INDEXO — Investor Presentation 2023

Nov 14, 2023

INDEXO One step from launching banking services

November 2023

Disclaimer

This Presentation should be regarded as an advertised for the sole purpose of assisting the recipient in deciding whether to proceed with further analysis of this potential opportunity. This Presentation in parposes only and shall not be construed as an offer or subscription or purchase or sale of any securities, or as an invitation for the sale, subscription or purchase of securities, or form the basis of any decision to finance the transaction described herein, or for engaging in any other transaction does not constitute independent investment advice.

The information set out in this Presentation may be subject to updation, revision and anch information may change materially. No representation or waranty, express or implied, is or will be may other person as to the accuracy, completeness of the information or opinions contained in this Presentation and any reliance the recipient places on them will be at its own sole risk.

Without prejudice to the foregoing, neither INDEX on its associates accept any loss howsoever arising, directly r rindirechy, from use of this Presentation or its contents or otherwise arising in connection therewith.

There is no representation, waranty or other source in the presentation will be realized. The respient should conduct is own investigation in analysis of the business, data and property described in this Presentation this Presentation that reless to a particular company or entity or its related parties, estimated or anticipated future activities are forward-looking statements which relieved carrent and plans. Forwardlooking statements are ubject to a number of its in could cause actual results to differ materially and could adversely affect the outcome and financial effects of the plans and events described herein. As a result, the recipient is cautioned not to place unduction statements.

This Presentation content may not be forther or reproduced, in whole or in part, oy any medium or in any form for any purpose, without the express written consent of NDEX. In furnishing this Presentation of provide the recipient with access to any additional information or to update this Presentation or to correct any inaccuracy the apparent. Any recipient of this Presentation is recommended to seek its own financial advice.

Content

く	INDEXO Sto
12	We are goir
28	Detailed fin
31	Fundraising
33	Risks

ory

ng to disrupt banking market

ancial projections

g timeline

INDEXO Story

Launched in 2017 as a challenger brand and the first passive pension manager in Latvia. By now, the 3rd largest 2nd Pillar manager in Latvia

In April 2021 launched the first 3rd Pillar robo-advisory product with automated investment decisions in index funds

INDEXO

In July 2022 held a successful IPO by raising 7.49 million EUR for Bank business development

INDEXO

Fastest growing pension fund manager in the Baltics, with brand emphasis on transparency, low cost and being local

AUM 840+ M EUR*

Up 350 M since IPO

Over 124 000 clients*

*as of November 13th, 2023

Up 42 000 since IPO

INDEXO 2nº Pillar pension equity plans are among the best performing plans in the Latvian market proving the thesis that passive low-cost funds beat active management

Total asset management growth since inception has been excellent despite market turmoil

Data source: annual reports, manapensija.lv data, internal data

INDEXO

Total AUM In millions EUR

Total Clients thousands

Total Market shares

Our business growth in 2nd pillar is 2nd Pillar pension waterfall chart Q3 2022 – Q3 2023 Millions EUR, based on management estimates largely attributed to growing monthly 160 contributions of existing clients and new 40) 84 533 customers joining INDEXO. Annual runrate contributions already over 100M. Even without new client acquisition, our Q3 2022 Inflows from Monthly Churn business would be growing from new clients contributions of existing clients existing clients.

INDEX

Competito

The absolute leader Competitor

in 2nd Pillar client acquisition -3,957 -

-7,671 |

-7,716

INDEXO:

Data source: manapensija.lv

Change in the number of 2nd Pillar clients (Oct. 1st 2022 – Sep 30th 2023)

9		23,919
r l	5,697
r 2	2,771
	1,982 Competitor 3
	Competitor 4
	Competitor 5
	Competitor 6

Gaining market share in fast growing market

Data source: manapensija.lv, internal data

Market growth driven by:

• monthly gross salary
• •
• · Long term positive market returns

INDEXO will continue to increase market share

Excellent, unique client acquisition model

We use retail, telephone and online channels

Exploring new potential sales channels

Constantly monitoring customer acquisition cost and lifetime customer value

Delivering growing customer numbers and revenue

Pension business alone creates significant shareholder value

Year	2023F	2024F	2025F	2026F	2027
Net commission income [2PP]	3,051,279	3,903,992	4,517,799	5,052,890	5,382,19
Net commission income 3PP	76,402	128,272	203,841	312,838	459,00
Net commission income	3,127,681	4,032,263	4,721,640	5,365,728	5,841,19
Administrative expenses*	(862,932)	(847,473)	(932,421)	(972,626)	(1,014,443
Marketing expenses	(1,794,495)	(1,820,400)	(1,457,110)	(1,545,208)	(1,635,574
Non-cash expenses	(247,012)	(189,539)	(137,968)	(137,968)	(137,968
Operating income before marketing and client acquisition	2,264,749	3,184,790	3,789,219	4,393,102	4,826,75
Operating income	470,254	1,364,390	2,332,108	2,847,894	3,191,18
Earnings before tax	223,242	1,174,851	2,194,140	2,709,926	3,053,21
Corporate tax	0	0	0	0
Net profit	223,242	1,174,851	2,194,140	2,709,926	3,053,21

INDEXO continues to invest in client acquisition - Operating results before marketing and client acquisition are more indicative of run-rate profitability

*Management information system

We are going to disrupt banking market

INDEXO

Low and decreasing loans to GDP

Latvia has the 2nd lowest Loans to GDP ratio in Euro area

Source: ECB (Q2 2023) Notes:

INDEXO

Latvia's Loans to GDP ratio is at an all-time low

Source: Notes:

Latvia has one of the highest mortgage loan margins in Europe

ECB (July 2023) Source: Notes: Interest rates calculated as 3-month average

INDEXO

Latvian banks charge some of the highest interest rates in the Eurozone

l he Baltic states were among the few euro area countries where mortgage rates did not decline during the 2010s

Latvian household market is underserved

Household debt-to-income ratio

Source:

The gap between the Latvian and the Eurozone household debt to income ratios has been growing since 2010, creating excess debt capacity in the market

Oligopolistic situation with high profits and limited competition

Source:

Source:

Outstanding mortgage portfolio to households and non-financial corporations, %

Lack of competition is a hot topic

Latvijas Bankas prezidents Mārtiņš Kazāks. (Foto: LETA)

Kazāks: Latvijas Banku neapmierina lielo komercbanku īstenotā politika

Bankas Latvijā – nedraudzīgas. Intervija ar LU profesori Innu Šteinbuku

Mārtiņš Kazāks: Ja komercbankas neaktivizē kreditēšanu, tad jāmeklē jauns tirgus spēlētājs ārpusē

Par komercbanku nevēlēšanos uzņemties risku izsniegt Latvijas iedzīvotājiem un uzņēmējiem pieejamus kredītus, iespējamajiem risinājumiem konkurences audzēšanai banku sektorā, ārkārtas nodokli bankām, ģeopolitisko risku ietekmi, kā arī valsts nevēlēšanos un nespēju tieši ietekmēt banku darbību vai iesaistīties banku tirgū "Neatkarīgās" saruna ar Latvijas Bankas (LB) prezidentu Mārtiņu Kazāku.

Latvijas Banka: Kreditēšana pēc finanšu krīzes sarukusi trīskārt

kreditēšanu un procentu likmēm

Rīgā +9 °C, Z vējš, 3m/s gERNOJIsT

Mārtiņš Bitāns: Procentu likmes Latvijā – cik ilgi turpināsim mocīties? (10)

Mārtinš Bitāns tvijas Bankas ekonomis

a Delfi

VERSIJAS

Līdz ar to – ja galvenais cēlonis pārāk augstajām kredītu procentu likmēm Latvijā ir pārāk zemā konkurence, tad situāciju pēc būtības var atrisināt tikai jauna, nopietna spēlētāja parādīšanās tirgū, kas ļautu esošajiem tirgus dalībniekiem sajust reālu konkurenci. Kamēr tas nenotiks, turpināsim mocīties. Latvijas kredītņēmēji – ar vienām no augstākajām likmēm eiro zonā, Latvijas noguldītāji – ar zemāko atlīdzību par uzkrājumiem bankās.

Latvijā nav tik labvēlīga kā citviet reģionā

Perfect time to enter the market

profits in 2023 ripe for disruption

Huge underserved lending market opportunity, estimated to be 5+ bn

Latvia lacks successful local banks like Coop, LHV who have been building market share quickly in Estonia

The end of low interest rate era

Addressable oligopolistic market of 700+ million banking

INDEXO well positioned to disrupt the market

Large, fast growing igh-quality customer base

Well recognized and positively perceived brand

INDEXO has more than 120 thousand highquality customer base and with 45 % higher AUM per client compared to the market average. Current sales channels generating 2-3 thousands new pension customers per month will be used to also sell bank products

According to market survey approximately 150-200 thousand people in Latvia are already open to start using INDEXO services

Building best-in-class IT infrastructure

We are building cloud native IT infrastructure, that enables agile product development Competition mobile offering is weak, we can make a difference Indexo does not need to "struggle" with legacy systems

Bank is technically ready in 2023

Banking IT infrastructure

Mobile Application:

1000+ loS and Android screen designs Digital onboarding and self service Integrated with CRM, Core banking, Payments Cards and AML systems

Base retail products:

Current accounts Payments and Cards Vaults and Deposits Consumer Lending 3rd Pillar Pension

Supporting and regulatory processes

Composable, cloud native banking IT infrastructure

• Production readiness of core system deployment and integrations
• Digital first approach and cloud native technology deployment
• Security and business continuity considerations
• Composable platform for future product development

INDEXO app will raise the standards for mobile banking in Latvia

Mobile first full-service bank with local support

Bonuses D 盟 | Reinis Vītols Bonuses A 盟 | Reinis Vītols Accounts Pillar 3 Savings Products Accounts Pillar 3 Savings Products Primary account Primary account LV80BANK0000435195001 LV80BANK0000435195001 € 1434.34 € 1434.34 Top up Top up · 1 Card Send/request · 1 Card ( Transfer 0 Available credit 2534.56 / 4000.00 EUR Transactions See all transactions Transactions C ರ Search for transaction +10.00 € Elizabete Baumane 23, September, 12:34 Export transactions -34.00 € Rimi 23, September, 12:34 - 4 + @ Display transactions లో Payments All Account top up +50.00 €

Some of the functions may not be available immediately at launch date

		INDEXO Competitor 1 Competitor 2 Competitor 3 Competitor 4 EXPLANATION
Design personalization	>		>		The dark and light user interface, along with additional image personalization, that matches to users' preferences.
Functionality personalization	>				Experienced and more demanding users who desire more from banking services can tailor their banking experience to their preferences.
Budgeting and expenditure planning		>			Budgeting is expected from users but it is also complex from the system's side. Currently, there is only one service that offers it, but it requires a lot of effort to make it work, and even then, it's not precise enough.
Management of pension funds	>				INDEXO offers mobile-adapted full pension fund management, while other banks provide it through their web version
Junior accounts	>			>	INDEXO will offer junior accounts that can be opened and set up directly from the app. It also includes the ability for parents to assign tasks to their children.
Immediate card usage	>		>		Bank card transactions immediately after downloading the app; instant card usage and Apple Wallet and Google pay usage
Native (system) design	>	>	>		Native (system) design works better than customized because users are already familiar with how to interact with the user interface.
Quick functions	>			>	Quick actions allow users to perform everyday tasks faster with fewer clicks.
ayment request from any bank	>	> >			Hassle-free way to receive money from anyone using safe web links.
Send money without knowing IBAN	>				All banks have a money transfer function, but to achieve the desired result, the user needs to know the IBAN. In the case of INDEXO, we have a streamlined solution.
Full financing within the application	>				Mortgage, consumer loan and other application and management options directly within the app. Other banks need to open the WEB to do it.
International payments within the app	>			>	To make international payments over 10k, you need to switch to the web environment. It cannot be done within the applications.

Simple for everyday user, customizable for power users

INDEXO

Survey results from 10,000 users, comparing various applications, were taken into account during the design of the mobile application's functionality.

ln 2-3 years INDEXO Bank will be bank for everybody with all significant banking services, but will start with mobile banking services for private individuals

	Q1 2023	Q2 2023	Q3 2023	Q4 2023	Q1 2024	Q2 2024	Q3 2024	Q1 2027
Bank licensing
Preparation of IT infrastructure
Recruitment and training of personnel
Beginning of retail banking
Launch of custody services
Launch of SME banking segment

The timetable indicated here is provisional and subject to change.

INDEXO cards are ready for customers

Card design and systems ready

VISA certification completed

INDEXO card design

Most of the excellent Bank management team is already in place

Valdis Siksnis CFO

Tina Kukka CFO

27 years of management experience

22 years of management experience

leva Bauma CMO

2 year of management experience

Līga Katrīna Kļaviņa CCO

5 years of management experience

Gints Ozoliņš CIO

13 years of management experience

Evija Sloka CRO

22 years of management experience

Vladimirs Bolbats Head of Retail Banking

7 years of management experience

25

One step from acquiring the banking license

Based on the communication we have had with the Bank of Latvia, INDEXO considers that the receipt of the credit institution license is subject to the raise of additional capital of 12.5 million euros.

NDEXO team believes that this is the last essential prerequisite for obtaining the license.

This exceeds the IPO plan of raising 11 (6+5) million euros during the first 24 months of operations. However, the increased amount of capital raised now would make us independent of further capital raising.

Note: Bank (credit institution) license is subject to authorization granted by the European Central bank.

Current capital raising plan

Capital raising plan at the time of the IPO

Even small market share will generate significant profit

Forecasted Net profit development

• -

Main differences versus IPO assumptions:

· ECB requirement of 12.5 million is higher than IPO forecast of 11 million and more dilutive as contributed up front. Higher capital at launch helps to catch up with planned lending volumes:

· Longer licensing process and higher IT expenses than initially planned;

· While lending and deposit volumes are expected to remain similar, the projected profitability of the INDEXO group in 2027 has improved due to the favourable interest rate environment.

Detailed financial projections

INDEXO

28

Forecasted Group Financials

Consolidated

	2024	2025	2026
Assets	107,387,054	273,430,356	440,965,325	650,
Intangible assets	3,487,101	5,050,920	5,953,962	6,
Fixed assets	147,500	146,500	92,000
Investments in subsidiaries	108,400	108,400	108,400
Deffered income	1,593,264	1,781,714	1,964,344	2,
Loans	44,959,313	98,475,913	190,158,446	361,
Other debtors	344,132	344,132	344,132
Cash at central bank	56,603,113	167,522,777	242,344,040	2/9,
Liabilities	92,449,730	254,684,083	411,053,966	602,0
Deposits	92,007,247	254,241,600	410,611,483	601,
Taxes	17,603	17,603	17,603
Other creditors	129,946	129,946	129,946
Accrued liabilities	294,934	294,934	294,934
Equity	14,937,324	18,746,273	29,911,359	48.
Share capital	21,001,496	22,262,665	24,673,833	27,
Retained earnings	(6,064,172)	(3,516,392)	5,237,526	21.

Loans and deposits development

Forecasted Group Financials

Consolidated
	2024	2025	2026	2027
Interest income	3,748,535	11,200,382	20,726,404	31,634,287
Interest expense	(525,793)	(2,340,468)	(3,156,180)	(3,714,585)
Net interest income / (expense)	3,222,742	8,859,914	17,570,224	27,919,702
Commission income	5,366,116	8,609,958	11,586,078	14,434,805
Commission expense	(527,325)	(1,331,275)	(1,968,310)	(2,507,222)
Net commission income / (expense)	4,838,791	7,278,683	9,617,768	11,927,583
Administrative expenses	(3,839,334)	(5,448,878)	(7,094,240)	(9,535,647)
Marketing expenses	(2,530,400)	(2,538,110)	(2,904,308)	(3,225,085)
lT expenses	(2,301,901)	(2,532,091)	(2,785,300)	(3,342,360)
Other expenses	(14,576)	(54,872)	(105,609)	(161,375)
Depreciation	(791,835)	(1,297,310)	(1,831,356)	(2,356,902)
Loss provisions	(750,965)	(519,556)	(1,363,261)	(2,482,925)
Earnings before tax	(2,167,478)	3,747,780	11,103,917	18,742,990

Earnings before tax		(2,16/,4/8)	18,742,990
Corporate tax
Net profit	(2,167,478)	3,747,780

INDEXO

Comments

• 1. All the profit generated by pension fund management and bank will be invested in bank's capital to support its growth in the upcoming years.
• 2.Admin costs are expected to grow substantially slower than revenues creating lasting operating leverage and efficiency driven profitability.
• 3.EURIBOR is expected to slightly decrease over the next years making assumptions that on the 2027 it will be around 3%.

Fundraising timeline

INDEXO

The indicative timeline of fundraising

Detailed information on the issue will be available after approval of the Bank of Latvia and publication of the issue prospectus. Please refer to the prospectus (when available) before making any final investment decisions.

Risks

1 INDEXO

Investment in INDEXO comes with pension risk

Business risks

Price competition

Regulatory caps on fees and competitor action could continue driving down fees, thus decreasing profitability.

Customer retention

Customer retention could decrease due to better sales and more attractive products of other market participants.

The INDEXO business case is very robust even in the face of much lower customer retention rate.

Political uncertainty

The geopolitical situation is challenging and uncertain for the Latvian economy due to the war in Ukraine.

Legislation risks

Changing contribution rate

Current 6% gross salary contribution into pension 2nd pillar system could be decreased due to an economic downturn. For example, during 2008 crisis it was cut to 2%, but reversed back up in 2013. Due to strong client acquisition record, INDEXO business case is very robust even in the case of contribution cuts.

Investment in INDEXO comes with banking risk

Entry in new market

INDEXO has created a brand with a strong reputation and an existing customer base that trust the brand and team behind it. The brand will help to enter the market, gain trust and show the public that they have already once challenged the market and is ready to do it again.

INDEXO has established strong client acquisition process that also will be used for acquiring new clients for the bank.

Banking license

INDEXO team regularly consults with the FSA and discusses the business plan and at this stage management understanding is that there are no conceptual objections thus the risk of not obtaining a banking license is small.

Additional capital requirement to support growth

INDEXO will follow conservative capital requirement ratios but in case of need, INDEXO IPAS will support needed capital requirement.

IT infrastructure

INDEXO Bank will be developed as a highly digital bank, largely relying on its IT infrastructure and its security. Appropriate solutions must be implemented to guarantee smooth operation and safety. INDEXO plans to outsource reliable IT solution providers and hire experienced professionals in-house.

Bank associated risks

The banking business is associated with many risks that must be managed daily - credit risk, market risk, liquidity risk, compliance risk, operational risk, AML and others. Appropriate processes for risk management will be designed in accordance with best practices and local regulations.

INDEXO will perform regular risk assessment.

Why to invest in INDEXO shares?

INDEXO is a company with good growth potential

It is very easy everybody will be able to become a shareholder

INDEXO

For a better financial environment in Latvia!

indexo.lv/investors

Appendix 1

Bank's financial projections in the scenario when neither external funding is available nor IPAS INDEXO is able to support the bank in its first years of operation

Even without any capital injections INDEXO bank will be able to generate positive returns

Forecasted Net profit development

Forecasted AUM development

■AUM, million