so on, but we could not expect kind of high growth rate. But once we're adding consumer loans to some of these customers, we see that that's an easy win and definitely, you will see growth coming from there. And on African side, still I would call out Kenya. I think it is a finance center. We've maybe had a bit painful experience there in the past in terms of not having fully hedged portfolios and so on, which is not the case anymore. We're very successful in local fundraising. Actually, most of our portfolio is already locally fundraised. And there, we have multiple products. We have motorcycle financing. We have motorcycle leaseback products. We have car leaseback products, very successful. And we just launched mobile phone financing. So from all these, let's say, 4 product categories, we believe that we'll be able to grow quickly, but at the same time in a controlled way kind of having multiple revenue streams and at the same time, securing financing pretty much locally. So these, I would say, 3 markets, 3 areas probably will see the most growth in upcoming 12 to 18 months.

Happy summer and a very successful Q3, Q4 and so on. Speak soon.

And now let's start with the questions that were submitted in writing during the webinar. So first question, Eurobond now at around [ 202%, ] quite a steep down from 1 to 2 years ago. How that affects company's results now? And what your insights in the future are if Eurobond stays low or even get lower?

So probably the development in Eurobond and also Central Bank interest rates in general does positively affect our P&L. Maybe worth an important aspect to mention is that our debt is actually at fixed rates. We don't have or let's say, we have a very small portion of floating rate debt, so which would have a direct Eurobond impact and that would have a decreasing effect already on the P&L. However, even with the fixed cost of debt, you can see the, let's say, the strength of the credit markets in general. You can see that reflected already in our bond prices where the bonds are trading, the yields for both of the bonds. So generally, decreasing interest rate environment is, of course, positive for our business. And especially, it is a positive tailwind in situations where we are contemplating any debt refinance, as we already mentioned on Eurobond. So this is positive tailwind for us.

The next question, what are the highest risks you see in your business? How much a possible economic slowdown would affect bad loans number? And how much or what percentage of loans issued are some kind of insured, for example, with real estate?

Sure. So talking about risks, very typical risk for any lending company. Of course, customer behavior worsening, some currency deviations. But if we think about our business and the actions what we've done lately, so in terms of customer behavior worsening, as of this moment, we don't see such trends. We don't see that there should be some red flags in any of the markets. Actually, economies are doing well. And I would say that we're in this still a recovery mode because we had very elevated interest rate environment, which is going down, as Maris just mentioned, we also had still some COVID effects, not so long time ago, kind of Russia-Ukraine war had an effect. So all of that, we saw that our customers are able to absorb -- economies are able to absorb and they didn't have some significant effects to our business. So we feel that our business model is quite well prepared for some even one-off turbulent effects. And similar station is this ForEx volatility in recent years, we've really strengthened our hedging capabilities, both raising funds locally as well as buying some hedge instruments. So I believe we're in as good position as we've ever been. And -- in terms of regulatory maybe risks, I do believe that in most of the markets where we operate, these regulatory changes have been done over the last 5 years. And currently, I would call this regulatory environment very stable, and we do not expect some -- unexpected new regulations coming in, which could affect our business in a significant way. So overall, I would say, rather calm period for nonbank lending as of this moment.

The next question, what percentage of the profit are you planning to pay out as dividends this year? Should it be 2 half-year dividend payments?

So as mentioned before, we plan to distribute up to half of the profits and dividends. Going forward, we do plan to do that in 6 months increments, so 2 semi-annual payments. The next one to be done in the month of November. Still, please do remember that June dividend payout was an outlier essentially because we distributed half of the last year's full profit. And going forward, it will be done on a 6 months increments, as I already mentioned before.

The next question, did vehicle finance portfolio dropped by 5% year-on-year due to foreign exchange fluctuations?

Yes, that was the main reason for that. And I think we have in the slide, which shows that if we look at local currencies, the portfolio actually went up.

How did revenue increase slightly faster than loan portfolio when average loan yields slightly decreased?

Yes. So I believe here, there is a bit of a disconnect between the data to be compared because revenue, we look at the revenue growth for the first 6 months of this year versus first 6 months of year 2024. So -- and if we -- but on the portfolio side, we're comparing the balance sheet figure portfolio end of June to the beginning of the year. So if we would compare that to the end of June year 2024 and just check the data, so our loan portfolio also grew by 10%. So if we compare like-for-like, there we don't see any disconnect in the revenue growth versus net loan portfolio growth.

Why did the company decrease equity total assets ratio? It affects negatively on return on equity in case when net interest margin minus cost of risk is larger than cost of debt?

So decrease in the equity to total assets ratio was on already pre-communicated, pre-planned dividend distribution level. So this was the main contributing factor. You saw that in the previous slide when we had the equity [ movement ] bridge. So more than [ EUR 19 ] million are in relation to the dividend payout. So that is our -- that has been our commitment to the shareholders, which we have honored and that's why we have publicly available dividend payout policy, which we are following.

The next question, how much costs approximately could be added during possible issuance of Eurobonds this year? How much such issuance would cost as a financial service?

Yes. So first of all, I would probably answer this question by saying that this is most likely a commercial secret. So there are cost of debt that we are issuing. So I assume here we're talking about fees to the partners, not the actual coupon rate, which will be known only slightly before the deal will be announced. But in terms of the fees that we will be paying to our partners, yes, that is something that we will not be able to disclose. But think about that, that this will be part of effective interest expenses. So you won't see that as a one-off hit in our P&L with the exception of maybe previously deferred expenses from the previous issuance, which we will need to write off on an accelerated basis. But as it relates to the new bond issuance, yes, so this will be part of total cost of borrowing for us.

And now the last question we have received so far. So recently, the Latvian company, INDEXO, announced that they are planning to buy DelfinGroup shares. What impacts are you expecting on Eleving Group if the deal takes place?

Yes. To be honest, probably no impact because neither we are competing with INDEXO, neither we are competing with DelfinGroup. We are present in Latvia, but still our customer base is slightly different. And still as of this moment, the biggest focus is on vehicle financing business. And I believe none of our companies is competing there as -- but we're -- again, we're a listed company in the same exchange as they are. So hopefully, this is positive news to the market and then will attract even more investors. But from a business perspective, it will not have any effect to our business.

Thank you. So now all questions are answered. Thank you for your active engagement and being with us today.

Okay. Thank you very much, everyone. Thanks for finding the time to join the call, and thank you for your insightful questions. Have a nice day and a nice upcoming week. Goodbye.

Sorry, we just received the last question. So what are your long-term target return on equity levels? What should we wait in terms of 12 months?

Yes. So our long-term ROE level would be 30-plus percent. So something that you saw already in the slides and the actuals. We do expect that also going forward.

And one more question. So will U.S. tariffs impact your company or its subsidiary?

So that's a good question. I think it will impact us to the same extent as it impact -- will impact every other country/company/person across the globe. So I think we're not in no shape or form immune to the global trade discussions, and we will roll with the punches, so to say. So I think our business is here. It has proven to be resilient through different challenging times, be it COVID, be it active war situation. So all that, our business has survived. So yes, anything to add?

No, I don't want to speculate on that.

So now all questions are answered. Thank you for joining.

Thank you once again. Goodbye, everyone.