Hoist Finance Stock

Welcome to Hoist Finance Capital Markets Day 2026. I am Bjorn Olsson. I'm a research analyst with -- at SEB covering Hoist, and I will be moderating today's event. For those of you participating online, each session will be ended with a Q&A session. [Operator Instructions]

Let me then start today by introducing CEO, Harry Vranjes.

Thank you very much, Bjorn, and thank you, everyone, for joining us, both here physically in the room. And of course, I heard that there's significantly more online. So to all of you, a massive welcome as well. I'm Harry Vranjes. I've been CEO of Hoist Finance now for about a little bit more than 3.5 years. Originally a computer science student, but stumbled into this industry in 2001 on an IT assignment. And I haven't left since. I've had various roles in IT operations, country management in these 25 years in the industry, pretty much all over Europe.

And it is an incredibly interesting industry. There is so much happening here at all times, right? There have been -- we had the global financial crisis and everything that happened in the south of Europe after that and so on, which has always created sort of a new activities in the industry. So we have a lot of a wide range of Hoist Finance experience here in the room from people who are new to the company. And then, of course, from, I think, the oldest employee -- or not oldest, one of our younger, but the most senior employees is Fabien Klecha with 15 years in the company. So he will know a little bit more details.

We will try to balance this message. Now as you saw in the press release last evening, we have updated our external financial targets, and we also published our new volume ambition. We will take you through them in a few minutes. But let's start with an introduction and also let's see what we are going to be talking about today. So we'll start with me here, an introduction to the company. Talk a little bit about what we set out to do. Some of you maybe were here for the 2024 Capital Markets Day, what has happened since then.

And then we will go straight into the financial targets. Then Fabien will take us through our investment strategy, what the market looks like out there and why we believe we are the ones who will win this game. After that, Magnus had so many topics, we couldn't really find a good headline for the section. So -- but it is around how we handle -- how we manage the portfolio, how we manage our funding and capital and how we manage our costs and how we extract the operational leverage in a little bit more detail than I will be talking about.

Then we will have our country managers for the 6 ones in the executive management team going through their countries with some tough questions, and let's see how they answer. And then we end up with a wrap-up. So again, welcome.

So Hoist Finance. We are a specialized debt restructure. It's basically an asset manager of nonperforming loans. We have been doing this for 30-plus years now. We operate in 15 markets. We're about 1,200 employees now used to be 1,000. And with the acquisition of Azzurro that closed just at the last days of Q2, we became 1,200. Now the return on equity numbers, the profit numbers, et cetera, come from an exceptionally strong start of 2026. So we've had a really good start of this year also on the deployment side, of course, with, let's say, 6.1 deployed -- no, actually 5.5 deployed organically and then 2.6 with -- including Azzurro. We've received our second credit rating hike since the last Capital Markets Day. So we are now Baa1 or BBB+, if you go by the Standard & poor's terms. So what is it we do then? This slide was actually in the deck from 2024. It was way in the back. It was called -- I think the title was Active Risk Management. And actually, it's the perfect title for this slide because that is what we actually do every day. So we buy performing loans from leading banks around Europe or some nonperforming loans from leading banks around Europe. What we have in our book right now in our total portfolio has had an original loan value of about EUR 60 billion.

We have paid EUR 6 billion for that, right? So we have bought them at a 90% discount. Basically, so EUR 0.10 on the dollar is what we pay or EUR 0.10 on the euro, most likely is what we pay for these debts. With that, the credit risk per individual loan is basically taken care of, right? This is bought in competitive auctions typically where the market value is set by the professionals in the market. To then reach our financial targets, the previous ones as well as the new ones, we then need to, let's call it, double that, right? We need to collect almost twice that amount.

That will then amortize the portfolio, generate revenue, and we will reach our targets. And we have been doing so for the last 30 years. And we've been doing it through the Lehman crash, through COVID, through Silicon Valley Bank and Credit Suisse through Trump, Independence Day, liberation Day or unclear, et cetera, right, and even Iran. Collections are very, very stable. So we have dug through our data lake many times to try to find correlations of sort of macro events, et cetera, and what links to payment behavior of our borrowers.

And there is very little sort of direct correlation to anything. We can see a weak correlation to unemployment, which would kind of make sense. So basically, we have some sort of an amateur psychology assessment on this that basically when times are tough or bad, people look after their own house basically. That is the best we can come up with in addition to our regressional studies. So credit.

So it is an essential driver of economic growth, of course. People can invest in housing. They can renovate kitchens is popular in Stockholm. -- buy a car, lend and borrow money for an education. Companies invest in research, in automation, heavy machinery, lots of investment in AI these days. It creates jobs and growth, right? And society, as we know it, would, of course, not function without access to credit.

But as with every good thing, too much of it usually ended up in tiers, right? And we can see here the credit expansion basically in Europe towards households and small companies during -- since the early 2000s, right? -- Expansion up until the financial crisis hit, then actually contraction. And then as we thought we were sort of done with corrections, we had the Ukraine and the high cost of living crisis, et cetera, right? And if you look at what NPLs have been generated during this time. So already here before the recognized NPLs, we should say, because they were probably already being built up there, we had an NPL ratio of about 2% in the banking system.

It then peaked up to some 8% during the crisis, right? And then it's slowly been working its way down. So if we go to looking at what is out there today. So I think the gray line, you will see that is the NPL ratio. This is now quarter-by-quarter, so it starts 2019. You will see that we have the remains of the crisis years slowly working itself out. And we've come to a new level here, right, where we're at about 2%, but 2% of a EUR 16 trillion stock, right? So what we see here as well, right? So we have about EUR 400 billion-ish stock of NPLs.

This range here, consumer and consumer mortgages is basically 90% of Hoist Finance's book or used to be before Azzurro. Now it's 83% of Hoist Finance portfolio. What we are looking at going forward as well and what we have been developing in the last years is the light blue bar, the SMEs. And with SMEs, we look at the smaller companies in that range, right? So NPLs have been generated. What options do the banks have for handling these? Well, the primary activity is to work it out in-house.

This is one of the core activities of the bank. They've been doing so for many, many years. And as long as volumes are very small, that could work. Increasingly, they have outsourced to specialized servicers, right? I think -- when you do that, then you get the specialization. There are specific systems linked to the court systems, linked to bailiff, et cetera, all of this, there's, let's say, predictive dialing.

There's all of these types of operational capabilities that a normal bank does not have. Now if we look at these 2 options, while you're doing this, the NPL is still on your balance sheet, right? So it's still on your balance sheet, contributing to your NPL ratio and costing capital. Now if you have a lot of NPLs that you need to do something about, then securitization has been a very, very popular solution, especially for the enormous volumes that came out during the peak of the crisis. So here, you would set up a structure where you transfer the risk basically to a co-investor. So somebody takes 20% of this co-investment, you keep exposure to the 80%. The person taking the 20% will usually want -- is also the one taking the first loss. So that person will usually request quite a high return on that tranche of the notes.

This basically means that you will get rid of it from your balance sheet. You will get some exposure to your NPLs, the economics of the NPLs from before. But it's quite complex and there are a lot of risks associated with it, regulatory in different markets and so on, and there's a flowback risk. What happens to what remains in this securitization when the 7, 8 years have expired. -- Or you can choose our favorite option, sell to a specialized NPL investor and of course, preferably to a specialized debt restructurer like us. You will then reduce your NPL ratio. The book will -- the portfolio will leave your balance sheet.

You will release capital and you will be able to focus on issuing new loans. And with new regulation, we see that banks are now selling more. So out of a fairly flat stock, Sales are going up. So another way of saying is basically despite increasing sales, the stock is staying flat-ish, meaning that it's being replenished faster, right? So there are NPLs coming in. This here is now still on original loan value. But I think since the financial crisis, the European regulators have done a lot.

NPLs have been an absolute core focus, and there has been the banking package after banking package with activities and regulation aimed to making sure that this crisis doesn't happen again. Now one of the key regulations and the one that we see the effects of now is the so-called backstop regulation, basically to make sure that banks don't keep the NPLs on their balance sheet, value them at 90% or something like that despite not euro or cent has come in amortization payments or interest rate -- interest payments. To make sure that, that doesn't happen again, so you create this awful bubble.

The regulator set up a calendar provisioning scheme saying if it's an unsecured loan, 3 years after default, it's written down to 0. And if it's a loan with collateral, a secured loan, as we call them in this presentation, it's 7 years. No exceptions. There's been -- the banks have been opposing this regulation quite a lot in the beginning, and they wrote all sorts of memos and so on to introduce exceptions and so on. None of them have been approved. And this is valid for all loans that are issued after 2019, 26th of April 2019, to be exact. Now -- and that means basically that the impact of that regulation, of course, you will not see it in 2019. Somebody would have to take a loan default immediately and then sell it, right? So it has gradually been growing over the years. And I think -- this is -- this slide is my idea.

I need to apologize, but we try to illustrate how we are doing this basically how we see this not just in sort of rumors or prices on the market, but actually in our own data. So we see that this cost, you basically you need to hold 100% equity against your NPLs, right, once they are written down if you don't get them off your balance sheet. So if we look at what -- since the last Capital Markets Day, so Hoist would buy portfolios that were sold on average 55 months after default. So what happens until then? Well, the bank -- the loan would default, the bank would work it out by themselves, maybe contact the servicing partner.

Here's a 3-year agreement, collect as much as you can we will eventually sell the tail. So that generated that blue level of expected collections going forward. And of course, that is what Hoist would be pricing and paying for. So this leaves not so much collections, still enough collections to invest the way we did in '24, right? We still deployed SEK 10 billion that year. But per portfolio, less collections, less cost or basically a lower investment. What we see now, same, same metrics. Now it's 38 months. And that's basically exactly 2 years later. So -- and we are buying portfolios all over Europe, as you well know, right? And we have been deploying serious amounts. So this is not one data point, right?

This is -- these are many, many cases. Now it's 38 months, meaning that what we buy is a lot bigger. This means larger investment, fresher portfolio, fresher in a way that means that we -- fewer debtors have moved, fewer have changed phone numbers. So increases contactability, increases the possibility of amicable resolutions, which typically go faster than spending money on legal processes through bailiff, et cetera, right? So -- and this basically means larger portfolios from the same original debt at the same return. So yes, we pay more because we get more, but our return hurdle is still the same.

So basically, that means if you look back at the previous slide of SEK 75 billion in original value, that growth between 73 and 75, this effect is much bigger than that slow growth. So we believe that this trend will continue. We don't have any numbers to prove it yet. We'll get back to you for the next Capital Markets Day. But we believe this trend will continue, and it kind of makes sense. It is expensive to hold these NPLs with the new regulation. And other dynamics there as well is that basically the banks have become more prudent in their provisioning.

Fabien will go through the coverage levels at the moment. But basically, the gap between seller and buyer has shrunk, which means that basically the bank will do less of a loss. And as we've seen in some cases, even a profit selling these banks -- selling these NPLs. In the past, if they had it valued at 90 and somebody bids 5, yes, it's a tough sell. So strategic update. So we are the leading debt restructure in Europe. Those with sharp eyes who have seen this slide before will recall that it's a banking regulated credit market company or something like that in the top.

Now it is -- basically, we're doing investment management is where we price and analyze 250 portfolios a year, 50-man strong team. Fabien will speak warmly about it. I will also speak warmly about all the other people who are involved in sourcing SEK 10 billion of investments per year, right? It's probably some 400 people in the group to be able to bring in that kind of level of portfolio, right? It's legal, it's compliance, it's risk. It's the local management team, the local operations, lots of people in 250 different projects during a year. It's an amazing machine. And once we have bought the portfolios and they end up on our balance sheet, these guys also monitor the performance and monitor their assumptions in feedback loops, right?

We assume this. Did it happen 6 months later, 9 months later, 12 months later? Yes or no, update the model. Capital and funding. I guess this is the area where most people say, yes, you are banking regulated, you have access to the deposit savings accounts, and that is a huge competitive advantage. Yes, it is. We have some 125,000 savers around Europe, saving in Euros, saving in SEK, saving in Zloty, trying to match our asset side as well as we can on currency. And yes. As we mentioned before, the Moody's rating has come in with basically 2 hikes since the last Capital Markets Day.

Now loan management, this is where the actual collections happen. Also here, we have a different strategy than most of our peers in the industry. We are -- we basically split it in 2. There is strategic loan management, which means you set the collection strategies, you steer either your internal operations or your external servicing partner. You follow up. You gather all the data you can from every successful action, every failed action, every half part payment, full payment. All of that data goes back into our data lake to the investment team, right? We -- we are the largest in Europe at the moment. We have the largest portfolio in Europe at the moment. You can only be one of the largest if you're large in the 6 large economies of Europe.

So we have the U.K., we have France, we have Italy, we have Spain, we have Germany, we have Poland. Excuse me, if I got them in the wrong order, I did. But in those markets where we see a steady flow of NPLs, we are super happy to have our own internal platforms. If we, as we have done now lately, right, grow a market from a SEK 3 billion book value to a SEK 5 billion book value, doesn't mean that we grow the operations to the same size, right, or with the same ratio. We are very careful with growing our sort of fixed cost base. So we outsource overflow.

Then we have all the complementary markets, the markets that are sort of outside of these 6. And there, of course, the majority, 9 of these -- 9 of our markets are in that category, where maybe the portfolio flow is a little bit more irregular, where we don't want to have a fixed platform costing money regardless if we win or lose a portfolio because we become a worse investor and you can become a forced investor, something you absolutely do not want to be. So there, we work sometimes fully with outsourcing and sometimes with multiple partners, benchmarking them against each other.

I think in the industry so far, people have been -- it's been a very much do-it-yourself industry. We build our own IT systems. We employ our own people. We're going to be 800 people in this market now, go get the volume. In an investment business, we believe that is not the right structure. So what did we do? Those of you who have been with us for a while know that we had the rejuvenation years between late '21 and '23, see here. And what -- during this period, the changes that I just described or this model that I just described was invented and set here, right? So we reviewed the full organization, rightsized the cost base in all areas.

We reviewed the full portfolio to make sure that are there any underperforming segments? Are we married to them? Is there a market for this? If so, let's sell it. If somebody else thinks they can do better and are willing to pay higher than our book value, let's sell it and again, rightsize the organization. Some quite tough unsentimental years, but I think it brought us into the phase we have been now in the last 3 years, right? And the thinking here because we used to say here that we have a volume ambition of 36/26. Sounds great. But it's not the only reason we said that. There is -- there are scale benefits, obviously, to a platform like this.

Running a specialized debt restructurer, running a regulated bank is expensive. It requires fixed cost. With a small portfolio, it's going to be difficult to reach the level of profitability that where we want to be. We want to deliver 15% -- then we wanted to deliver at least 15% return on equity and a continuous 15% EPS growth. You need the scale. So now we have reached all those targets. And it's time for the next the next phase in Hoist development. And that is to actually use the scale that we have now achieved, right? So we have the platform in place. We have become an SDR. We have a regulatory stability, which we have not had before, right? It's been -- now it's very clear.

So obviously, on the scale, you will see operational leverage. We have always talked about operational leverage in keeping our indirect costs flat while we grow the book and grow the direct costs in line with the income. This has been successful throughout '24, '25, '26. But of course, you would also want to see some operational leverage on -- also on the direct costs surely, if you collect more with the same amount of people, et cetera, you should be able to get some leverage there. And yes, we are starting to see that, and Magnus will go through that in his CFO update later. And basically, with this, the percentage difference is going to be smaller there, but the amount of cost we're talking about, the absolute amount is, of course, much larger in the direct part than in the indirect.

So this is something we will be working hard on to deliver going forward. We will leverage this sourcing capacity. When we rightsized the organization, we were quite tough on many things, but we did add -- we doubled the investment team. We increased the funding team a lot and to be able to source what it is we want to deploy. And this is in place for every portfolio, we become better and better. Every portfolio that has lived for a while and fed back all that information, we become better and better. So this, we will leverage also going forward.

And then it's the risk side of things. So now with a larger portfolio, let's call it, SEK 40 billion or SEK 39.2 billion, we are -- every new additional investment that we put on top of that, should something go wrong in that investment, it is a smaller impact on the total portfolio compared to if we would be at 18, right, and buy a portfolio that goes the wrong way. And so this -- the size here increases stability and resilience and also on the funding side. The liability side is much more stable. And then finally, the growth ambition, portfolio size growth ambition. And this is an ambition. I want to be very clear with that, just like the SEK 36 billion in the past period was an ambition.

We have grown in absolute term book value from end of '21 after selling the U.K., which we actually sold it here. We were at SEK 18 billion up to SEK 39 billion. So SEK 21 billion. Coincidentally, there is exactly SEK 21 billion missing to get to SEK 60 billion by the end of 2030. Now this here represents a CAGR growth of 15%. Now the additional 50% growth, let's say, represents, let's say, 10% if we start -- if we count for half year. And this is an ambition. But -- if it ends up at 57% or 63% is not the point here. This is the direction for us internally and that we communicate out to the market that this is the growth we believe is possible and that we will go after. But we will, as always, do it at the right returns. Nobody in Hoist is measured on volume acquisitions, not even the sourcing teams. It is return on equity across the board. And if you start buying aggressive volume at low IRRs, you will fail that target. So how will we get here? Fabien will take you through the details, but basically, we have 4 pillars of growth, what is it? -- grow what you know, right, increase market share in current asset classes, in current markets. We believe we can expand our market share in the markets that we are in. Some of them are quite newly entered where we expect to do more.

Geographical expansion, there are still white spots in Europe. We will stay in Europe for the foreseeable future. And then, of course, the SME segment. This is 30%, the light blue part of the seventh slide, I think it was, 30% of the NPLs in Europe. We are focusing on the granular part of that, right, which has roughly the same ticket size as our secured consumer mortgages, for instance, right? So we are not looking for half finished golf courses or things like this. Small, granular in line with our current risk appetite. We'll continue to work that. This is a market in a couple of our jurisdictions, France, Italy, to some extent, Spain, very big. U.K., of course, now with the acquisition of Azzurro, who are specializing on only this. And then we see a lot of it on the balance sheets of the banks in more rest of Europe. We need to unlock that volume. Sorry, and there's one more. Selective M&A. When we look at companies, we look at companies for the assets, for the portfolio. That is what we want in our book, and we will continue to view it that way. We are a picky buyer. Many processes fail because basically, we want to make sure that the portfolio that we are getting with the acquisition is valued in such a way that it will be accretive to Hoist from day 1.

And we will continue to reason in that way. And like I said, that is a source of growth if we find it. So with that, going into the financial targets. So without further ado, let's dive into them. So I've gotten a few questions already this morning. Isn't this a bit too conservative? You're already at 27.5% ROE or something like that. And for Q2, that is correct. You see here the red line is the reported figures, so basically what we put in our quarterly report.

The blue line, which I think is the most relevant one, is the underlying core business delivery. And you will see that it has grown, right, especially after the rejuvenation years when we had sort of adjusted the cost base, then it started taking off, and we also managed to grow the portfolio. We believe that 20% with a growth rate of 15% EPS per year is a very ambitious target. I don't -- I think most companies would agree. So we have set that as a new floor level. And I think we will see here going forward as the portfolio grows, as we continue our investment strategy, as we stay focused on the returns, we expect that to rise. But during the next strategic period, the floor is 20%. Earnings per share, again, should be viewed in combination with the return on equity target.

So obviously, great growth here, especially if you look at sort of the underlying. So the SEK 395 million you see here is the profit from selling the U.K. platform in 2022. Yes. And so if you would draw the line there, then it's even more impressive. But -- so we've delivered 16% per annum on average, including the one-off, and we want to continue that growth rate. We are still a growth company, and we will remain a growth company. Looking at the capital levels, we have a corridor today, which says we should be 2.3% to 3.3% above regulatory CET1 limits requirements. We are comfortably above that at the moment as we are 4.2% over.

You could say, why don't you run the capital tighter and distribute more. I think we want to be able to deploy. We want to be able to be engaged in a number of larger transactions at the same time and be resistant to external shocks. We have been fine through all these Trump things, 5 years is a long time. Lots of things will happen in the world. We will keep this buffer. And then on the dividends and share buybacks, also quite common question. So obviously, during these rejuvenation years, nothing was repatriated to the shareholders. We started in 2024, paid out in '25 with a small dividend of SEK 2 per share, basically launching our dividend payout program. But we actually also did a SEK 200 million share buyback during that year.

So total repatriation, let's say, 37%. Looking at '25, one of the things -- the ones that got paid out now in May in '26, -- we had a base ordinary dividend of 25% at the lower range of our previous range. And then we had an extraordinary dividend on top of that as we released the backstop capital that we were holding until we became an SDR. So we are now increasing this to 30% to 40% -- and our priorities are, as always, portfolio investments at attractive or accretive IRRs. That is #1, 2 and 3 really. Then comes the dividend policy. And of course, any excess capital after that will be redistributed to shareholders through either extra dividend or share buybacks.

That is the new range and target. So summarizing these goals, we will end up -- we will continue to be a more profitable growth company than we are today. We will continue to invest at accretive returns. We are hiking our ROE floor by 5 percentage points, whilst at the same time, keeping the earnings per share growth target and increasing the repatriation. So with that, that is my intro. -- over to Bjorn for Q&A.

Thank you. And the floor is now open for questions, either you can raise your hand in the room or right in the chat. We can -- if we can get the microphone to Ermin, we can, in the meantime, take a question from online. What characterizes your investment strategy versus your competitors? And do you have a competitive edge in choosing the right portfolio at the right time? Yes, let's start there.

So Fabien, I don't want to steal your whole presentation, but maybe it's good for the people in the room. No. So I think the main characteristical difference between what we do and our peers do is that we cover consumer and SME, so borrower types, right? Either you're a company, a small company or you're a private individual, most focused on the private individuals. We can handle loans with collateral, loans without collaterals. And it doesn't sound like a huge difference. But basically, it's -- the one kind is statistical underwriting, right? You see the cash flows coming in from tens of thousands of borrowers over a 10-, 15-year period and you statistically model that with the reference curve and so on. That skill we have and we master, I would say. But then to, at the same time, be able to do line by line, and that's basically what you do when it's mortgages and when it's SMEs, right? -- You take a pack of 100 pages. Nowadays, we also use AI for this as a support and go through, right, line by line, what is this -- okay, there's a real estate as collateral there. There's a co-owner of the debt.

There's a co-debtor, there's a guarantee here and so on. And after that, basically, we value the claim. We set our purchase price for this individual claim. Those are 2 very, very different underwriting techniques and to have a team that can handle both of that and have local teams that can handle both of that, which I think both Makram and Andrea here from France and Italy will talk to you about later on, is, I think, one of our absolute competitive edges.

All right. Now we'll...

Yes. Ermin Keric from DNB Carnegie. So maybe the first question would be, you showed how the seasoning of loans you're buying is much fresher now than 2024. Is that anything to do that you try to avoid backstop loans as well at that point? Or is it just that the banks are actually selling much fresher claims?

It is a general trend. We looked at that as well because, of course, we -- when we were not an SDR, we did try to find the older portfolios. But basically, the trend is if we would go back '22, '23, '24, '25, '26, the trend is clear. So maybe there's 2 or 3 months on the 55 that you can shave off, but that's it.

Okay. Fair enough. And then just on -- that you're now buying fresher claims, does that entail you need any kind of different digital tools to be faster on collecting, anything like that, that's changing the skill set you need?

I would say we have always been strong on the fresher claims in Hoist. So I think this actually -- this development helps us. If you want to be really, really strong on the nonpayers, basically the really old difficult ones where maybe you don't even find the borrower, then you need maybe a 700-person call center, et cetera, right? We don't have that. So we typically outsource those claims, right? So what this development means is basically we can bring more on our own platforms.

A question on SME. You're highlighting SME as a potential growth market for you as well. In the same time, you say that you want to grow where you -- on what you know. Do you see an operational risk there entering and growing into a market that you don't have the same sort of experience in?

There is an operational, let's say, challenge, obviously, in starting something new. But I think we have proven that now as we move into new markets, how we take -- it's not a complete black box for us when we enter, right? We investigate the market. We make sure that we have the right people on the ground, but we also bring from our other markets and central teams a team to sort of help deploy. We did similar when we started with the secured underwriting back in 2019 -- '18, sorry. There, we basically set up a multi sort of disciplinary team, that had experience from this, who had worked in the banks, in the mortgage departments of the banks and could sort of travel around and make sure that this was set up correctly. We use the same methodology now. So basically, the skills we have in France, the skills we have in Italy, the skills we now have in the U.K., we put those together. We sit and then we go analyze the next market and we see how we can handle it.

Fair enough. And one question I've gotten this morning on your new target is you're targeting a ROE above 20%. Me and my colleagues expect you to achieve that quite significantly. A general pushback is then with such high returns, at such an attractive market situation. No market is static from a competitive point of view. So naturally, there must be increasing competition again. So I guess, how do you view that potential that maybe the competition might be increasing for years to come on the investing side? And I don't know maybe while we're at it, could you give a sort of a brief historic backdrop as well on how the dynamics has changed under your CEO tenure?

Absolutely. Thank you for the great question, by the way. I think we're all aware that there's been a lot of change in the industry lately, right, the last, let's say, 4 years. As interest rates started going up, or actually, we should probably start earlier. '18, '19, there was a big push for M&A, right? Everyone wanted to be bigger. We had mergers between Lindorff and Justitia. We had Lowell becoming larger, et cetera. I think those situation built up a lot of goodwill on the balance sheet. Goodwill needs to be financed on the liability side. So bonds were issued. And then interest rates go up. And of course, we have benefited from that, right? So as the industrial players scaled back, let's say, '23, '24, '25, the competition from the industrial players was less. There were still successful industrial players out there buying, right, competing with us, but there were fewer. Then the investment funds saw the same opportunity, okay, here's a market that is underserviced. Let's get in there and try to buy portfolios. So basically, I would say the competition was sort of flat, but it came -- but the actors were replaced, right? What we see now is that many of the investment funds, they had higher return expectations or no local expertise potentially, right, out in the markets.

So they didn't deploy as much as they had hoped. We see some of them now scaling back, whereas we do now see that the industrial players are getting into better shape, most of them, right? So they will be -- at least they are announcing that they will be increasing their purchases. But they still have a funding side and Magnus has a slide on, now I'm ruining that too, about basically twice our funding cost, right? So one would hope that the return levels are adjusted to that. Otherwise, we will end up in new trouble. So I think that's on the, let's say, investment funds and the industrial players.

Then we have, of course, people who look at Hoist and see this SDR thing seems to be working out. Let's try to copy that. We know that there is already another SDR in Sweden, Myntro. They are already active. I think they became SDR actually 2 weeks before us. And we know that there are players trying to qualify to become an SDR maybe next year or '28. How they will deploy, what they will deploy is a little bit difficult to say right now. But from one point of view, we are happy that there are -- that more SDRs coming.

This -- we need more SDRs around Europe to make sure that this becomes a really firm status, right? So that would be -- that's a positive from the sort of regulatory side. Then how they will act once they are live, let's see. But a little bit when I talked about the model earlier, right, it is not just the funding cost. Many of the investment funds could source money at similar levels and still didn't make it, right? So -- or still didn't manage to deploy the amounts they had hoped for. So I think you need a little bit of everything to everything in our recipe to copy it, not just the funding.

Fair enough. We have another question online. The EBA will review the SDR framework no later than end of 2028. Have you been in dialogue with EBA on this? And what's your view on the SDR structure relative to the regulators' expectations?

Yes, that is a common misunderstanding. I think if you read the text, it says that EBA will review if the criteria for qualifying as an SDR are sufficiently risk-based to further a secondary market of NPLs in Europe, roughly. And so they are looking at the criteria. And of course, that is something -- it is an expensive status to get, right? As you all remember from us in 2025, we had to hold all that extra funding without the benefits for a full year, right? And then you actually -- you need to start building it up, let's say, 3 months before that.

So 15 months, we have a lot of cost for little benefit, right? So we're actually -- I'm going to Brussels on Monday actually to discuss just this. So -- but we are in constant dialogue with the regulators here in Sweden. We speak to Riksbanken, Riksgalden, the SFSA and to make sure that everyone is on the same page here.

All right. You've been teasing for the next speaker throughout your own presentation. So let's not wait anymore. The next speaker, Fabien Klecha.

All right. Welcome, everyone.

Yes. So we're going to talk, as you have understood, investment strategy. And I think we've come a very long way. The past 2 years, we've increased our deployment, as you have seen, in two steps, I'm going to go through it. We had the ambition to have a book of SEK 36 billion by the end of the year. We are already at SEK 39.2 billion. We had the target to deliver 15% ROE. We are beating that target by a margin. So this came with a very disciplined approach to our investments. And what I'm going to go through now is how we choose our investments as a first section. I think there were a lot of questions on this. So that will be of interest, hopefully.

Second part is the market development. We will go through the stock of NPL, the primary market, the secondary market, but as well as the competition, how each of our competitors is structured compared to us and why -- and the last part will be why we are well positioned to take on this market. Now I want to stress something throughout the 30 minutes I'm going to be talking about investment. Our target is returns. It's profitability. It's not growth per se. Growth is the consequence. I mean I think we've proven that we've been able to step up in this market our level the growth that -- I mean, at the current rate, we will grow anyways, but we think we will be able to grow further.

So starting with how we invest, I think this is not something new, but I want to reiterate. We have 5 pillars in how we invest. Number one is our geographical spread. We are covering 15 markets in Europe. The six biggest being the ones mentioned by Harry earlier. It's mainly the largest economies in the Eurozone where we have the biggest NPL stock as well. And those markets, they are making the 3/4 of our NPL book currently. On top of that, in the past couple of years, we've actually expanded into new markets where we could see better returns that are accretive to our margins, but also where we could find good partners to manage our book.

So that geographical spread where actually we have a good geographical diversification means that there's no one single change in regulation on the -- or macro that can move the needle on the whole book or the whole company. We are not concentrated into any of those markets. Then talking about the loan exposures, we focus on banking assets. Our DNA since the very beginning is that we are here to serve banks. So we are mirroring the bank's needs. And we are constructing solutions, whether it's structuring, whether it's operational solutions to be able to accommodate those NPL loans that they are getting out of their system really.

So we are setting up an organizational structure to be able to accommodate those loans and manage them. And one trend we've been seeing actually the past years is that there's more and more of mixed portfolios where the SMEs and the individual segments are sold altogether. So if you're not able to operationally handle that, you put yourself out of the market, at least for a part of it. So you need to have that ability and that capability to do. Now if you look at how historically this market has grown, I mean -- and I'll go to that afterwards.

I mean there are a lot of specialists. So the main big servicers, they are focused on consumer secured because this is what was typically outsourced, what the banks didn't want to manage. Now the banks, they are also selling a little bit more complex scale, still granular because the average loan on our book is SEK 105,000, so less than EUR 10,000, right? But a little bit more complex to handle, meaning, I mean, in terms of complexity, actually, for us, it's a benefit because it means you have more sources of collection. So it's -- you have to go after the real estate collateral, you have to go after the financial guarantees, you have to go after the personal guarantees -- all in one thing. So that's different workout situations. Then talking about the proactive management. This has been a difference compared to the years before in Hoist.

That has been a big change for us. We are an investor, and we are holding the assets, of course. But when it's necessary, we divest. And we happen to do this in several instances where the market was not attractive to us, we just exited the market. And I think that's also an answer to a question that was asked. I mean, when we see that the market is not attractive, for example for a very long time, the unsecured consumer market in Spain -- we can make these kind of decisions and allocate the capital where it best fits our requirement, our return requirement primarily. And finally, the sourcing. I think we said 2 years ago in the room, we're going to source from the primary market, but we are going to source from the secondary market as well. And we did 23% of what we deployed since the next day after the CMD in '24 is from the secondary market. So we deployed SEK 21 billion exactly since that day and 23% of that has been acquired from funds or from industrial players that were in the course of refinancing or repositioning and buying fresher. Well, actually, as Harry said, no and a proof of that is our co-investment structures. So we have put in place 3, one is a fund and one is we think a big chunk of the pipeline. So this strategy when applied to the market, you see an increase in the yields of their bonds and then the step-up was at EUR 7 billion.

Then we had another step-up starting '24, '25, and that does not include the co-investment volume, right? Because if we put the share of our co-investor, it would be rather EUR 12 billion for both those years, exactly the same actually, EUR 11.8 billion and EUR 11.8 billion [last year]. And so far this year, it's EUR 8 billion for the first half year. So our deployment has stepped up, and it's a combination of those new markets. We are seeing more volume in general in the market, and I'll come to that after. But basically, we're going from one-off disposal strategy from the banks to a recurring sale. So we are seeing more recurring smaller tickets, which is suiting our model very well and which doesn't suit other type of players who need to put an SPV in place, a refinancing together, et cetera.

So we have that model that fits that constant flow of business. So as of now, so 50% -- 53% of our book has been deployed in the past 2 years. As you can see, it's performing well. But most importantly, a few characteristics about that flow of new acquisitions. Number one, we have acquired close to 80% -- from our top markets, right? So we are mirroring what we see in the pipeline in general in Europe. So we represent the flow that is coming to the market. Number two, we have 29% of forward flows. So it's recurring business that we will see year-on-year-on-year.

And number three, we've seen a change in the mix of our pipeline towards SME. And this is why our SME share came from below 5% to 17%, also explained by the acquisition of Azzurro, but we are seeing more SMEs on the pipeline. And this is suiting us because it's typically a good performance for us, and it's typically better margin as well because not all the competitors are looking after this. So this strategy has led to this book. As you can see, this book is very diversified. There's no one jurisdiction here that is making more than 15% of our total book.

So 15% in Italy, then the U.K., Poland, Spain, Germany are making between 14% and 15% each. And then it's France, 10%. So altogether, it's a very big part of our book with those markets. That said, the additional markets, they are very important for us because they give us that flexibility to be able to deploy when it suits us and to switch asset class when we see that there is a competitive tension. And as I said, with the example of Spain, this is a practical example of what happened. I could tell you other examples of that.

The share of secured has not changed. It was, I think, 29%, it's 30%, so pretty stable. And then the borrower type, I talked about it already, 17%. Now this is a very big large table, but you might wonder, okay, so maybe they are mixing the average claim within the asset classes. Well, actually, consumer unsecured, it's SEK 83,000. SME unsecured, SEK 285,000, so a little bit more, but still very granular. And then on the secured side, whether it's consumer secured or SME secured, this is the same ticket. It's SEK 100,000 or SEK 1 million on average.

So it's -- that's what we mean by granular. So now if you look at -- instead of going through each asset class, I think from the simplest where you have one counterparty, it's an individual debtor, you try to find an amicable agreement or you have to go legal through a network of bailiffs, which is the simplest part to SME secured. SME secured, it's mostly secured by residential real estate. So we are explicitly out of any commercial real estate or corporate loans. It's the S of SMEs that we are targeting. So the small ones, not the large exposures. And on those assets, what's interesting is the multiple source of collection that we find. We have real estate collaterals, we have financial guarantees, we have personal guarantees, and we have proceeds from liquidation.

The underwriting is slightly different. We have a mix of statistical pricing and line-by-line reviews that we need to perform. And that requires senior loan asset managers who have a good understanding of execution law of real estate valuation and who are sophisticated enough to negotiate with sophisticated counterparties basically. So -- and we have those skills. So that is helping in this. Now this has led to this performance. So the left part of the graph, the performance is our ability to underwrite and our ability to operationally deliver our promises, right?

So this has nothing to do with the market. This is us. Did we do better or worse than we promised? Well, if you look at since '21, this has been constantly above 100% of our management targets and by a margin. So we are very confident in our ability to price and our ability to deliver operationally. I think you don't have a better proof than this looking at those numbers. The second part, this is actually the margins. So this is the net 10-year unlevered IRR. Sorry for the wording, but this is basically without any effect of leverage, right?

So no cost of funding and no leverage. And what does it mean? It means that the margins came up starting '22, you see this is slightly coming up. Why? Because a number of the players of the market, they have seen their rates hiking up, and it's very healthy then to see the margin increasing in the same -- at the same pace, right? So that means that if you're squeezed by your cost of funding, then the margins on the market increase. The only difference with us is that we are an SDR, and therefore, we are financed with deposits, and we didn't see that hike.

So our own margins increased. So our own margin increased and our performance increased as well. So we had the benefit of both those impacts in our book. So now talking about the market opportunity. There have been many changes. I've been, as Harry said, 15 years at Hoist. So I've seen a few cycles, the mergers and all the things that happened with the regulation as well. And I think what we can say throughout those years, starting with the global financial crisis is that the regulator who has taken many steps to create a secondary market has made it more difficult for the banks to keep their NPLs on their balance sheet every time.

So it started with the supervision of the systematic banks to start with. And then with the EU NPL action plan to make sure they have the proper provisioning and reform in the insolvency system. Then the one single piece of regulation that has really unlocked the market is the prudential backstop. This prudential backstop, this has triggered more recurrent sale and that has pushed the banks to have a faster provisioning and find other solution than keeping the claims on balance sheet. And finally, the NPL directive that has licensed the manager of those NPLs. So past 10 years, big changes, structural changes, I would say, into our market.

When the U.S. in the space of 2, 3 years after the global financial crisis completely absorbed the NPL stock, it took more than 10 years in Europe to go from EUR 1.3 trillion to EUR 400 billion today. So it took a long time. And you can see that here, now we are starting 2019. The peak was in '13. So the disposal happened up until 2022, and now we are flattish. Does it mean that the supply is reducing? Absolutely not. Actually, we have a deep stock of EUR 400 billion still, number one. Number two, the banks are better provisioned because they have the same coverage ratio, but they are selling earlier.

So they are taking less of a loss when they sell. They still take a loss on average. And we see that this market here, this was a lot of funds buying portfolios for from EUR 100 million to EUR 1 billion purchase price, this is gone. Now the average ticket we buy a portfolio at is EUR 20 million, right? So when you're a fund, you don't set up an SPV and take a financing from the bank for EUR 20 million portfolio. It doesn't make sense. You need a different model. This is our model. And the market is going in our direction because we have this machine that can price, that can onboard and then can manage those portfolios any kind.

So now looking at maybe focus a little bit on the various markets. If you see that table, you see really 2 trends. Number one is the concentration. It used to be that the stock was in the South, what I call the South, I'm French, and now it's going to the north. North means France and Germany. It's probably south of Sweden. But it's going north at least directionally. And you can see that as the German NPLs are going plus 12% almost, the French NPLs plus 7%, whilst Spain and Italy, they are still reducing minus 9% for Spain, minus 12% for Italy. So there's a clear change in direction. And that's why our flexibility, our footprint makes a lot of sense.

We've been -- just taking an example, we've been many years in France since 2001 2001, and it's a country I know well, as you can imagine. It's been a very difficult market for many years. The supply was very, very low, but we have always been there. And this is really appreciated by the banks, the fact that we have always been in those markets in Germany, in France, we've been constantly present, buying the little they were selling. The past 3 years, we've been seeing that our pipeline tilted a lot towards those jurisdictions, France, Germany, et cetera.

So asking this question, how do you think your book will look like, there's a big chance that those markets, which currently represent 1/4 of our book will take some size or will increase in size, sorry. Talking about the various players. So I said it throughout. So you historically had the funds. Now I would say the funds, they are more partners or partners in the sense that we co-invest sometimes or they can be also clients of ours in the sense that we buy from them rather than competition. There are competition for the big portfolios. It happens a lot of times, but less -- we don't see them as much as we did before.

And they have a different DNA. They come and go depending on when the market is attractive to them. And one of the criteria for them is the size of the investment. That size, yes, average size is going down. Number two, we have the industrial players. The industrial players, they've had higher funding costs since '22. Again, we've been partnering with some of them to acquire because they have platform. So it was important and interesting to co-invest with us. We'll continue to look after those opportunities. And we also buy from them.

And we are a good buyer of those portfolios because we know how to price and they are happy to have a fair price for their portfolios rather than dealing with the funds most of the time. And we can even leave the portfolio with them for them to continue collecting, which is moving from a capital heavy to capital-light model for some of them are trying to do. Finally, we have our model, deposit based, constant capital. So a big benefit for the -- for our counterparties is that they know we can close. We are buying from balance sheet. So they have certainty of closing, not only because they've seen us for the past 30 years, and they know that we can price and deliver on operationally, but also because we have the funding on the balance sheet.

And when we handle nonbinding offer already then, they know what they can expect to -- for their binding and for the closing of the portfolio. And this has a tremendous value for our counterparties. So now you'd wonder, so what sets us apart in the industry. Well, you've heard there are more SDR coming. So you would say, okay, so you're not that special. Actually, what makes us special is the combination of a number of things. It's not one thing. It's the deposit base that we have together with our geographical footprint, the data we have for the past 30 years. I mean, we've been deploying, I mean, billions of euros in the market in the past 30 years. So we have data which are commensurate to that deployment and our ability to manage different type of portfolios.

And finally, and I would not underestimate that, I mean, both the regulator and the banks, they value a lot our regulatory status. The fact that we are regulated the same way they are gives them a lot of comfort in handling their customers because they are still customers and there's a reputation topic there. So this is quite important, too. So the combination of that is very, very important. Now in terms of the sourcing of growth, we still intend to have a granular portfolio. We still intend to have a diversified portfolio.

That said, there will be a few areas where we think there will be more growth. And the #1 is the SME. Remember, the S of the SME. This is SEK 1 million on average, what we are buying. And this is 1/3 of the NPL stock right now, 1/3. So this is a large growing pool for us potentially. And when we set our strategy, we look at our coverage in terms of markets, we look at our coverage in terms of asset class. One smart move, I think, that was made was to acquire Azzurro. Azzurro is covering both the U.K. and the SME asset class.

And this is really supportive of our strategy, the fact that we have been stepping back -- stepping up on the U.K. So this -- the U.K. is a mature market, and we cover both relevant asset class consumer and SMEs. France and Germany, again, not only we see that the stock of NPLs is big, but also we see that the risk on the balance sheet in general is big just looking at the Stage 2 loans, which is an early indicator. It doesn't tell us how much will go to NPL, doesn't tell us when it's going to go to NPL. It just tell us that there is some risk there that should be taken care of at some point.

And finally, new geographies. I mean, we don't cover the full Europe. We don't intend to do so. But there are a few selected geographies where we think if we can get the right setup that would be both accretive to our book and helping our growth. So again, the target is profitability. The target is not the size of the book. It's the ambition. We think we can get there, and this is basically a 10% growth since now. So we think it's something that is at least credible. So I talked about the how. I talked about the what. I guess now it's about why we are well positioned.

Well, this could be interesting to -- for you to see. I don't think we've ever shown that before. This is our sourcing. So 80% of the market, we think we are seeing 80% of the volume in Europe, I think we think we are covering for. And that represents around SEK 70 billion of deals. We have the list of 160 different -- 16 different originators, right, so counterparties that we are dealing with. And this SEK 70 billion that we are looking at every year, it's 250 investment case, 250 different portfolios that our team, our investment team, our local teams together, actually, our legal teams are working on.

So I mean, the investment team is 50 people. But if you add to that the local teams, if you add to that the legal team, this is 200 people looking at 250 investment case, hard to replicate, in the space of a couple of years. If you ask why is different about Hoist? Well, good luck starting this from scratch. And out of those 250, so you could say, well, you've grown a lot. So maybe you're buying everything you see. Well, we're bringing to IC 120 investment case out of those 250. So we're actually pretty selective, right? And that's both based on how competitive we feel we are or our view about the market or our view about the asset class, the origination, it's a mix of factor.

There are different reasons. Bid-ask spreads too high. Don't waste our time. Let's focus on what we think we can win. And we deployed this then around EUR 10 billion last year. Median portfolio size is EUR 20 million, I said it before. So it's a lot of work to be deploying close to EUR 1 billion, right? It's -- then it requires onboarding after you've done all the work on the investment case, then you need to onboard it, you need to prepare your team, et cetera, et cetera, to deliver on the targets that you've seen before, the performance target. And where does that volume come from? It comes from Tier 1 banks, primarily 52%.

So around half of the volume is coming from Tier 1 banks. Then it's Tier 2 banks. So regionally important banks, it's another 22%. And then a relevant part is also the secondary market. And then we have also some local banks. So that was sourcing. Now what do we do concretely? Well, when we receive an e-mail saying, would you be interested in that portfolio? What do we do? We -- obviously, we start with the NDA, et cetera. We look at the data. And for each jurisdiction and each asset class, there are different underwriting models. They are locally adapted models.

So there's no one model that fits all the jurisdictions, not at all. We have tens of different type of models. And our team, the team of 50 of the investment team, they are not based out of London or Stockholm. They are actually spread in 10 different jurisdictions. They are sitting next to our local teams. So they understand very well the operational aspects as well as the quantitative aspects, and they link the 2. And that's what makes the value of the underwriting team that they are able to transform operational inputs, historical data into relevant underwriting assumptions for our portfolios, right?

Now what is consistent though across our investment is the way we look at returns, and that's the right-hand side here. What do we look at? We look at a few aspects, but there's one in particular that is important. So I'll go through them. When you look at the portfolio, you have a cash flow curve, right? And the cash flow curves compares to your investment. So if you buy a portfolio at 100 and you expect 101, you have a multiple of 1.01. We typically don't buy that, don't worry.

If you have a super high IRR because the cash is coming very early, well, the slightest mistake in your forecast and you lose your money. So we look at the net money multiple because this is a relevant item, of course. So that gives you an idea of how commensurate is your margin compared to your risk. So how much of drop in collection you can absorb before you make a loss, number one. Number two, the unlevered IRR. We look at it for various reasons. First of all, obviously, it takes into account the time value of money. But more importantly, it gives us a sense of how we compare with competition as well because everyone is looking at this metric. We look at it over 10 years.

We know that there are different way of doing in the industry further away. We look at it over 10 years. And then the average life -- weighted average life, which is, let's say, a way to apprehend the risk of the timing of our cash flows. But one metric is actually making all those investments comparable with one another, and it is the return on equity. And this is how we steer the whole company anyways. So for every single portfolio we look at, we look at the return on equity to be able to see where it's best to allocate our capital.

Now talking about our governance. Well, this work that I talked about, we do it centrally. It's owned centrally by the investment team, but it is done jointly with the input of the local team. It's very important. We have a very strong tight collaborations with our local team. To capture all the aspects of the deal and to have also some intelligence on the deal in the sense that we know what happens in the market at every point in time. And then we have a number of committees. Every deal is governed by this. So there's no one deal that is not approved by the committees. So whether it's the Management Investment Committee, the Board Investment Committee of the full Board depending on the size of the deal, this is going to a committee.

And there are some checks as well at the deal level. So every deal, there's an independent quality review for the deal as well as a nice feedback loop. What does it mean? It means that 6 months, 9 months, 12 months after we acquire a portfolio, we review all of our underwriting assumptions, and we check. So how did we do on this? How did we do on that? And then we learn and we constantly learn. And this is what makes our model work so well. And obviously, the risk functions are involved in every deal as well. So the risk gives also their view. And on top of that, we have the internal and external audits.

So finally, so maybe worth reiterating, SEK 60 billion achievable. That's an ambition. That's not a target. We think there's room to deliver this. But what you should take away from this presentation is that it's still going to be accretive portfolios with the same underwriting discipline, highly granular, geographically diversified. There will be probably a higher share of SMEs in that mix, and we will continue to actively manage our book. That is where we see there's no market and we don't have the scale, we will dispose. So we will do some disposal. And we actually did dispose EUR 1 billion in the past 2 years since the last Capital Markets Day every time we sold at a premium. So conservatively managed as well. Maybe time for questions now.

Okay. While we wait for the audience to find your energy, I have a few for you. If we start with the SME segment, it's a bit alluding to my question to Harry as well. It's a bit of a new market for you still. How is the -- when you're bidding and investing, how is the market different from the consumer market? And are the competitive dynamics different? Are there different types of competitors? Or -- and how are you preparing for this sort of new market as well?

Well, it's a sweet spot for us really because, as I said, we have the DNA of mirroring what the banks are needing on the NPL side. So yes, we see slightly less competition. You need to have the know-how to onboard, price, manage those portfolios. So we -- every jurisdiction I look at Italy, France, we have some in Spain or the U.K., it's usually better margins, better performance as well. So we really like that asset class because that's not an easy thing to step in that. Now I don't want to oversell it. I want everyone to start looking at this.

But it requires some special skill set to be able to do that. And we've started maybe longer than what you think because, I mean, 5% of our book -- total book was SMEs before. But in Italy, for example, we have a very long experience with SMEs. I mean it's been more than 10 years since we buy SMEs. In France, it's a little bit new to the whole market because France was very quiet for a very long time. Now all of a sudden, we see very big portfolios coming up. So you have a lot of I would say, commonalities with the secured workout that we've been building. It's actually the same team managing both. So it's -- and we started in 2018, the secured. So it's been a while now.

Okay. The second market you highlight as a growth market is Germany and France. One thing I noted was that the coverage ratio in Germany is much lower than in the other market. And you previously said that the higher coverage ratio means that banks are more willing to sell portfolios. Is this a factor that limits the sort of near-term growth potential of portfolios in Germany? Or how is this market playing out?

No. What I said is that the coverage ratios are stable, and we see the banks selling earlier, right? So that means that given your coverage ratio is the same and you have fresher portfolios, you're selling earlier. Now the coverage ratio in itself doesn't mean much because the counterpart -- I mean, it depends what kind of security you have against your loans, right? So typically, in Germany, they have a lot of commercial real estate. So they have big buildings behind those loans, and that could very well be justified that they have a very -- I mean, a much lower coverage ratio.

So the point was more to say everything being equal in terms of coverage, they are selling earlier and therefore -- and this is complemented by the fact that we speak to the banks. So we know. They're telling us, yes, okay, I'm making a loss, but this is okay. A few years back, they would have withdrawn the portfolio as simple as that. So we see that. I would say the best indicator is more of on-the-ground experience than just a very high-level ratio that makes a lot of different things.

And given your sort of first-mover advantage in France and Germany, how big of a market share do you currently have in those markets?

Not sure if I can comment on the market share, but No.

You rank yourself. Are you top 5?

Yes. We are definitely -- I would say, in all of our key jurisdictions, we are always top 3 or better. So we are at least top 3.

Okay. We'll discuss it during the coffee break. A question from the audience.

Yes. Phillip Moe Molmen from SB1. Just while some industrial players see their balance sheets shaping up and new SDRs are expected to come in, do you see a risk that your IRRs on employment (sic) [ deployment ] can come down to the early levels compared to like 2022 or 2023?

I see that -- I mean, if the market keeps on being rational, which is our expectation, and we've seen the market has been rational, right? I mean we have this slide here that is, I think, reflecting pretty well the timing when the rates increased, right? We see them flat now. We don't see them increasing, right? It might increase. If the rates increase, hopefully, the market will reflect that, right? We definitely don't see them decreasing, okay? So there's obviously pressure in certain markets. In certain markets, yes, definitely, there's more pressure, but then we just reallocate our capital elsewhere. This is what we do. So we try to adjust the whole time. We will not participate into that game of increasing price to increase volume. We need to keep our book healthy and this is our primary target.

Can we get the microphone here?

So what is the bottleneck both on the investment side and the operational side when you're growing so much and taking on new volumes?

Yes. I mean good question. I mean we are seeing most of the volume, right? I think the bottleneck is localized in some areas, right? And this changes in the sense that there are some parts of the market where we decide not to participate at a certain point in time, and that's taking off opportunities for us. But that's a little bit our decision in a sense. Then we had some part of Europe that we did not cover. We're trying to remediate that with Azzurro. It was a bottleneck for us. That was removing a growth potential for us. But in reality, I think we have a very good setup now when you look at our ability to deploy the capital, our ability to underwrite our ability to manage with a very good mix between in-house and outsourced.

So it's really difficult to see what will limit us. I think what will limit us is localized in some areas at a certain point in time. We see that kind of behavior that someone wants to get into a market and therefore, is pushing, knocking on the door, we then try to step away, wait and come back.

Can I also ask your win ratio? Has that changed anything over the recent years when you're bidding?

Can I talk about the win ratios? It's around 40% on the ones that we bring to IC, right, on the ones that we bring to IC. So we have a pretty good sense of what we can win before we even start. And how to win it, meaning that it's a combination, of course, the price matters, and that's the single most important aspect, but there are other aspects as well. Sometimes it's the SPA. I have seen a few competitors being kicked out of process because the SPA was not aligned with what the sellers need. One thing I did not mention, which I think is worth knowing, the Tier 1, 52% of our sourcing. We have 8-plus years relationship with each one of those banks. We know them very well. We know the person who's selling. We know their organization. We know their data. We know how to onboard their portfolios. So this is giving us a big head start and advantage when we want to build a long-term relationship.

And can I also just ask, you didn't talk so much about the securitization. There was a big part of [offloading] all the NPLs. Do you see that being a big upside if you see [indiscernible] HAPS transactions, et cetera?

Yes. We are seeing such transactions, and that's a source of our deployment, in particular in Greece. We bought from those vehicles, and there will be more opportunities going forward. Obviously, the EUR 1.3 trillion to the EUR 400 million (sic) [ EUR 400 billion ], they have not all been collected on. They are on the secondary market now, right? And we see regular sales happening, and this is part of the secondary market we have been talking about. So there are disposals happening from those big securitizations in Italy and Greece in particular.

A question from online. How much do you need to invest annually to reach your SEK 60 billion target by 2030, given amortizations, et cetera? I think all of me and my colleagues can give the answer as well, but I'll let you do it.

Well, first of all, it's a target in 2030. So there will be difference by quarter, by year. On average, it's 14%. But yes, it's around 14%, the answer.

Great. Time flies. All right. So now we take a -- let's make it an 18-minute coffee break. So we restart at 3:00 sharp.

[Break]

Welcome back for the next speaker is Magnus Söderlund, CFO.

Thank you, Björn. Is the sound working? Yes. So as Harry concluded, I didn't get a very snappy headline, but hopefully, this will be interesting anyways. So my name is Magnus Söderlund. I've been the CFO for the company since 2025, last year. Before that, 20 years of experience all over Europe in the NPL and debt collection industry basically. So that's me. And the plan today is to cover the management of our NPL portfolio. So how we deal with the risks attached to it and how we sort of manage it to maintain a healthy return level.

I will also talk a bit about the other risks associated with our business and how we deal with those. Then we will look at the funding side of our business. So I think it's no surprise to anyone that we have a very competitive funding cost, but we will look at that in a bit more detail. And the last piece we will focus a bit on our operational leverage, basically what we have achieved so far and what we believe moving ahead. And you will probably hear the word diversification a lot during my presentation simply because we have an ambition to be just that.

We want to be diversified. We want to be diversified both in our NPL investment portfolio, but also in our funding structure. But to pick up where Fabien left off. So this is a high-level overview or centralized governance structure around our NPL portfolio. So we conduct quarterly reviews for all individual portfolios from the time of acquisition until the cash curve has expired. So basically throughout the full lifetime of the book or the portfolio. And we apply a 15-year collection curve, just to be clear. We focus on the outliers, both the positives and the negatives to decide on what valuations needs to be actioned at all times, and this we do every quarter.

We're data-driven in everything we do. And for every negative outlier, we assess whether something can be improved operationally or if a revaluation is necessary and appropriate. We always take a prudent approach. If we see a need for a write-down, we will do it immediately and deal with a negative P&L impact that comes with that immediately as well. When we revalue positively, we take a more conservative stance. We only assume our performance for the sort of period of time where we are absolutely certain that this will happen. And this assessment is based on the actual performance up until that moment and then by what we believe with sort of our more conservative glasses on.

And what we don't want to do is to overestimate the future collection and thereby pushing more risk into the future performance. This is key for us. And this is all a very centralized process. The decisions are taken by our management revaluation committee, which is run by me. And for every individual portfolio where the adjustment is above EUR 2 million, we also required -- and we also need an approval from the Board as well. And obviously, our external auditors also review and approve our decisions. And then we also apply something we call derisking for the secured part of the portfolio, but I will come back to this in a bit.

And by this process, we are basically maintaining an active risk management of the portfolio. And by addressing the problems immediately, we build performance for tomorrow. And we, of course, want to have a positive over performance which is stable and predictable. And then we feed back the findings to the investment side of the business and the operational side of the business. For every portfolio we buy, the more data we get and the more we learn for the next acquisition.

So if we look at our performance over the last years, this is sort of the proof that our centralized portfolio monitoring works. We are at around 105% over time. This means that we are collecting 5% more than what we -- what the management collection curve predicts. So -- and that curve is not to be confused with the original cash curve that is established at the time of the acquisition. The management curve is a living forecast, so to speak, and reflects all of the revaluations that has happened in the past for any given portfolio.

So it's a current best estimate and the driver of the portfolio book value at any given time. And looking at the graph, you could say it feels a bit boring. Nothing really happens. But in this case, boring is extremely positive and exactly what we want. We want a steady and consistent overperformance. And as you can see, we call this net performance. So the graph shows the combined performance of the total book, both the secured part as well as the unsecured part. And this brings me back to the secured collection performance. So I will just briefly highlight the difference of the unsecured and secured collection forecast.

So for unsecured, we normally have a portfolio of many, many similar individual loans. We know based on our data and statistical models that a portion of these loans will be paid at a certain point in time, and this becomes the forecasted cash curve. And then we get over an underperformance based on the deviations that materialize over time, and this we book to the P&L on a regular basis. So it's a very statistical approach.

For secured, it works a bit differently. A secured portfolio is forecasted on a line-by-line basis as we call it. So as an example, let's say, we have a portfolio with 100 houses in them, just to keep it simple. We then make an assessment of when each house will be sold and paid. And based on that, we get our collection curve for that portfolio. And then let's assume we have a house we expect to be sold in September of next year, 1 year from now. But when closing September now, we realized that it went much faster. We sold it already now.

That means we have a positive deviation from the cash curve, and we could potentially book this as a performance for the month. But of course, we don't do that because that would create a problem in September of next year. And we can't sell the same house twice. So what we instead do is we derisk the curve of the secured assets. So we booked the collection, but we also conduct a negative revaluation of the book value to reflect that the expected cash in September next year is no longer there. And that's what we call derisking the curve. We remove the risk in the future.

And on occasion, we may receive more cash than the curve predicted and then we may end up with a small piece of overperformance. But in most cases, we would use that excess cash to derisk the future curve even more. So that's why we refer to this as net collection. And the performance outcome we see in this graph includes the derisked cases as well or the secured side as well. So I think the key message here, if we collect something prematurely, we're not going to add that to the collection over performance. So on the example I just mentioned on the house, that would do nothing for this curve.

This is just pure performance and nothing else. That's sort of the key takeaway from this. And then to illustrate the risk profile of our portfolio, we have this comparison against an average of our competitors. And it's based on data from 5 of the biggest industry players. And it's based on 2025 figures because those are the latest we have available to make a relevant comparison. So this is the cash curve projected from the current valuation of the NPL portfolio. This is sort of what and when we expect to collect.

So the blue line is us and the orange is the peer average basically. And to come back to what I said previously, we do not want to push risk into the future. Like with the positive revaluation that I talked about, we're prudent when assessing future overperformance. We don't assume that an overperforming portfolio will continue to overperform for 10 years because that would be to push risk into the future. We expect a bigger portion of the cash flow to come in the beginning of the curve, which is clear in the graph. So our sort of proof in the pudding moment comes much faster. We are very conservative in adding value to the tail. We are more conservative than the average of our competitors, which is clearly shown in this graph.

And then when comparing to other players, you need to remember that there are other factors in [ play ] here as well. It could be a different mix of assets, difference in geographies, et cetera. But the conclusion is still that we have less risk in the tail of the portfolio compared to our biggest peers. So the key message again is that we are prudent in the way that we manage the book, and we are prudent and disciplined in how we price new acquisitions. And I think that also becomes very clear when looking at the performance and profile of this collection curve.

And then moving on to the overall risk assessment or risk overview of the company. So we are a banking regulated institution, which means 3 lines of defense. It means operational risk controls, risk assessments. We need to have ready-made plans in case something happens. So it's all very diligent and very detailed. So overall, our assessment is that we have a low to stable risk profile, and we are very active in managing it. So we just covered the credit risk related to the NPL portfolio, and we feel we are very much in control in that area. We also have a liquidity portfolio consisting of high-quality liquid papers, government bonds, regional government bonds, so very low risk in this.

Operational risk. We have a continued improvement process built into monthly reviews and other benchmarks we do on a market-to-market level. So we focus on continuous improvement, and I feel our numbers and performance shows this to a very large extent. And then for cyber risk, we obviously have the same risk as any other company on the planet, basically. We have a dedicated team for dealing with this. And like any other bank, we have regular trainings and controls in place as well. And then on the market risks. So we're a pan-European company with many investments in other currencies made out of Sweden and SEK.

So this carries FX risk and a built-in currency mismatch. We manage this by natural hedging to a certain extent. We have deposits in SEK, euro and Polish [zloty]. And then we also have our liquidity portfolio that we can use to steer the exposures. And for the part we cannot sort of fix ourselves, we hedge with FX derivatives basically. And on the interest risk side, we have a maturity mismatch. We have a longer asset side and a shorter liability side. We try to naturally drive this mismatch down by increasing the length of the funding. But for the part we cannot mitigate, we also hedge this as well with interest rate swaps.

So the liquidity risk, we assess as very low. We have a material liquidity portfolio with the papers that we can sell off very easily. And then we have the regulatory risk. So since the last Capital Markets Day, we have now notified and become an SDR, and we feel stable in this role, especially since we are aligned with the intent of the regulators. Our role is deemed necessary from the regulator's perspective, and we are now filling it. So from that perspective, we feel we're in a good place. And then we obviously have a fairly complex organization. We have different subsidiaries, et cetera. So there's a portion of structural risk built in, but I feel like we are managing this very carefully as well. So we have an overall assessment that our risk profile is low to medium.

And I mean, all of these areas are something we constantly monitor and work with on an ongoing basis.

So let's move into the funding part. And we'll start by looking at the very high-level breakdown of our balance sheet and sort of the [ building ] blocks it consists of. So we are a capital-heavy NPL specialized debt restructure basically. And in order to be successful at that, you need an efficient balance sheet and one that is sort of fit for purpose, and we believe we have this. So if we start by looking on the asset side, we have a highly diversified and granular NPL portfolio. We buy portfolios from the biggest bank in 15 European markets, and we have no single risk exposures. So this means we are extremely diversified with low risk. And then we have the liquidity portfolio that has grown from the last Capital Markets Day. This is obviously a consequence of the SDR requirements where we're obliged to hold a lot more capital. But it consists of high-quality liquid papers, which are easy to dispose at any given time. And then on the liability side, we have our deposit base.

So this is basically 125,000 individual customers from 7 different markets, all guaranteed by the Swedish deposit guarantee scheme. So we're diversified also here. And then we have our bonds. And they have also been diversified over time because we've done a lot of smaller but frequent issuances, and we have improved the maturity profile very much compared to 3 to 4 years ago. So in total, we have a very strong and diversified balance sheet, which really is fit for the purpose. And this all leads up to this a sustainable low-cost and diversified funding platform.

So the deposits makes up 80% of our total funding base. And this is obviously a very good thing. We want to keep this level high because it's very cost efficient. And this is the driver of our low funding costs and the competitive edge it creates. And then we have the wholesale market funding side representing the remaining 20%. So we want to keep this mix to maintain our investment grade and also to have a greater extent of flexibility in our funding base. So if we take a look at our deposit platforms a bit more in detail. So we are, as I said, currently present in 7 markets, and we offer attractive savings accounts in SEK, euro and zloty in tenors ranging from 3 months to 5 years. And at the end of last year, we launched our own platform in Germany to complement the third-party platform we already had.

And in this year, we opened up our own platform in Spain. So we have decided to go to very deep markets with our own platforms. And everything is covered by the Swedish deposit guarantee scheme, as I mentioned. No one can deposit more than the guaranteed limit of EUR 100,000. So not only is it a source of low funding cost, it's also a very attractive customer offering. So people will sign up for this, which we can clearly see in the graph because this has now been ongoing for quite some time.

And if we look at the market like Germany, saving through deposits is one of the most common saving forms for the general public. And the benefit for us is it's always on. It provides great flexibility for us, and we were able to steer the flows very effectively. And as I said, we have approximately 125,000 customers with a total deposit of SEK 49 billion. So this average roughly SEK 400,000 per customer, EUR 40,000 per customer.

So this is also quite diversified. And then in 2024, we moved away from the overnight or flex deposits in order to become an SDR. We had to do that. So we have effectively and over time, replaced those with longer tenors, which is good. because this obviously adds stability and stickiness in the deposit base, and it also helps to mitigate the maturity mismatch I mentioned before.

So it does sort of 2 things for us. And here is the comparison, I think you referred to in the intro, Harry. So to sort of further illustrate our competitive advantage, looking at our average cost of funding in comparison with some of our peers. And this for us, the 3.5% that we see includes the AT1s we have. So it's a mix of our deposit interest rates combined with the cost of the wholesale funding and then AT1s. And this leads up to 3.5% for us.

So we have a funding cost that is less than half of the average peer rate. So we do have a leading funding cost in the industry, and this is obviously one of our most important competitive upsides. And if we look at the development in our wholesale funding cost, we see a material improvement as well, and we illustrate this with an example here, if we compare a senior preferred 3-year tenor in 2023 compared to now, we are at significantly lower levels. So that's roughly 350 basis points.

This improvement is obviously also driven by other factors outside of our control, but we are happy with the achievements we have made. To get us to where we are today, being frequent in the market and with 3 upgrades from Moody's over the past 2 years. And we also feel a lot of support in the market. And by being frequent, we have improved our maturity profile significantly. And then if we look a bit closer into our NSFR or net stable funding ratio.

Now being an SDR, we have to remain above 130% ratio. And as you can see, we have stayed above that level with some margin. We deliberately want to leave a prudent buffer here. But as this obviously comes with a cost, we're actively working on the NSFR efficiency of our deposit pool.

So in the middle graph, we see the development over the last couple of years post-and pre-SDR.

So what we have focused on is to optimize the NSFR efficiency in the deposits we take in. For everything that is sourced through our own platform, this remains 100% efficient for the entire lifetime of the deposit. And for everything sourced through a third party, this has a different schedule.

For the last 12 months of any term-based deposit, the NSFR efficiency or the available stable funding ratio goes to 50%. So a third-party platform deposit is less efficient over the last 12 months of the total tenor. So we are now obviously working to increase the share of our own platforms, but also to take in longer-term deposits in our third-party platforms and shorter ones in our own platforms. And moving into the graph to the far right.

The way we measure our efficiency is by the size of the liquidity portfolio in comparison to the NPL portfolio. And as you can see, we're improving in 2026. So our directed efforts are starting to pay off. And then you might wonder what is the optimal percentage in that metric.

I wouldn't want to speculate too much around sort of a target or a perfect number here. As we get a bigger share of deposits onto our platform, this will help us improve this even more, but this is a gradual process. We have initiated it for sure, and we can see the impact now in 2026, but it is a gradual process, and it will take some time. That takes us to the last piece, the operational leverage. And this is a slide I like very much.

So this is basically illustrating our cost-to-income ratio from 2021 up until now. And as you can see, we come from sort of a darker place at least, with the 93% ratio to the 62% that we see now. And this improvement is driven partially by better returns from our acquisitions, as Fabien showed, but the majority of the improvement is coming from strong cost control in all areas, basically.

The biggest driver of the improvement is coming from the indirect costs coming from 45% to 20% over the period. So we have managed to keep them flat. At the same time, as we have grown the portfolio size significantly. We have basically more than doubled the book. And to achieve this, we have restructured both central areas and improved efficiencies in the markets, whilst adding cost -- sort of cost in value-adding areas of our business, we have basically replaced cost and added more people into the investment side of the business and to the treasury side. And basically, we have swapped costs where we see a better outcome. But we have also seen leverage coming from the direct cost side as well in terms of the scale benefits. And we expect this to continue with the growing book and obviously a continued tight cost control. This is key for us.

But we have come from a 47% rate to 42% over the period. So this is obviously a development we're very happy with. And as I said, we expect it to continue because this shows that what we're doing works, right? And then the question becomes how much more can you achieve? And I don't -- I want to refrain from guiding with any specific numbers. But what I can say is we expect the leverage to increase with the growing book.

This is our absolute conviction and ambition. And then to close off, a quick look at our 2 previous periods. So during the rejuvenation years, as Harry concluded, we saw fairly flat growth of the NPL portfolio, but a rapid growth of ROE, and this was obviously driven by our cost cleanup. And then we moved into the profitable growth phase with a bigger portfolio growth, but we still managed to sustain and improve the growth in profitability as well. And this clearly shows that several years of much effort and successful work has paid off over time. And now we are well suited and prepared to go into the next phase of the company. And that was it almost on time.

I guess being on time is we would expect nothing else from the CFO. If we don't have any questions from the room, we have one from the viewers online, and it's a very straight question. How will headcount develop from now to 2030?

2030. Yes. We have an ambition. We're very convinced and we have a very clear ambition to keep the indirect costs flat. So far, we have been able to do this. I think I'm convinced we will continue to do this. But at some stage, they probably will improve with the growing book, and now we have a really forward-leaning ambition, I would say.

And then regarding the direct costs and more the operational side, as I said, I expect and we will make sure that the leverage continue to grow. So I wouldn't expect to see the same rate of inflation in number of FTEs compared to collection and book size.

Just a follow-up then. At what level of book will you need to increase direct costs like what's the capacity?

We will see. But I think where we are today, this is working fine. We have a great output from the whole book, and I expect us to remain at sort of flattish levels well into the future. But with the SEK 60 billion book, it's slightly different from where we are today. And I don't really want to speculate, but it's going to be slightly bigger.

Yes. So maybe on the direct cost to get leverage there, how much AI do you assume to drive that?

I want to say nothing because people discuss our line of business. I've been in the industry for a very long time. I think certain companies with certain different -- that have a sort of different set of cases than we do, there, I definitely see a potential upside.

I think there probably is one for us as well in the future, but the sort of claims we have are more complex than your average sort of servicer, I would say. So -- but to get to your question, I mean, the leverage will come regardless of AI or not. That's clear. So we are not betting on any AI initiatives to get there. This we will deliver without AI.

And can I also ask now when rates are starting to come up again, it seems like how do you see the impact on underwriting returns, et cetera? I mean, more tied into rate duration as opposed with you having the deposit funding?

We're not seeing that much of an impact yet. It obviously protects us a bit now when we're moving into longer tenors, we're sort of closing the gap of the maturity mismatch. I think if the rates continue to go up, we will eventually sort of be hurt or impacted, and it's going to happen faster for us than for a bond financed player, of course. But I think in the end, the way of funding ourselves the way we do is always going to be cheaper than going to the bond market. And with the high rate, we also expect the prices to change. It's not going to happen as fast probably, but it should happen.

And then one last question, if I may. Do you expect to have only internal deposits in, I don't know, 5 years from now, 10 years from now?

All of it.

Yes. Is there any reason you wouldn't have everything internally?

Not really, no. And as I said, we are in the process of sort of moving over as much as possible. Then we go through different phases during the stage of the year, we could have periods in time where we don't need more deposits. And then it's sort of difficult to steer it. But with the investment pace we have kept over the few years, we're going to be in constant need. So that's going to make it quicker.

But to get everything over, it's probably not going to happen in 2, 3 years, I wouldn't expect. And now in Germany, we see a lot of traction. That's probably coming from the fact that we have been active in Germany through the third-party platform. So the customers know -- they know us. What we see now in Spain, I think I can say this, is that it's going to be a slower process because we have never been in the Spanish market.

But to follow up on the raising or the external deposit platform question then sort of a tail risk is still the deposit guarantee scheme because like you say, you raise deposits from a German individual and Swedish taxpayers guarantee it through the deposit guarantee scheme.

I mean it's not discussed at the moment, although the risk has been slightly raised by the head of the Swedish Resolution Fund. If this deposit guarantee scheme would be reduced for foreign deposits, do you have like -- do you have a plan for what you would do in such an event because naturally, it would stress your funding structure?

It would -- to be honest, I don't want to speculate on that, Björn. We stick to what we know at the moment. And I mean, we would always have to find another way.

But we -- I think we have a track record of proving that we can act very fast when we have to. Like when we qualified for the SDR, there were a lot of rapid changes we had to take. We did it. We succeeded, and we came out an SDR in 2026. So it's a complex question.

All right. If we don't have any more questions, we will move on to the Managing Directors of the 6 largest regions, countries. You can stand here and then distribute the mic with solidarity and then I'll stand.

Yes. So.

Can you hear me?

Yes.

All right. Hi. Nice to meet you, everyone and fun to see the people behind the scenes. My name is Enok Hanssen. I am here. I am the Head of the Growth Markets. I got a U.K. flag here. So I'm not the MD of the U.K., but it is a part of the growth region or the growth markets region, which is what I'm responsible for. In the U.K., we have a U.K. Managing Director, who is the former CEO of Azzurro, who has now taken that role. So my markets and what I do is basically what you could see on the slides of Harry and Fabien as others and Sweden and U.K. So it's a little bit of the smaller pieces of the puzzle. And basically, I have 2 jobs.

So one of them is to open up new markets. So basically, when we started with Sweden in 2023, we did Portugal in 2024, we did Finland in 2025. And this year, we did Hungary. That's one part of my job. And the other one is the markets which we think are subscale. So where we see that it requires a little bit more effort to come to scale, and we need to basically make a little bit of an extra push.

Like we have done now in the U.K. So as you probably know most of you, as it was mentioned, we acquired Azzurro in end of June this year, we closed. And I think that's a really interesting example of basically starting with a quite small footprint and not a lot of activity since we divested the platform in 2022 because basically what we had in the beginning of the year was 8 people working with the outsourced collection of the unsecured consumer book, which we -- which we still have in the U.K. And I think the U.K. is a fantastic market.

It is extremely mature, extremely sophisticated. It is really one of the leaders in Europe in terms of innovation, in terms of how things work. And what is interesting about it is that -- and what is interesting about it is that it's very sort of dominated by these Tier 1 banks.

So the big banking groups, the big universal banks carry a lot of the flow. And they, of course, are extremely concerned and interested in what happens with their claims when they sell them. And that means there's a lot of requirements on us as an NPL buyer to have a full structure. We need to be licensed. We need to have consumer duty. We need to be -- have a lot of sort of structural things in place. And up until this year, we didn't have that.

We only have this small part of the business working mainly through a partner. Now when we bought the Azzurro Associates platform, we get both this SME specialist as discussed many times why it's important and why we think this is good.

But we also really got the step up in terms of getting the licenses, getting the people, getting the structure to be really able to go after those kind of clients, which carry a huge part of the deal flow we see in the U.K. And I think the story starting with the sort of semi-small team and then gradually going bigger as we understand more about the market and see pockets of value is also really one of these things which sort of signifies or captures the essence of how we are thinking about going into new markets and doing these kind of things.

So basically start with a very low amount of fixed cost to not create the must buy syndrome, what was used to be called feeding the machine in the previous Capital Markets Day, but rather being able to get the relationships to understand how the market works and not be basically forced buyers when something comes to market.

And now we can see that as we have learned more about the U.K. market again, we were able to identify this opportunity to get this step into the SME space while enhancing our capability to transact with the big Tier 1 banks, basically leading to a situation where the previous team of 8 people have now been absorbed into the Azzurro team.

The Azzurro CEO has become the MD. And basically, we have -- I don't want to say that integration is a nonevent, but I think it has reduced significantly a lot of the sort of integration risk because basically, it's been a sort of bolt-on. The end state in the U.K. now, I don't think will be the end state of all the growth markets and all the new markets. I think this is really dependent on how the market structure looks.

I think it's important for us that having a low fixed cost level is strategic because that allows us the opportunity to not invest if we don't want to, but it also gives us the opportunity to really go after something when we want it. And that idea of having basically the market structure to dictate or set the operational model is a way where we can be flexible and go into different markets depending on the market structure, whether that is a big market like the U.K. where it's very sort of a lot of volume professional sellers, supermarket or if it's a smaller market where things are maybe more lumpy.

And 1 year, maybe we don't want to buy or we don't want to invest, but another year, it is much more coming. And having this connection and the proportional setup between the operating model and the market structure makes us really flexible in being able to capture opportunities even if they don't fit a sort of one size fits all kind of model. And when we are looking at these different markets, I mean, we have done now 4 in 4 years.

I think it's not a requirement to do one every year. So it really depends. I mean it took us probably more than a year to do Portugal. So when we start with Portugal. And I mean the reason was I think we really want to understand how the market works, and we want to have a combination of things in place. So we want to have the right people. So we are typically hiring industry experts, people who have been around for 20 years.

They know all the tricks of the trade. They really understand it in a way. We cannot understand it in Sweden or in London, combined with having this confirmation around the deal flow that it's not a market which is captive or something special, but it is truly competitive and open for us. And finally, having a good fit from a kind of regulatory compliance point of view.

I think there are some markets which are more complex to enter. Other markets are more similar to what we are used to, and there is a strong, let's say, bias towards continuing in the markets which operate like we are used to. And I think the results speak for themselves. I mean, Portugal has had a fantastic development since we've finally managed to close it.

I think in the presentation you saw from Fabien, he was mentioning these 250 IC deals or IC transactions. I think we did 10 or 15 of those in Portugal before we actually managed to win. And the reason is, of course, that when we really go after it and we do it, then we want to be confident that the results will come like they have been doing. And I think that's the sort of takeaway from this whole thing or at least my thing regarding the new markets and the M&As.

So we will continue to do it, but we will only do it when it makes sense from an ROE perspective. And when we can be confident that going into Portugal or Hungary or whatever market will really work for the long term because in the end, like Harry said, that is all -- that is the main measurement and how we are being measured in doing these things. It's not about putting another flag or saying that we're now live in another country, but it's really about being sure that by adding this market, we will add more ROE accretiveness that we basically introduce in terms of risk and complexity.

Interesting. And just a follow-up question on M&A then. It has not always been a recipe for success. Why will this time be different with Azzurro?

So I think -- yes, I think that's a fair question, right? And I think the reason -- I think there's a couple of reasons. The main one is that when we look at the M&A, when we look at this transaction, we look at it as a portfolio deal.

So this is the same as the deals Fabien's team does every day. So the transaction or the M&A price is really based on the portfolio, which is a part of the deal. And that's what kind of the price we pay. But then in terms of the kind of value we receive, we get the value of the portfolio, we get the structure, we get the licenses and we get the people.

So we see that there is a sort of price which is supported by the portfolio valuation. But actually why it was a great deal is because we also got all these other values, which is a little bit more hard to maybe count, but this is not a synergy case. There is no expectation that there will be cost synergies or revenue synergies or something like this. The deal stands on its own as portfolio investment.

Interesting. So we move to France maybe, just following the map.

Thank you. Hi, everyone, and good afternoon. My name is Makram Chebli. I've been the Managing Director for Hoist in France for the last 3 years now, and I have been with Hoist for the last 13 years, mainly covering business development for France. So I have a few minutes now to take you to France. So let's travel. And what I would like to do is, first, to tell you more about the market and second, to talk about Hoist in this market.

So I'll start with the French paradox. As we have been saying over time, France sits on the biggest stock of NPL in Europe. And the other funny fact that we've seen earlier is that this stock is increasing now together with Germany, it's a stock that's increasing. And the reason is that the French bank historically has really managed their NPL by selling portfolio abroad and what they had in their entities abroad. Now this is changing.

They are selling much more in what they hold in France, and this is due to profitability concerns, but also due to regulatory pressure. And we are seeing that increasingly. What is also changing is what they are selling. We have talked about claims being sold earlier in the process, and this is totally true. I'll go back in time. We've been on the market for 25 years. Fabien mentioned that.

They -- the banks have been selling really written-off claims very old, multiple times reactivated. So there was not much to take out of that. Now this has changed and what we are seeing is claims that are much fresher and also new asset classes. We are talking about over-indebtedness cases and increasingly -- significantly increasingly SME portfolio, mixed portfolio consisting mainly in SME. And this is not a forecast. This is what we see in the deal flow.

So over the last 3 years since more or less the last Capital Market Day, we have seen bigger transaction and many more transactions that we historically have seen on average. So we feel that the market has started to move since then. Now going to where Hoist is in this market. And there, there are 3 elements that differentiates us from the rest.

The first one I'll start with is our historical presence. 25 years, we've been there even when not much was sold, but we stayed there. We stayed there. We worked on building strong relationship with sellers, building confidence, sourcing transaction for the future, we could say. And the other thing that is also very difficult to buy is that we have gathered data across all asset classes, right?

This is the first point. The second point is that we cover the full spectrum of the asset classes. We invest, as you can see on this slide, I mean, we invest in unsecured, of course, secured and SME and private individual in the secured area. So we really cover everything, not the commercial real estate, but when it comes to the main concern of banks, we are there. So this also differentiates us because when we talk about our competitors, they often focus on a slice of that.

So we are really a one-stop shop for these banks that are selling now. And the third element I wanted to talk about is the fact that we are a regulated credit institution. And as I mentioned, banks are selling much fresher claims. They almost are selling customer relationship and not closed accounts, right?

So they really are careful to whom they are selling. And this status, the fact that we are supervised really gives them a quality stamp and it gives us a quality stamp vis-à-vis them. So this also differentiates us. Bottom line, the market has started to move. We have been there for a long time now, and we are totally in place to continue capturing the growth that we see in this market.

So given that the market is sort of wakening up on the backdrop of the backstop regulation and so forth, how much more can the market grow until it reaches sort of a new steady state?

I mean the market is continuously -- I mean, it has started growing, but I mean, we don't see any limit to that in the near future. The Stage 2 and Stage 3 is increasing significantly. Fabien has shown that earlier. And there is real pressure on bank to sell, and it's real pressure. It's not just talk. There's 2 things driving it.

I mentioned profitability. Capital sitting in Stage 2 and Stage 3 is not earning anything when banks are already under pressure and need to really improve returns relatively to their European peers. And second, the regulation. The NPL directive is now part of the French law. So it's setting a frame where it makes it easier for French bank to sell and also for us to be more confident in the way we are pricing. So this is expected to make it easier for the market to turn and bring more volume to the market.

So what we see on the ground bears that. We are seeing sales happening abroad. Now it's happening at home, right? We are seeing a pipeline that is the strongest that we have. It's a very significant pipeline. And if there's something I would like to stress is the pipeline on the SME. The SME is really the area and the asset class where we see most of this happening. So banks are under pressure to sell, and we are there to help them.

Interesting. It almost feels like a football match here, but let's move on to Italy to Andrea.

Good afternoon. Yes, I'm Andrea Giovanelli. I'm the Managing Director for Italy. Italy is quite a historical business for Hoist and has been active -- we have been active in the country since 2011. So we gathered considerable experience on the market and on a number of asset classes. For the last years, for a certain time, we have been the largest book invested in one single country in the group. We still are. And we -- such a book now is SEK 6 billion, and it increased in the last few years at a steady pace, slower than other countries.

But we think it is a significant growth because we attained that in a market that Fabien showed well, which has decreased and which compared to the years when the stocking of NPL was present in the banks in Italy, it is reduced by 3x, 4x. So it's a completely different market. But still, we have grown our book, which arithmetically means that we have substantially increased our market share.

How did we managed to do? Well, basically, a little bit like also Makram was working for France, we widened our footprint in terms of asset classes. And now we have quite a wide range. We do secured, unsecured, secured from a lot of time, SMEs, but individuals. We are also important investors of payers, what we call payers, which are claims already restructured by somebody else, but which still needs a certain maintenance.

So we have a wide range, which helped us in increasing the volumes. And -- but even more importantly, which somehow provides us with the flexibility to allocate our capital at any given time in an optimal way on Italian market, which is important, and it is difficult to replicate. I maybe insist once again on this, but my colleagues already did, but it is true for Italy as well. Italy is quite a mature country. We intermediated huge volumes on NPLs in the past years.

So we know a lot. It is mature. It is sophisticated. It is specialized. And to be competitive, to be profitable in this market, you must be an expert of each asset class you are purchasing. So to purchase more than 1 or 2 means that you must be expert competent in all of them. And it is difficult to replicate. It requires time, requires refining the process and making mistakes and losing money. So it takes time, and it is an expensive exercise, doable, but we think to have a strength there. The primary market is evolving, as always done true, and it is now evolving under a number of metrics.

Of course, it is on the press. Italian banking system is now living a consolidation wave, and there are mergers and acquisitions, and there is a lot of movement. We think that this will help us in the future in the sense that we will get less banks. Italian market is still pretty much fragmented on the primary side.

We've got less banks, which means less deals, but a little bit bigger. We are a big investor. So somehow it goes in our direction. We -- the regulatory pressure is increasing from ECB, but particularly from Bank of Italy on less significant banks getting prepared to -- I mean, trying to get prepared the system to external shocks.

And of course, this somehow increased the market, the addressable market for us. Well, I will not insist on that, but yes, claims that have come on the market are fresher and fresher, the freshest possible, basically a few weeks after the default, which means that we buy richer credits, there is more cash there and requires more refined capacity to extract such value.

Everything that is difficult comes together with higher margin, of course. And so it goes a little bit in the direction of what we like, difficult things. And finally, on the competitor side, the there is a little bit of reduction of the pressure because a number of -- Italy was one of the few markets where some banks were investing in the NPLs, but they are banks, so they cannot be SDR. And of course, the business is not sustainable because of the backstop provisioning.

And so they are basically reducing their investment and some of them are even stepping out of the market. And the other investors have been not sufficiently successful and somehow are slowing down or stopping their activities. So a lot of things that changed. We think that we are well positioned for the fact that we have pointed out, we are -- we think we are in a good position to accompany the banks in their needs, and we will try to continue to do so in the future.

All right. I was thinking then if we assume then that there will be fewer bigger banks and fewer larger deals out in the market, won't that result that the large funds are coming back to bid in Italy?

No, because it's -- in relative terms, it is not a massive change. I mean to give you an example, the destocking phase, which in Italy was from 2010, 2013, '14, the average deal probably was surely above EUR 100 million. But the largest transaction have been EUR 1 billion.

We are not talking about that now. The average deal in Italy is below the group average, EUR 20 million. In Italy, we have EUR 10 million, EUR 15 million as an average deal. So if out of the first 20 banks in a few years, we will have only 15 that EUR 10 million, EUR 15 million will increase by EUR 15 million, EUR 20 million. So...

You sound optimistic. Moving to Germany then.

Good afternoon. My name is Mihails Mihailovs. I'm responsible for Germany. Germany is one of the oldest markets we have at Hoist. I think if I'm not mistaken, we've been established in 1997. So next year is going to be 30-year anniversary for our German unit. German NPL environment is quite stable. We have been experiencing steady inflow of the NPLs. And as you saw from the Fabien's presentation, we are still thinking that we will see more.

It's a very well-established legal system, well-functioning recovery processes, supporting the predictability and the debt recovery overall. Competitive landscape is quite fragmented. We have quite a few local players and also international players.

We also see new financial investors coming into Germany in the last couple of years. The Hoist main focus has been and remains to be unsecured consumer NPLs. We have been quite successful in that asset class, and it's actually a prevailing asset class in Germany. However, over the last few years, we've seen an increase in the SME NPL stock, especially on the bank balance sheets. We see slight signs or small signs that this market is opening up as well.

The portfolio is coming into the market composed only about the SMEs, and we are there to address that market. We're currently also busy with building up that competence internally and we're also working with the partners to do that. Operationally, we have our own platform. That's 200 -- around 200 FTEs we have in Germany, and we used to do the workout ourselves. However, with the pace of the investment, as you have seen from Fabien's presentation, especially in Germany, we need to catch up also the operational capacity with that pace.

Therefore, in the last couple of years, we started to gradually outsource the workout to our partners, the capital-light servicers. And we are now trying to establish a panel where we mainly focused on servicing the claims that are labor intense where we don't feel we have the right competence to address.

That's quite interesting, actually. How does that -- how does the servicing market in Germany look like? Is it -- given that it's also a quite young market from that point of view?

It is quite unique from the pan-European perspective for the reason that in the rest of countries of Europe, we've seen the consolidation of the servicing market. So there were M&As happening. It was not that much in Germany. There were a couple of big M&As and that resulted in having a couple of countrywide players. But in general, it remains highly competitive regional market. You have a very -- quite a large number of local players or players which are specialized on certain asset classes just doing certain competency for their business.

Interesting -- and then moving to Poland.

You don't miss the Greece. Greece is the last one.

Okay. Good afternoon. My name is Mateusz Poznanski. I have a pleasure to run the Hoist business in Poland. Previously, I was 20 years in the banking sector. So you may say that I was selling the loans, which I now try to manage from the debt industry perspective. Hoist has been present in Poland since 2011. So 15 years road, starting from the small JV with the local partner and to become as a second biggest company in our industry in Poland.

But coming back to country, it's true to say that the Polish economy is booming. So everyone knows this. When you look on the GDP growth in the last years is the fastest-growing economy, but it's more important that in parallel, the household wealth is growing as well. So currently, we are sixth biggest economy in EU and waiting for the invitation in G20 Club. So yes, this is the situation.

So I couldn't be surprised that many players really like to join this road, this boat. So almost everyone is in the Polish market. But despite this super competitive market, our view of the market is positive. It's due to, let's say, 2 things. On one hand, you have unemployment rate on the lowest level in the history. So this help us in the collection. And in the other hand, you have this GDP growth, which drives the loan volume increase. And we still believe that this is the room to increase.

It's simply to answer for that question. Why? Because when we compare the debtness of the household in relation to Europe, Poland is one of the lowest. So it's still room to increase, especially when you compare with the developed markets, it's even not half.

But coming back to the, let's say, emerging market, when you think about the emerging market and then you think it's unstable, unpredictable, but it's not the case for Poland. Currently, we can say that Poland is it's a mature market, quite predictable and stable. We have 40, 50 deals every year. And because of that, we can easily manage the risk, and we can also buy and focus on those deals, which are profitable in line with our, let's say, strategy and goal.

So that's why probably the Poland is one of the most profitable market for Hoist -- and not only because of the macro is helping us, of course, it's true. It's not only because we have the great investment team who can price all the portfolio with the cooperation with the great experience in the local team, but mainly because we are, let's say, organized differently.

So our setup is 100% in-house operation, so we can focus on the process, being super, super curious about the excellent process and then having the cost under control. So giving you only one example to illustrate this, the last 5 years, the collection was doubling in Poland. And at the same moment, it was the question, we keep our FTE level on the same level. So yes, this is the situation of Poland and maybe I should say something in the end is one more thing. So it's one more thing. When you think about the Polish market, we are operating on the main part of the market, so unsecured individuals. But 1/4 of the market is the secured and SME. So this is what we see as a potential growth. We already invested in the secured EUR 20 million, and we are now building the team for the SME. And this is the next engine to, let's say, continue to grow or to maintain the excellent growth as we have seen in the last years.

So then it sounds like with low unemployment, NPL levels probably -- with low unemployment, NPL levels will probably remain flattish for banks. So then on the unsecured side, I guess you will grow with GDP each. So then the sort of structural growth engine will be SME, it sounds like.

It probably is the combination. As I said, this 1/4 of the market, this is the place where we see the potential growth and also the core part of the market when GDP is growing, then the volume of loan is growing. And it's -- of course, if you have the healthy market, then the share of the NPL is slowing down. But it's a certain level when they should stabilize. So I believe that the NPL level will be more or less on the same level, and then you can see the growth coming from the growth, the GDP and the volume.

And then last but not least, Greece.

Good afternoon, everyone. My name is Sarah Salmona, and I'm Managing Director for Greece. We have been in Greece since 2016, and we have been investing mainly in unsecured portfolios. We have outsourced all our portfolios since we bought them. We, therefore, don't have an internal collection platform.

We currently work with 2 of the largest servicers in the market, and we have a team of approximately 15 people on the ground. The way we follow and steer our servicing partners is what is making this work well. And it starts with the information we get. So we get almost more than 40 reports from our servicers agreed in the contracts on a daily, weekly or monthly frequency.

The majority of these reports relate to performance where between them, we can -- we have a very complete view of what is happening and what is the performance and then a set of other reports that have to do with legal, regulatory and finance issues. The point, of course, is not the number of reports we get, but the level of detail we managed to have where we almost have the same information as the servicer does. So we form our own view on how things are working and performance.

Being able to see the portfolios in that detail is what allow us to be able to challenge our servicing partners. We have an experienced team on the ground that knows very well the market and the regulatory framework under which we operate. We are not there to receive updates.

We are there to work alongside the servicing partners and challenge them to do things different where we see that there is room to do better. There is a structural governance around it. We hold set meetings with everyone involved, including top management from both sides. We very frequently visit their premises, review performance, adjust strategy, resolve issues.

This is -- meeting that often is a big part of why this is working really well because we are not waiting for quarterly reviews to take decisions or resolve and issues not pile up. Also, whenever it is needed, we are there to support the communication and cooperation between the sellers and the servicers.

And we can do that because we have a long-standing relationship with the seller that continue well after closing. So this is the way we have been managing our portfolio since the beginning, and it let us steer -- actively steer our portfolios despite the fact that we don't collect from them ourselves.

Interesting. And on the growth side, coming back to Fabien's slide earlier where Greece -- the NPL market is in decline, where do you -- in which of the subsectors do you see the largest growth potential?

The Greek market has emerged outside from the Greek crisis and from regulatory pressure on the banks to dispose their NPE stock. Schemes like HAPS, the Hercules Asset Protection Scheme, have also supported the market, and we have seen large transactions coming to the market from all asset classes.

Volumes currently are lower, and this is what the normalizing market looks like. The majority of the -- the bulk of the NPAs on the balance sheets of the banks have been disposed. So we see now mainly the flow coming from the secondary market where it's -- the landscape is more complex and more competitive. It's around all -- we see transactions coming from all asset classes. They depend on the plans that they want that hold the securitizations have and some are more -- have a short-term view, other have a longer view in the market.

Looking forward, we also see credit growth across the banking sector. We expect that to continue. And as the loan books expand, we expect to see a more recurring new NPE stock and that the Greek banks will become more proactive and frequent sellers. It's also worth to mention that the lower volumes and increased servicing costs are likely to drive consolidation in the market, but our fully outsourced model is very well suited to those dynamics as we can scale together with the market.

Makes sense. Thank you all. We now round up with a final round of Q&A for today's CMD with the previous speakers, Harry Vranjes, Magnus Söderlund and Fabien as well. So welcome up. You can stand over there. So you guys can stand over there.

We will stand over here.

And then I'll change position. So -- do we have any questions from the audience? We have a microphone as well.

Hi, my name is Michael Helman. I'm from a company called [ BIG ] Finance. My question is does your threshold -- minimum threshold for investments will it change? Or will it always be a red thread for all the different countries as you're now in 15 markets. Also geopolitically, each country is quite drastically can change financially in each country in very short terms as well.

So will that be changing in the future? We work a lot with buyers, but we see some buyers, minimum investment size is EUR 20 million in one country, can be EUR 5 million in another country. So we see these changes all the time. So how do you guys see for yourself in the future?

Well, maybe this is a question actually for -- well, we don't really have a limit, right? I think we buy -- we have limits. But we buy portfolios from, let's say, EUR 0.5 million investment up to, yes, EUR 250 million, right? So that can be in any market, right?

Obviously, if we're going to deploy EUR 250 million, then we need to have some serious track record. It would not be a first bet in a new market. So that's how we see that, right? And when it comes to sort of -- you alluded to sort of geopolitical changes, et cetera, in markets.

But we are tilted to the Western side of Europe. We've just now opened up Hungary. But in general, very large share, except then for Mateusz. But we call -- we count Poland into the Western Europe now as well. He will be happy to hear. So I think there, with that the corruption risk and in general, geopolitical stability is sort of higher.

A question from the online audience, and it's probably good to ask this now when the country heads are not on stage. What's the variance in terms of profitability top to bottom for the different markets last year? And what are the key factors explaining the variance?

I am absolutely sure Mateusz again, would like to -- is it you who have asked the question perhaps on your phone. No, I think -- we don't necessarily disclose that. But I think we are -- we obviously do keep a ranking. And we are -- we have a very -- let's say, we have a standardized target for all markets, basically, right? So how we steer the company is on the return on equity target.

We have said to the outside world that we were going to deliver 15% up until today. And of course, that 15% needs to pay for head office, for investment team, for IT, for a lot. So the targets on the individual markets is, of course, higher than the 15%. And for them, they also have, of course, indirect cost in their own local market, which means that every portfolio they buy needs to deliver a higher return on equity than their country target, right, to pay for their local cost, right?

So the return on equity goes through the whole organization all the way down, right? Or if you see it like Jan Carlzon all the way towards the customers. So I think that's what I can say there. And we do have sort of the country target, there is sort of a standard. Then we know that in one market for 1 year, we know that there's going to be some sort of change, et cetera. So we might adapt it a few percentage points up or down. But in principle, everyone needs to deliver the same.

Fair enough. It was previously asked, but it probably goes to all of you as well, not only Magnus. Several of your competitors are talking a lot about AI, machine learning and LLMs improving efficiencies. How are you generally working on this? And how is your view in a near-term perspective? So until 2028, how much efficiencies do you expect to find?

So as the only computer science student in the panel, I will -- yes, we -- so we are a believer in AI. We are a user of AI, and it has accelerated, I would say, in the last year to the point where we now need to make sure that tokens are well spent. But I think we implemented in Hoist in sort of a different way.

I think many are looking at the front end, right, the consumer versus sort of our frontline staff that there is where the big benefits are. We are actually doing it from the opposite, right? So we are going from the group functions to the investment team to the back office in the countries, et cetera, where we have massive amounts of data, massive amounts of documents, et cetera, right, that we need to sort out, which previously we have -- sometimes when we onboarded a portfolio, we have brought in 50 students to sort through the paper that comes with a truckload of -- for a portfolio, binders that would fill this stage, right? This we don't do anymore. So AI tools, et cetera, are doing those things for us now and we can employ the students for other stuff.

Makes sense. Maybe a rude question and maybe, Fabien, you can hold your ears now. But if we look at your position, you have your funding advantage. Other competitors are trying to replicate the funding advantage, then you say that, okay, so then your investment experience is another competitive advantage. What do you do internally to prevent a competitor from giving Fabien a call tonight, offering him a horrendous amount of money and offering him to bring the 5 smartest guys and women you have on board and leaving tomorrow. What would happen then?

No.

You want me to answer?

No. I think -- I mean, obviously, if you're going to copy Hoist, where do you look, right? You look at Hoist. And people have been doing that now for a couple of years. So far, we have lost very, very few.

If you are -- and now I'm speaking for your people, if you are -- maybe for yourself, if you are an investment professional, you want to, every once in a while, win -- make an investment. And then you want to work for the company that lands and wins the most investments. So I think that I think is the key reason why our investment team is intact in this market. And in fact, currently is attracting people from players who are not deploying as much and who have not managed to deploy as much in the past few years, right?

So of course -- so I think that is by far the biggest. Then if we talk about the pile of money and so on, that's a different story. But we do have incentive programs internally and so on. And all our bonuses are according to banking rules, deferred for years and so on, right? So there is some sort of stickiness in that. But I think the main -- the absolute main reason is if you want to win at the work you do. And I think our investment team have won a lot lately.

And people in the investment team, they've been -- we've had very, very little people leaving actually. Over the past 4 years, maybe 1 or 2, and that's it. So hopefully, that will stay the same. But as we said, we are trying to incentivize them to stay. But more importantly, I think we are trying to create opportunities internally as well. So there are a few that are moving into the countries or into other functions. So we are thinking about their current -- I mean, their career path as well.

This is very important. But investment team is not everything. I mean the countries are a big part of those wins. So that it's an oversimplification to say that, okay, we have very smart guys doing the investment. That's not true. Yes, it's true, but it's not enough. That's not enough, unfortunately. So if you want to replicate, you need to hire 250 people, not those 50 only.

All right. No -- if we don't have any more questions from the audience, yes, maybe.

Maybe just given your size and how much you've grown, how should we think about when you're growing forward? Is that mainly going to be outsourced collections? And as a direct follow-up on that, given that you have a much bigger base now, wouldn't it be worth to staff up much more in the big countries to do more in-house given that I suppose it's better margins?

So I think with the growth going forward, we will, as Magnus said, right, we will be cautious in adding any sort of fixed structures. We have a functioning outsourcing, sort of, framework. I think Sarah wrote the book on that, our Greek country manager, which we are all benefiting from. And I think that framework is we can use that to make sure a little bit as I'm not really sure which one of the country managers, maybe it was Andrea, mentioned that we keep the, let's say, lighter touch, more cash-generating parts of the portfolio, and then we can outsource the heavy lifting parts of the portfolio, which maybe requires a completely different infrastructure than we do have. But we will continue to be cautious about building up, let's say, fixed or semi-fixed structures in the company.

And then final question. I mean, part of the pillars for growth was expanding geographically. Which countries are missing in Europe that you don't have today that would be reasonable size? And when do you look for U.S. or something beyond Europe?

So in terms of countries, we like the Nordics. I think we have been public about that before. We are present in half the Nordics at the moment. So those, I guess, would be a natural next step. So -- and then there is, let's say, maybe Ireland and so on left, right? So there are a few markets where we see opportunities to expand. We will be staying in Europe. We have no plans during this strategic period to enter outside of Europe.

All right. I think that sums up the Q&A session. Then I'll leave the floor for Harry for some concluding remarks.

Thank you very much. Thank you. I had some notes here, and then I need my glasses. So thank you. It's been a long day, a long session. I hope you have gotten to know Hoist a lot better today or now than in the beginning of the session. And -- but to leave you then with some concluding remarks from this Capital Markets Day, basically, it is what is it -- I mean, the whole summary is basically what are we going to do '26 to '30 now, right?

We have the new targets in place, and they have been communicated, how are we going to deliver on them, right? And I think we have tried to show that here today. But it is continued focus on the profitable growth with this investment ambition of SEK 60 billion by the end of 2030. We will maintain strong cost control and return focus to make sure that we reach both the EPS target and the ROE target. And we will be -- the scale benefits of the growing portfolio will expand this operational leverage further.

We've talked a lot about the sourcing capacity, the 4 different asset classes, let's say, combined with the borrower types and so on. I think that is -- it's a sourcing advantage, but it's also a risk mitigant basically, meaning that 4x 15. We have 60 different places where we can allocate our capital. So if something gets too intense or falls below our hurdles, then we have multiple more places to deploy. And of course, building up the resilience and the stability in the book.

Everything will move a little bit slower. The portfolio will -- a larger portfolio at the same absolute investments will grow slower, similar on the liability side, right?

So we will become a more predictable and stable company going forward. And with that, and I guess there are no further questions, Q&A sessions are locked. I just want to thank everyone for joining us here on this Capital Markets update or Capital Markets Day today. And thank you for your interest in Hoist Finance. Thank you very much.

Welcome to Hoist Finance Q2 Report for 2026. [Operator Instructions]

Now I will hand the conference over to CEO, Harry Vranjes; and CFO, Magnus Soderlund. Please go ahead.

Thank you. Good morning, everyone, and welcome to this Hoist Finance earnings call for the second quarter of 2026. I am Harry Vranjes, and next to me, I have Magnus Soderlund, our CFO; and Karin Tyche, our Chief Investor Relations Officer. Thank you all for logging in today and for showing interest in Hoist Finance. We'll try to run you through this quite action-packed quarter in about 30 minutes and try to leave as much room for questions as possible. There's a lot to cover. We have also understood some of you are looking for some more color on the Azzurro acquisition. So we have added a slide about that later in the pack. But in general, we are very pleased that we managed to close that transaction already in Q1. But as Magnus will talk to you about later, they are not in the P&L yet, right? So we have the company, the people and the assets on the balance sheet, but revenues and costs will only be visible from July onwards. We are, however, already operating on the market, and we've been able to win a number of smaller portfolios since closing.

Now Hoist Finance is a growth company operating in a growing market. Although the stock of NPLs on the balance sheets of the European banks is growing -- are growing at a relatively modest pace. The stock today generates more NPL sales than it did in the past as sellers sell earlier. Now this change in behavior is driven by a combination of factors, but certainly, regulation is one of them. The European regulators are still laser-focused on the NPL topic, and we expect them to be so for the foreseeable future. And all in all, we assess that we will have favorite market conditions for the foreseeable future.

There are many, many things to highlight this quarter. I think one of the highlights is, of course, also this Moody's rating hike. It will make our market financing marginally cheaper, and we also see it as a recognition of our rigorous risk management. And with this rating, we believe we have the highest credit rating in the industry. Now over to the highlights. Yes. It has been a record quarter. We closed portfolio investments of some SEK 3.5 billion in the quarter at good returns. That is our highest Q2 ever. Now combined with the Azzurro portfolio of SEK 2.6 billion, that means we added about SEK 6.1 billion to the total portfolio in the quarter, another record. Now the market is active. The pipeline is healthy, and our investment team is fully occupied for the second half of the year.

Currently, our portfolio stands at SEK 39.2 billion, up 26% from last year. And of course, with that, we have reached and surpassed our volume ambition of SEK 36 billion by the end of 2026. That doesn't mean that we will be pausing acquisitions in any way. We will, of course, continue to invest and build scale on this platform that we have. And when it comes to new volume ambitions, we'll get back to you with that at the Capital Markets Day in September. Very strong collection performance this quarter, 108%, broad-based. And I just want to thank all our operational teams for this delivery, really great work.

Profit before tax came in at a strong SEK 632 million compared to SEK 310 million last year. Now we did get the VAT refund and adjusting for that and the transaction costs, the last batch of transaction cost, I should say, for Azzurro, we end up at an underlying earnings before tax of SEK 501 million, another record. And I think we continue to see the benefits of the scale that we are now reaching. Return on equity, our core target came in at 27.5%. And of course, if you then make the same adjustments as on the EBT, we end up at an underlying 21.6% return on equity, above the 20%.

Now earnings per share doubled or more than doubled, I should say, to SEK 5.15 per share. And at the end of the period, we had a CET1 ratio of just over 13%, a very strong capital position. Moving over to the portfolio and the investment. So it has been a busy quarter. And as we have highlighted before, to be the leading investor and manager of NPLs in Europe, you need to have significant presence in the 6 largest European economies. That is simply where the bulk of the NPLs are. We now have about 80% of our portfolio diversified over those 6 markets, Germany, France, Italy, Spain, Poland and now the U.K. During the quarter, main investments were in France, Poland, Italy, and we're happy to also have closed a larger portfolio in Sweden. It's been mostly unsecured this quarter. And then combined with the Azzurro portfolio, which is also unsecured, the share of unsecured of the portfolio went up with a few percentage points, but this will fluctuate quarter-by-quarter.

IRRs are holding up. We have seen selective aggressiveness around certain transactions. But if returns drop below our hurdles, we walk away. Discipline is key and the pipeline is healthy. So far, in July, we've signed transactions for about SEK 1 billion. We expect to close those transactions during the second half of the year. I think the market trend of NPL volumes moving north continues. At present, almost half of the EU NPL volumes are on the balance sheets of French and German banks. And if you then add U.K. there, it's -- they have NPL stock similar to Germany's, but a slightly more active NPL market. And let's say, before Azzurro, we had strong market positions in 2 of these 3 markets, and now we have it in all 3. So very happy about that. And then as per the end of the second quarter, the total portfolio now stands at SEK 39.2 billion book value with an estimated remaining collections of SEK 66.9 billion.

With that, I'll hand over to Magnus to take you through the quarter in more detail.

Thank you, Harry. Good morning all, and thank you for calling in. So if we look at the quarter, we see a continued strong delivery during a rather busy quarter with a record investment volume and the final implementation of the Azzurro acquisition, amongst other things. Profit before tax at SEK 632 million versus SEK 310 million last year, meaning a 103% growth year-on-year, 105%, excluding the FX impact. As we have communicated during the quarter, we have received a VAT refund from the Swedish tax authorities after a mutually concluded agreement with a one-off P&L impact of SEK 164 million, which impacts this quarter. We also saw the last bit of the transaction costs related to the Azzurro acquisition, SEK 33 million. If we exclude for these one-off items, we have an underlying profit before tax of SEK 501 million to be compared to last year's underlying SEK 335 million. Last year, we had a negative VAT court ruling in the Netherlands. So the underlying growth ends at 49%.

We have a net profit of SEK 474 million to be compared to last year's SEK 234 million, rolling up in the same growth percentages as for pretax earnings. Excluding the mentioned one-off items, we see an underlying SEK 376 million of net profit for the quarter to be compared to SEK 254 million last year. So this leads up to a 48% growth in the underlying net profit, a really strong number. So in the reported figures, we arrived at an ROE of 27.5%, which adjusted for the one-off items becomes 21.6% to be compared to last year's underlying 16.1%.

And then if we look at the P&L in a bit more detail, interest income, including the income from co-investments at a combined SEK 1.46 billion, leading up to a 19% growth compared to last year. This to be compared to a book value growth of 26%. And then obviously, as Harry said, the one thing to keep in mind for the second quarter is that we see the SEK 2.6 billion investment of Azzurro in the reported closing portfolio book value, but we don't see any P&L contribution. Since we closed the deal at the very end of June, so adjusting for this, the book value growth is at 18% and in line with the interest income development.

In the net interest expenses, we see an increased cost of SEK 20 million year-on-year, so a 6% increase. This is a result of a more favorable interest rate environment, combined with a lower NSFR for the quarter. We reported 138% compared to 143% last year. And the fact that we are becoming more NSFR efficient in our deposit composition. We continue to see a steady net interest margin in line with previous quarters and also last year. In the impairment line, we see a continued strong performance coming from our collection activities. We closed the quarter with 108% compared to forecast and compared to last year's 104%. We have collected a total SEK 3.1 billion in the quarter. And as per normal, we have adjusted for timing for the majority of the secured overperformance, and we also see a strong overperformance in the unsecured collection.

We had a total overperformance of SEK 447 million, where we did timing adjustments for SEK 218 million. We also saw some performance-related net negative write-downs in the quarter of roughly SEK 50 million, all part of our intention to manage our book, our portfolio in a prudent and responsible manner. And we also made an ECL adjustment related to the German performing portfolio of minus SEK 53 million. So all of this leads up to the SEK 135 million we see in the impairment line. Looking at other income, this is where we have booked the refunded VAT of SEK 164 million. And on top of that, we have contributions from the real estate sales in Spain and servicing revenue in Germany that we normally see every quarter.

Net result of financial transactions is mainly driven by our performance and gains coming from the notes held in our co-investment vehicles. So this all leads up to a total operating income of SEK 1.44 billion, which is a 38% growth compared to last year and a 23% growth, excluding the VAT refund. On the cost side, the direct costs are growing by 15% compared to last year to be compared to the portfolio book value growth of 18%. So we're continuing to demonstrate a controlled and healthy cost level. And if we look at the indirect costs, we see a reported 4% increase compared to last year. In the second quarter, the costs also include the last bit of transaction costs from the Azzurro transaction. So if we exclude this, the underlying indirect costs are on flat levels compared to last year, where we also had the aforementioned SEK 25 million impact coming from the VAT case.

So to conclude, adjusting for the one-off events in the quarter, we are at 21.6% ROE to be compared to last year's underlying 16.1%. So we're very happy with the continued strong performance in 2026. We have record high investment volumes. We have good cost control and a very strong operational performance. So we can move to the next slide. This is basically a recap. So just a short one. Net interest income, 19% growth year-on-year compared to a portfolio book value growth of 18% if we exclude the Azzurro portfolio book value. And we see a net interest income growth of 23%, further adding the increased liquidity efficiency, where we have an NSFR materially lower than last year, 138% compared to last year's 143%. We see another quarter of very strong operational performance. Our costs are at continued good and controlled levels. And the net profit reported at year-on-year 103% growth or 45% growth in the underlying result, adjusting for the one-off items.

We can move to the next one. Looking at the 5-quarter trend, we see that the direct costs are developing at a somewhat lower rate compared to collections in the second quarter, further illustrating our cost control and strong operational performance. The collection figures in the second quarter is, however, positively impacted to some extent as we had 2 significant payments totaling roughly SEK 180 million, which were timing related. So if we adjust for those 2, we see a quarterly collection of roughly SEK 2.9 billion in total, and this pretty much leads up to the underlying stable ratio that we now see on a regular basis. Our indirect costs adjusting for the last piece of Azzurro transaction costs remain on flat levels compared to previous quarters. And for the FTE numbers, we see a rather static level for the total business. And here, we also illustrate the immediate size of the organization post acquisition. So we have a total of 197 FTEs coming in, where the split of direct, indirect is fairly similar to our existing business.

We can go to the next slide. Looking at our funding structure, the mix of sources is pretty much identical to Q1. We see a further improvement of the overall cost of funding down to 3.23%, and we remain competitively priced to further support our growth ambitions. And looking at the funding cost in relation to our portfolio book value, we land at 4.1% for the second quarter. This is a further improvement from the first quarter where we saw 4.3%. So we're maintaining our strong position from a funding perspective. We do have a lower NSFR ratio in the second quarter, which helps us. And on top of that, we are currently very NSFR efficient in our deposit pool.

We issued an AT1 during the quarter at very favorable market terms to manage our capital position in this period of strong growth. And we also did a total SEK 500 million tap into our existing senior preferred instruments, SEK 350 million of that at STIBOR plus 125 bps and SEK 150 million at STIBOR plus 100 bps. So all in all, we're maintaining and improving our competitive edge on the funding side.

We move to the next slide. Our CET1 ratio comes in just above 13%, down from 13.9% in Q1, and this is mainly driven by the record quarter investments, leaving us with a continued strong capital position moving forward. LCR remains at continued high levels. And looking at our liquidity reserve, it remains at around SEK 27 billion. So we're becoming more efficient in the deposit structure. And if we look at the ratio between our liquidity portfolio and our NPL portfolio, it comes in at 70%, which is a significant tightening from previous quarters. And we also have a slightly lower NSFR ratio, as I mentioned. So to conclude, a very strong continuation of the year with record investment volumes, a continued great operational performance and the costs at controlled levels, this to achieve increased earnings and increased profitability moving forward.

So I think with that, I will hand back to you, Harry.

Thank you, Magnus. Yes. So on Azzurro, so we closed the acquisition in the last days of June. And we're, of course, very happy about that. And with this acquisition, we doubled our portfolio in the U.K. And as you can see, the U.K. now is by portfolio book value, our second largest market. We now have a larger presence in a very interesting market and in a very interesting segment, the SME segment in the U.K. And up until now, as those of you who have been following us know, we have been handling the U.K. in a 100% outsourced model. But of course, now going forward, we'll have greater optionality when it comes to servicing also our consumer debt portfolios, which we will continue to invest in.

And with this acquisition, we now have a solid presence on the ground in all the 6 largest economies in Europe, where the bulk of the NPLs are. U.K. represents -- they don't report statistics through Eurostat anymore since Brexit, unfortunately, but it represents circa GBP 30 billion to GBP 35 billion of NPLs, which we see at similar levels as Germany, but with maybe a slightly more active portfolio market. Now the team for the combined unit is up and running, and we expect to be fully integrated by the end of the year. This is not a heavy integration. These teams are highly complementary. Yes. And since closing this transaction in the last days of June, we have already won a few smaller SME portfolios, and we are looking forward to the autumn pipeline.

And then to close off before we open up for questions. Obviously, a strong quarter. We're happy with that. But our business model on the surface is quite simple. So we invest in portfolios at good risk-adjusted returns. We then collect at or above 100% on the pricing curves of those purchases on those portfolios. And we ensure that we, at all times, have capital and liquidity to do so. And I think as you can see from this report in Q2, we have done well and even very well in all of these areas. And of course, this builds a larger portfolio over time, and that generates more interest income. So the scale has its benefits, right? Obviously, for covering our fixed costs and growing the operational leverage, but also in terms of single risk exposure. As the portfolio becomes larger, any incremental new investment that we make will add proportionally less risk.

So we think we've come a long way or come some way towards becoming the leading investor and manager of nonperforming loans in Europe, but there is still a lot more to do. On the 9th of 9th, we will hold a Capital Markets Day here in Stockholm to lay out our plans for the future. And we hope to see as many of you as possible there.

And with that, I think we thank you for the attention, and it's time to open up for questions.

[Operator Instructions]

The next question comes from Bjorn Olsson from SEB.

First, perhaps a technical question to you, Magnus. You're mentioning that you're increasing your NSFR efficiency. And I guess this is that you're migrating deposits to your own platforms, also explained by the sort of improving ratio versus your book. Could you give any guidance on, I guess, a, inflows into your own deposit platforms; and b, if we can expect this migration to add additional improvements in terms of margins?

I think our own platforms is one part of the story, but then we're also becoming more efficient in the stuff we get through raising, right? So we did the change from overnight a little over a year ago. And now we are actively moving more of the deposits into longer-term tenures on raising. And that's obviously helping us because, as you know, during the last 12 months of the tenure or the run time, the NSFR efficiency drops. So where we are today, we're at a really good place where we have a lot of our raising deposits and longer tenures on raising. And then on top of that, we obviously have our own platforms where we have seen a relatively good inflow since we opened up Germany and now we also have Spain. And I think we can guide a bit about -- we have roughly SEK 3 billion received on our own platforms in Germany and Spain now as of today.

Okay. And then on the Azzurro acquisition, I guess, first, it sounds on you, Harry, that you're not only buying the company and its book, but rather you buy a platform to grow a bit more in the U.K. How does the U.K. stand out in terms of, I guess, return metrics and attractiveness versus your other, I guess, euro area? And is this correctly interpreted that this is sort of a travel for you as well to grow further in the U.K.

Thank you, Bjorn. Yes, I mean, this is going to be a platform for further growth in the U.K. I think we are happy with the returns on the consumer side. I think what we can say is that the returns on the SME side are slightly better. So we will continue to grow in both those segments. But we believe the U.K. market is in an interesting moment right now, and we believe there will be volume to pick up there at good returns.

Okay. And just finally, Azzurro in itself, as of today, in terms of cost income, ROE, et cetera, how does it perform versus you? And if weaker, can we expect you to do, I guess, to have some redundancy costs and sort of a rightsizing one-off costs to come in this year as well if you want to slim it and improve it?

I think Azzurro is performing very nicely. We will not be giving you any ROE or earnings numbers on the call today. We'll see it baked in, in the Q3 report. But -- and I think, as I mentioned before, I think the integration and so on, this is highly complementary, right? These are teams doing legal collection on SME cases and are our existing or former U.K. organization was mainly doing consumer through outsourced operations. So this will be a fairly light integration going forward. So we don't expect any major integration costs. Obviously, they need to come over into our IT cloud and all of this, but those are fairly light touch activities.

The next question comes from Ermin Keric from DNB Carnegie.

So maybe first, just to check, Magnus, did I hear you right that you said you had 2 larger collections of SEK 180 million. And so what was that? It sounds very high given that you have such a granular book.

Yes, we do have a granular book. One of them originates from an indemnity payment basically. So it's sort of put back where we have claims that didn't fulfill the contractual obligations with the seller. So we, on a yearly basis, identify which cases should be sent back and then we receive the cash back for that. So that's one part of it. And then we had a larger investment in one of our markets where the interim collection piece was significant but also built into the collection forecast. So it doesn't impact collection performance per se, but it obviously drives the total gross collection, which we are looking at, at that particular graph. So it's just a coincidence that they both happened in Q2, and they were of such a size that I think it's worthwhile highlighting that. And then looking at the gross collection versus direct cost sort of makes sense again in relation to our sort of previous performance.

Got it. And then on the NSFR, you already touched upon it a bit, but I suppose you'll look to further increase the efficiency, but how about the actual kind of NSFR percentage? Would you want to come further down than 138%? Or is that a satisfactory level going forward?

We're always looking to optimize our deposit structure, of course, and I think we have done a really good job with that, which is now becoming sort of bearing fruit now in Q2. When it comes to the actual percentage, we obviously want to stay well above the 130% regulatory level. I'm not going to guide for an exact number, but if we would sort of start closing in on 135%, I would become a bit more active. But we are active on a daily basis in monitoring and forecasting this. So I feel very comfortable that we are in a good place to sort of remain at a reasonable gap above the regulatory limit. I have no concerns about that.

Great. And then the last question would be more on the investment pipeline. How far out do you have visibility? And it sounds like banks have started to sell a bit earlier. I suppose that's part of the backup. But do you see that there's anything kind of temporary that's getting banks to accelerate now that wouldn't be sustainable over the long term in terms of the activity you're seeing in the market?

Yes. I think it's difficult to say. I think we have typically, I would say, 9 months concrete, let's say, view. And then we have -- through our relationships with the banks, we can sort of assume what happens after that. And some banks are very, very structured and very scheduled in their offloading of NPLs. So we have -- but I think sort of concrete visibility is sort of 9 months. And we don't really see any that this is some sort of a bump or temporary push. This has been, I would say, growing gradually over the last 2, 3 years, the pipeline.

The next question comes from Markus Sandgren from Kepler Cheuvreux.

I was -- 2 for me, please. The first one was the credit loss that you reported. How much of that portfolio that is performing is provisioned, including this -- the cost you took for this quarter? That's the first one. And secondly, the -- coming on impairments, it seems like you're surprising the market quarter after quarter. If you look at consensus numbers, is there anything you think the market is not quite understanding rightly? Or you think those forecasts seems reasonable?

Yes, I can start with the second one. I think our forecasts are definitely reasonable. If we look at the longer time period like 6 quarters, we have sort of stood out in the last 2 quarters but we aim to be above 100%, and this we have done in a really good way. When it comes to the ECL provisioning, I think that's what you're referring to, right, Markus. Can you just repeat? The sound was a bit.

Yes, that one, that was exactly right. However, the one that you just answered, I was more referring to when you look at the market expectations in consensus, it seems like you have been surprising on that line for many quarters. And I was just -- or thinking if you think that the market is not understanding what you're doing there since you continue to surprise on the upside there?

It's difficult to answer the market what they put into the models. We have been delivering 105% collection performance on average, I think, all of '24 and '25. And also in '25, I think we had a very strong 108% Q4. I think we had 106% quarter as well. So I think -- and then typically, we are coming into the seasonally slower Q3 now. So yes, I think above 105% or around 105% is where we have been in the last, what is it, 8 to 10 quarters if you do it, some sort of average.

I wouldn't say there are any sort of misconceptions or misunderstanding. It's just that to me, this is a testimony that, first of all, we have a great operational setup. We have a great operational box, and we are very prudent in what we buy, and we are disciplined and then this comes out. But as Harry said, we have been -- it has been fluctuating over time, right? And now in the past 6 to 9 months, we've seen really high levels. But I think that's more to us buying high-quality stuff and actually performing on it.

And then the ECL, Markus, that's the SEK 43 million you're referring to, right?

Yes. Yes.

And sorry, if you could just repeat that question because...

I was wondering what the provision level of that portfolio is.

I think it's around -- would be 4% or 5% would be fair to say.

4% or 5%?

Yes.

The next question comes from Kyle Koka from Arctic Securities.

You mentioned Germany and France as markets with high levels of NPLs on absolute level. It's noted that you made some acquisitions in France during the quarter. Could you please describe or give a comment on the opportunities in France specifically and if you're seeing a greater willingness to transact in that market more recently?

Yes. Kyle, your audio was a little bit -- or the audio was a little bit choppy. But yes, I think the market in France is, I think, very active at the moment. It is -- and there has been a large stock of Stage 2 loans in France for quite some time. And I guess we -- what we're seeing now is that some of that is bleeding into sort of Stage 3. And what we see is typically a lot of secured, a lot of SME portfolios there, right? And -- so the market is getting increasingly active.

There are no more phone questions at this time. So I hand the conference back to the speakers for any written questions and closing comments.

All right. So we have one written question. Please elaborate on the key differences for Hoist between managing NPLs for SMEs and private individuals, respectively, in terms of return and risk characteristics as well as capital adequacy requirements and also debt collection. A question for you, Harry.

Okay. Okay. There's a lot in there. But I think, yes, I mean, the main difference between when we buy consumer portfolios compared to SME portfolios, secured or unsecured is that the consumer portfolios, we typically -- it's high volume, small ticket, statistical underwriting where our database from 30 years back, basically of continuous investments gives us a really, really strong pricing capability. When it comes to the larger ticket SMEs and also to some extent, mortgages and so on, then it's line-by-line underwriting, right? And then it's -- then the teams dive into each and every asset and sort of look at the liquidation values of those. We never assume that we will turn a business around. We are -- we price them at liquidation value.

And in terms of return and risk characteristics, I would say they both -- well, typically, we have the same -- around the same level of returns for these, right? We have our hurdles, and we stick to them regardless if it's unsecured or secured. And then when it comes to capital adequacy requirements, typically, NPLs, regardless if it's SME or consumer is 100% risk weight. And then, of course, in the actual debt collection, the teams work very differently. When we talk about SME line by line and mortgages and so on, it is typically the collectors have a pool of assets each -- a pool of loans each that they manage, whereas when it's in the unsecured business or the consumer business, typically, there is a lot more, let's say, machine involvement, making sure that the agents are working with the most -- with the best case at any given time. I hope that explains that question.

Great. Thanks. And one more question then. Are we looking to do more M&As going forward?

Yes. Thank you for that. Well, we are a well-capitalized actor in the industry. And of course, we do get incoming calls, and there are always interesting opportunities that we are looking for. But I think as we have said before, we are a very, very picky buyer. So our strategy is to buy portfolios, loan portfolios and any company that we look at will need to have one of those, preferably one of very high quality. so that it becomes profitable for Hoist from day 1. So we always are open for opportunities. And I think I'll leave it at that.

Great. And that's all the questions we had. So thanks a lot for dialing in today.

Yes. Thank you, everyone, and I wish you all a great summer for those of you who are already on vacation, sorry to interrupt it. And for those of you who are leaving like myself, enjoy your holidays.

Thank you.

Welcome to Hoist Finance Q1 Report for 2026. [Operator Instructions]

Now, I will hand the conference over to CEO, Harry Vranjes; and CFO, Magnus Soderlund. Please go ahead.

Thank you very much. Good morning, everyone, and welcome to this Hoist Finance earnings call for the first quarter of 2026. I'm Harry Vranjes, CEO of Hoist Finance. And next to me, I have Magnus Soderlund, our CFO; and Karin Tyche, our Chief Investor Relations Officer.

Thank you all for logging in and for your interest in Hoist Finance. We'll try to run through this in 30 minutes and try to leave ample room for any questions you may have. Today, with the new year, we're also trying out a new slightly modified format. So please bear with us.

Let's see, yes, there. So before we jump into the highlights, I think this quarter will be the first quarter in quite a while where we will actually be comparing apples-to-apples. So in the last 4 quarters, we constantly compared Hoist with SDR costs for the current year with SDR or Hoist without SDR cost in the previous year. And this has sort of clouded the underlying growth.

So if we now compare Q1 2025, where Hoist actually had full SDR costs with the current quarter, we see a profit before tax growth of currency adjusted 32% versus the total portfolio growth of 19% -- if we then also adjust for the transaction cost for Azzurro, growth is actually 37%. So I hope this gives an indication of sort of the scale effect of our business model.

Now before I go into the highlights, I just want to say a few words about the ongoing acquisition of Azzurro Associates in the U.K. So we are a leading actor in the industry. We're well capitalized. And for that reason, of course, we look at opportunities, M&A opportunities around the industry on a continuous basis. We are, however, a picky buyer. Our core strategy is to become the leading investor and asset manager of NPLs in Europe.

So we, therefore, primarily look for companies that have large portfolios that we can add on to the Hoist Finance portfolio. They have to be at attractive returns. And of course, we want to be able to improve our market position in the large economies in Europe.

We are also striving to grow our share of SME loans, as we've discussed, which is the largest asset class in Europe, and we have been successful there historically. Now Azzurro Associates ticks all those boxes. We become stronger in the largest credit market in Europe, in the largest asset class of NPLs. We will be allocating the entire purchase price of the circa GBP 200 million, so SEK 2.5 billion-ish to their portfolio, which is a granular SME portfolio with an average ticket size of SEK 120,000, a little bit larger than our consumer average in Hoist. There won't be any goodwill or other intangibles on our balance sheet after the closing. And so far, we have obtained positive responses from 2 of the 4 authorities that need to approve the transaction, and we are hoping that we will be able to close the transaction during the summer.

Now over to the highlights. Next slide, please. And this -- here, you see the new format. So strong start of the year. We closed portfolio investments of SEK 2 billion in the quarter at good returns. Combined with what we have signed after the quarter closing and including Azzurro, we have secured SEK 5 billion in volume up until the summer, depending, of course, on the closing of AZUR. The market is active. The investment team is currently fully occupied with 55 transactions.

Our portfolio has grown 19% from last year, stands at SEK 34.4 billion. And we are, of course, inching ever closer to our SEK 36 billion volume ambition, where we, by no means, will stop investing. We will continue, obviously, further.

Collection performance, again, a strong quarter. The machine is working really nicely. despite geopolitical uncertainties, fluctuating energy prices, interest rates, and it is a pattern we see from previous external shocks. Collections tend to remain stable.

Profit before tax, strong SEK 394 million, including the Azzurro transaction costs, compared to SEK 332 million last year, as I said before, currency adjusted growth of 32%. And this is driven by growth of the portfolio, accretive return levels and disciplined cost management. And this also helps us out on the return on equity that came in strong at 19.5%, a solid improvement of almost 3 percentage points compared to last year. And earnings per share, over 50% growth compared to Q1 2025, 53% actually.

At the end of the period, we had a CET1 ratio of 13.86%, giving us ample room to maneuver and plenty of firepower for the rest of the year.

Next slide, please. So it has been a busy investment quarter. So we've described before, Q1 is seasonally a slow investment quarter. So in January, typically, the market participants, they rest and regroup, not so much Hoist, but the sellers. And after what is usually a super intensive December and when we really had an intensive December in 2025.

So this Q1 was no exception. So the transactions that we booked this quarter were primarily transactions that we actually started working on in Q4 or even Q3 last year. We are now a specialized debt restructure and being -- as such, we have started participating in investment processes that we would have skipped last year simply due to the negative backstop impact on our capital. So this is not a problem anymore. And it's still too early to say how successful we'll be on these portfolios. We'll have to come back to you on that in Q2 and Q3.

But if you have -- take a look at the bottom right graph, you will also see that we are co-investing less as a result of being an SDR. The co-investments we have now are mainly forward flows that have been signed in previous years. Yes, which basically means that we are landing a higher share of the volume on our own balance sheet.

As you can also see in the bottom right graph, investment volumes are lumpy, and that is just the nature of the business. We don't want to stress any transactions to any particular date. It makes us a weaker investor. So the deals come when the deals come. However, internally, we usually assume a split of 40% for the first half year, 60% for the second half. But please don't see that as any guidance. It's sort of a rough rule of thumb.

The market trend of NPL volumes moving north, as we've talked about before, continues. Currently, almost half of the EU NPL volumes are on the balance sheets of French and German banks, and these are markets where we have a solid market position.

Spain, the exception there to the south moving north rule, maybe Europe's most structured and mature NPL market is also very active. We won 2 secured mortgage portfolios there during the quarter, making Spain our largest market in our geographically very nicely diversified portfolio, overtaking Italy and Germany from Q4.

Now if we would pro forma include Azzurro Associates in this graph, the U.K. share of the doughnut would grow to 15%. And although not sort of depicted on this slide, it would also grow our SME share of the total portfolio from today's, let's say, 10%, 10%, 11% to 15%, 16% and as per the end of the quarter, again, the book value, SEK 34.4 million, significant growth compared to last year and an estimated 118-month remaining collections of SEK 58.7 billion.

With that, I will hand over to Magnus to take us through the quarter in more detail.

Thank you, Harry. Good morning all, and thank you for calling in.

So we are off to a good start of the year. We have a profit before tax at SEK 394 million versus SEK 332 million last year, meaning a 19% increase year-on-year. And as FX is having a fairly material impact in the quarter-to-quarter comparison, the FX adjusted growth is at 32%. We see a net profit of SEK 337 million versus last year's SEK 260 million, which leads up to a 30% growth, 42% adjusted for FX. This SEK 337 million is impacted by transaction costs related to the Azzurro acquisition of some SEK 25 million, and that's reported in the indirect cost line. And on the positive side, we have a SEK 43 million impact in the tax line coming from a provision release. This relates to transfer pricing legacy case going back to 2016, '17.

Underlying profit before tax, excluding the SEK 25 million of transaction costs, grows by 25% and 37%, excluding FX. This results in a return on equity of 19.5% versus last year's 16.7%. And adjusting for the 2 mentioned items, the underlying return on equity for the quarter is at 18.4%. And then, if we look at the P&L a bit more in detail, interest income, including the income from co-investments grows by 10% year-on-year compared to a book growth of 19%.

The variance in growth mainly comes from FX, where the book value is reported as point in time and interest income is reported on average throughout the quarter, but also from the fact that roughly 80% of the volume in Q1 was implemented in March. So we're not seeing the full quarter impact in the interest income for Q1. Excluding FX, the interest income is at a 15% growth versus the portfolio book value growth of 19%, excluding FX.

And then for the net interest expense, we see an increased net cost by some SEK 42 million, driven by the higher portfolio book value and higher NSFR ratio compared to last year. And the increase in NSFR is coming from the fact that we have to hold liquidity for the Azzurro transaction, even though it has not yet been finalized, pending approval from regulatory authorities.

And looking at the impairment line, we keep the positive momentum from 2025 and arrive at a 105% collection performance for the quarter compared to 103% last year. And this is very much a tick in the box and confirmation that we have prudently and conservatively managed portfolio.

In other income, we have roughly SEK 15 million coming from Spanish real estate sales and the remaining mainly coming from servicing revenues in Germany. And we have a decrease compared to last year, and it's mainly driven by an asset sale conducted in Italy in Q1 of last year.

Net result from financial transactions is driven by overperformance and gains coming from the notes held in our co-investment vehicles.

Total operating income comes in SEK 138 million higher than last year, leading to a 13% reported growth, which is 20% adjusted for FX impact. So pretty much aligned with the portfolio book value growth. All in all, we see a steady development on the net interest margin with supportive pricing and really good return levels in the closed transactions for the quarter.

On the cost side, we are remaining at healthy levels with the direct cost for the quarter at a 15% growth in the reported figure. So that's 20% growth, excluding FX. This could be compared to a collection growth of 12% or 18% excluding FX.

To note also in Q1 is that we are doing a small reclassification of certain costs related to the deposit platforms. These were historically considered as indirect costs, but as part of it is directly linked to the portfolio book value growth and size, we will now define them as direct costs moving forward. It relates mainly to personnel and marketing and IT costs and the impact from the reclassification now in Q1 adds roughly SEK 12 million of cost to the direct cost line and therefore, a relief of the same in the indirect cost line.

If we look at the indirect costs, we report a 3% increase versus last year, driven by the SEK 25 million transaction costs already mentioned. Looking at the underlying growth adjusted for these costs and FX, the indirect costs are decreasing by 3%. And then on top of that, if we also add back the reclassified deposit costs, they are increasing by 1%. So all in all, we are on flat levels compared to previous quarters.

Adjusting for the 2 more significant impacts in Q1, the underlying return on equity for the quarter is, as I said, 18.4%. So all in all, we are very happy with the strong start of the year. We see higher investment volumes in the traditionally slow Q1, also with the material growth reflected more accurately, where we are now like-for-like on the financing side related to the SDR status.

So we can go to the next slide. So just to recap, a very good start of the year. Net interest income growth of 15% adjusting for FX, somewhat impaired by the majority of the new volume acquired at the end or towards the end of the quarter.

Total operating income boosted by another quarter of strong collection performance. We overperformed by SEK 223 million and adjusted for earlier than planned collections by derisking revaluations of SEK 88 million. And our expenses are at continued controlled and good levels. And the net profit reported at year-on-year 30% growth or 36% adjusting for FX and the 2 significant impacts, the tax provision and the transaction cost.

So we can go to the next slide. So if we look at our funding structure, the mix remains fairly similar to prior quarters with the exception that we now also have a Spanish-owned platform up and running. This, in addition to the German platform implemented during Q4 of last year provides a longer-term flexibility and ability to increase NSFR efficiency. We are always competitively priced with a stable funding base, which is and will continue to support our growth ambitions.

In Q1, we see a 3.28% average cost of funding, leading us to in relation to the NPL book value of 4.3%. So this level has been very stable throughout 2025 up until now, and this obviously puts us in a very good position versus the competition. And our ambition moving ahead is to try and keep this mix of funding moving forward to support our industry-leading credit rating.

We go to next slide. Looking at the direct costs, the cost to collect is roughly at the same level as in Q1 last year, adjusting for the newly reclassified deposit costs of NOK 12 million that I mentioned. But also slightly higher than Q4, where we saw a high earlier-than-planned secured collection, not adding any material costs, and this was particularly driven by France.

In general, we had a larger share of the total collection coming from the secured side in Q4, which carries a slightly lower cost to collect compared to unsecured. But overall, the cost to collect is aligning with the growth of the portfolio just as we anticipated.

Our indirect costs remain on flat levels compared to prior quarters. If we look at the FTE numbers, we see the shift for the deposit costs reflected in the decrease of indirect FTEs. In the direct FTEs, we see the similar increase of staff, and we're also adding roughly 10 operational staff across the markets in order to manage our growing book.

So we can go to the next, and I think last slide, Harry. Thank you. Our capital ratio is now increasing as a consequence of the backstop relief. The impact coming from this is roughly 2.7 percentage points, and this puts us in a very good position to keep growing as per our ambitions. We see LCR remain at very high levels. The liquidity buffer is at SEK 27 billion with a continued lower ratio compared to the portfolio book value.

And looking at the NSFR, we see a high 145% for the quarter, and that's fueled by the fact that we have to hold a share of liquidity for the ASR transaction and also be prepared for the immediate closing when the approvals are finalized.

So to conclude, very strong start of the year, very healthy growth in earnings and a continued strong collection performance over a very controlled cost base.

So with that, I hand back to you, Harry.

Thank you, Magnus. Yes. So an intense start and just some key takeaways before we open up for questions. So we are now an SDR, and this gives us increased flexibility. We have stopped sort of excluding or filtering out deals that we would have done last year or the previous years. And we've also been co-investing a bit less in Q1 compared to previous years, landing a higher share of the source volume on our own balance sheet.

Now the market remains active, strong primary market flows, and we expect to see some interesting secondary market opportunities as the year progresses as well. Azzurro Associates, the acquisition will give us a stronger position in the U.K., both for our current consumer business and in the SME asset class. And with the opening up of our Spanish deposit platform, we are further strengthening our platform resilience, basically taking down costs and making sure that we have multiple sources of collecting euros.

With that, I'll open up for questions.

[Operator Instructions] The next question comes from Bjorn Olsson from SEB.

First, to follow up where you ended with your excess capital. You're now adding M&A as a bit of a new leg to your story and you're sort of guiding for that to continue ahead. Is this on top of existing investments? Or should we see this as a -- that you're sort of -- that you feel that the ordinary market, the primary and secondary market is sort of limited in terms of additional growth opportunity? So -- or is it because the margins are more attractive?

Bjorn, thank you. Well, I think we have been looking at M&A continuously for the past years. But as we've stated and said also in this call, we are a picky buyer. So the portfolio needs to be valued at a price where we are willing to execute. And yes, if we find those opportunities, we will go for them. And I think doing it on top of or as part of investment volumes, we want to grow the book.

We see a fantastic primary market out there. And of course -- but that doesn't sort of exclude any that we also want to take position in certain markets, right? So I think this will add to the size of the book and also a very, very interesting SME asset class. And we will be continuing to look at other options in Europe.

All right. And as you're mentioning, you sort of -- the SDR enables you to broaden scope for primary investments as well. Could you give any quantification of -- in terms of a ballpark percentage figure, how much larger is your addressable market now in terms of investments once you are SDR?

I think looking at 2025, when we were not SDR, I think you could use the sort of co-investment volumes that we saw then, right, as some sort of a proxy. And that would lead you to something where 15%, 20% larger market. Now we will see the outcome of the bids, et cetera, and so on later this year or later -- well, until the end of the summer, most likely, to see how successful we are. But yes, it is an absolute benefit, of course.

Okay. And finally, on just a technical note, you're mentioning that you're wrapping up your deposits due to the Azzurro acquisition. Is that basically just roughly SEK 2 billion of deposits that will go into their books and consequently NSFR to drop by a similar amount once the deal closes? Or how should we view that effect on NSFR and funding in general?

Bjorn, so from a regulatory perspective, we're required to hold 40% of the acquisition price. So that's what we have now that is driving the NSFR ratio. Just to put it in perspective, if we would close the deal today, then the 145% would drop to 140%. So that's the sort of addition we have coming from the reservation for this deal.

The next question comes from Ermin Keric from DNB Carnegie.

So maybe the first question could be, you mentioned that you had a lot of volume coming in late in Q1. How much tailwind should we expect into the coming quarters? And then the second question would be just on investment returns. Are you seeing any kind of incremental upwards, downwards pressure relative to your back book on the front book investments? And then the last one would be on the collection performance, which is obviously solid in Q1. How should we think about that for the coming quarters?

Ermin, so that's 3 questions. The first one was it was....

The tailwind coming from the late investments in Q1, right, Ermin?

Yes, exactly.

Yes. So I don't know. But I mean, I think we had pretty much the same thing happening in Q4, and I think we see the impact of that now in Q1. Now in Q1, we obviously have roughly half of the investments we had in Q4, but I expect like SEK 20 million, SEK 30 million, like if we would have bought everything exactly in the middle of the quarter, that would probably be a sort of spillover or impact in Q2 compared to Q1 coming from the SEK 2 billion we invested of interest income, SEK 20 million to SEK 30 million roughly.

Yes. And the second question was -- sorry, Ermin?

Then it was on the investment returns. If you see the front book deviating upwards, downwards to your back book?

No, I think from the investments we did now in Q4 and Q1, the return levels are very positive. They are very supportive. And I know at some stage, we might run into the contrary. But so far, we're very happy with what we see in the books that we signed -- in the deals that we signed.

Yes. Return levels keeping stable and accretive. And then the third one.

Was collection performance.

Collection performance. Yes. I think we -- I mean, over the years now with the rejuvenation program with various operational excellence initiatives around the group, we see a broad-based improvement in the collection performance across the markets. It's not one single market driving, and it is -- it's really, really good to see.

Now we obviously expect those operational excellence initiatives, et cetera, to continue yielding. So I think that's how we should think about that.

The next question comes from Markus Sandgren from Kepler Cheuvreux.

Sorry, it was a bad line. Can you please repeat what you answered on Ermin's last question?

Oh, it was a bad line. On the collection performance?

Yes, please.

Well, Ermin asked, I guess, if it -- well, if the strong performance will continue. Basically, my answer was that we see the effect of many of our initiatives that we have been doing, right, large and small. And I guess, now we are in the continuous improvement phase. So we see a broad-based strengthening of the collection performance across multiple markets, right? So it's not any one market driving this. And we of course...

And since this seems to be a broad-based improvement, why don't you bring up this as NII instead of impairments if it's not just something that fluctuates -- because I would expect it to be closer to 0, but with a higher NII if this is something that would continue.

Well, we do manage the book in accordance with our auditors, right? So to make sure that it has the appropriate value at all times, right? And we do this on a -- we do minor readjustments on a monthly basis, and we do, of course, larger revaluations every quarter. So we believe the book has a fair value, and we see this collection performance as on top of.

Yes, I think fair to say, we're very conservative in the management of the book, and I think that shows now for many quarters in a row.

Yes. Okay. And then secondly, I was thinking about -- you paid a dividend now in -- as you got the SDR status. And it seems like consensus is expecting continuous dividend payments, just disregarding the size of them. But what's your thinking when it comes to capital repatriation versus growth? I mean, is it that you want to pay steady dividends? Or is it what you have capacity to acquire? Or is it the market size that limits growth instead of -- or I mean, if you compare the alternatives to pay dividends and grow?

So we believe that the best shareholder value we can give is by buying portfolios at -- certainly at the current return levels that we see in the market. And that remains. So that will be our primary focus or primary use of our ample capital. And for the rest, I would say we have the dividend policy where we are accruing at the top range of that for -- in accordance with the auditors or in accordance with IFRS.

And well, we will continue to focus on buying portfolios. And I think in terms of capacity, given the operational model that we have, where we have a mix of in-house collection and outsourced collection, we have the capacity to absorb quite high volumes. And if the return levels stay as they are and we stay competitive, then that's what we're going to go after.

The next question comes from Phillip Moe Molmen from SB1 Markets.

Last year, you sourced around SEK 11.5 billion of portfolio acquisitions if you include co-investments and you communicated that you expect the inflows of portfolios coming for sale to be the same or larger this year. Should we expect your investments or your organic investments, so to speak, to be roughly the same or larger and Azzurro to come on top? Or should we include Azzurro in the portfolio investments rough guidance?

I think what we see in the market is roughly the same amount of portfolios or same amount of deals as last year or more, right? It seems to have been a sort of more active start of the year. We don't have full visibility on Q4 yet. But if the trend holds up, then there might be an increase compared to last year. We will try to capture as much as possible of that and at the stable returns that we're seeing at the moment and pending competition. So that is the target.

And then again, similar to, I guess, it was Bjorn's question, if this comes on top or not, we see the M&As, right? We will do M&As primarily when there is a large portfolio. So we see it as a portfolio in a company suit. Then, of course, with the specific case of Azzurro, we get extra capabilities, which we are very, very happy to get, right, and an extra strong position in the U.K. market. So there are many benefits of that M&A. But yes, we will deploy as much as we have capacity to take on depending on return levels.

Yes. And my second question is of the SEK 2 billion closed in Q1, how much represents the settlement of Q4 '25 signed deals versus the Q1 '26 originated transactions? And is the whole SEK 1.4 billion still over from Q4 in this -- is it correct to assume that you source around SEK 600 million acquisitions in the quarter?

The absolute majority is deals that we started working on Q3, Q4 last year simply based on the timing. These are large transactions up to SEK 1 billion a piece. They take a little bit of time to negotiate, sign and close, and that's the nature of the business. The market, let's say, opened up again in February this year with the first investment committees and so on. And so I would say, yes, a minority of what we have booked in Q1 has actually been sourced in Q1. We will see that coming in later.

There are no more phone questions at this time. So I hand the conference back to the speakers for any written questions and closing comments.

Thank you very much.

So we have some questions on the chat as well here. Are there any markets or countries of current interest that Hoist is evaluating where it is not yet active, either within Europe or globally?

Thank you. That's a great question. Well, I think we have been vocal before about that we want to expand further in the Nordics. We have about 4% of our book in the Nordics, and we would -- we find it an interesting market. In the previous years, I think the dynamics in the Nordics are a little bit different. The banks typically -- first of all, it's not usually the large banks selling. It's typically smaller institutions selling, and they typically sell earlier.

So a lot of the volume has been backstop affected in the Nordics. And now with the SDR, it is a market that we will be focusing more on where the backstop is not a problem for us anymore. And I would say that is the primary markets in Europe that we are looking at. And we are not looking outside of Europe at the moment.

Great. And then there is a question on AI. Are you looking into using new technologies such as voice AI to reduce your direct cost for collections?

Also a great question. We are using AI, and we are using it mostly in the support functions at the moment. We typically have a bit larger ticket collection than many of our peers. And that's typically more complex collections where a senior agent will be sitting with the debtor in one phone, debtors co-debtors representative in another phone, the court on the third phone, et cetera. So quite complex negotiations.

So far, we have not seen any AI tool that can help in that respect. But we do see benefits in our head office. We see large benefits in our IT, where we are developing tools together now with Claude and so on. And we've seen some pickup there. And for all these tiny interfaces and small improvements that we do in this continuous improvement base, we are using AI and trying to maximize the benefit of that as much as possible. But so far, we have not deployed it in the collection core conversation with the debtors. But we are looking into it and following the development.

Very good. Then we have a question on return on equity. If we adjust for the SEK 43 million tax reversal, we have an underlying ROE of 18.4%. What's the target ROE range on a normalized basis? And what are the key levers to sustain or improve it further?

Well, if we look at the target ROE range, I mean, we have a target right communicated that will probably be updated at some point in time. But we want to be above 15%. And then when it comes to how to keep this up, I mean, that's basically to keep on doing what we're doing, make great acquisitions and be conservative in our valuation and costs and also to keep the very good level of operational performance that we have now, keep that going. That's basically how we sustain this and make it grow over time, which is obviously our ambition.

Yes. And I think adjusting the underlying ROE down to 17%, I guess, then -- or adjusting for the tax reversal, as Magnus said earlier, then we typically would also adjust for the onetime acquisition costs, and then we come to an underlying ROE of 18.4%.

Great. So that was the final questions on the chat. That leaves us with saying thanks to everyone for listening in to this call.

Yes. Thank you, everyone, and have a continued wonderful day and rest of the week. Thank you.

Thank you.

Bye-bye.

Welcome to Hoist Finance Q4 Report for 2025. [Operator Instructions] Now I will hand the conference over to CEO, Harry Vranjes, and CFO, Magnus Söderlund. Please go ahead.

Thank you very much. Good morning, everyone, and welcome to this Hoist Finance earnings call for the fourth quarter and full year of 2025. Well, so I'm Harry Vranjes, CEO of Hoist Finance. And with me in the room here is Magnus Söderlund, our CFO, and Karin Tyche, our Chief Investor Relations Officer.

So, thank you again then for logging on this morning and showing your interest in Hoist Finance. We will try to run through the presentation in some 30 minutes to leave ample room for any questions you may have. But before we get going on the quarter and the year itself, I just want to take a minute on some perspectives on '25. 2025 was an action-packed year again, with lots of activity on the funding side of the business in the beginning of the year. But when it came to investments, we started the year slowly with a sleepy first quarter, with a pipeline that then gradually grew and eventually culminated in Q4 and especially in December.

So, we booked about SEK 4 billion in the quarter, which is 40% of our 2025 volumes and most of that in December. So, this has been a drag on the interest income development in 2025, but it will give us a great start in 2026, especially as we have already secured about SEK 1.4 billion for the first half of the year. But I guess, in quarter 4, our core business really, really delivered. 108% collection performance is a new record, certainly for the time I've been here. And just to put those percentages in perspective.

So, the fact that we collected 108% instead of 104%, which we had done in Q1 to Q3, added SEK 105 million profit to the quarter. So, a big thank you to the whole organization for an incredible finish of the year.

We also launched our new internal HoistSpar platform in Germany in Q4 in November. The reception and the uptake have been significantly above our expectations. So, in the first 3 months, we've onboarded more than 4,000 new customers who've deposited the equivalent of SEK 1.5 billion. And we're very happy about that. This will help bring our funding costs down over time. On top of this, as we announced 2 days ago, we are now a specialized debt restructure, and we will now have a larger addressable market. We will become more competitive on the margin and especially for unsecured. And we will also have more firepower going forward.

Now let's go through the highlights. Some parts here might be a little bit repetitive. I apologize for that in that case. Profit before tax came in at a strong SEK 492 million compared to SEK 281 million last year. The main driver of the result, as I just mentioned, comes from the very strong collection performance in unsecured as well as secured. Yes, both came in higher than ever in the quarter. That brought a return on equity to a record 21.8%, driven by stable IRRs, very strong collection performance, and good cost control.

Then on the investment side, we closed, as I mentioned, SEK 4 billion at good returns. And yes, as we talked about, basically all of 2025, it has been a very backloaded year with sellers waiting almost until Christmas to close the transactions and transfer the portfolios. Q4 was a mostly unsecured quarter with only smaller investments in secured, a great geographical spread, and our German colleagues can now claim the largest portfolio in Hoist, beating Italy by a few million. I'm sure they are happy about that.

After the quarter closing, we have signed an additional SEK 1.4 billion, which we aim to close in Q1 or Q2. So, our portfolio now stands at SEK 33.4 billion. And compared to last year, that's a growth of 9%. But if we adjust for currency, which has been a significant movement, the growth is an underlying 15%. So, we are inching ever closer to our ambition of having a SEK 36 billion portfolio by the end of '26. I think the real driver, again, is operations, a very strong collection performance, 108% and the SEK 105 million I've already spoken about.

Now on the SDR, we are now specialized debt restructure as of the 4th of February. With that, we released a SEK 1.2 billion backstop reservation. And after deducting the SEK 6 total dividend, our pro forma CET ratio is then 13.5%, which leaves us plenty of firepower to invest for 2026 and beyond. I think, as a well-capitalized SDR, we will now strive to increase our market share further in Europe.

If we look at the full year, nice growth there as well. Profit before tax, SEK 1.5 billion compared to SEK 1.3 billion in '24, 14% growth or 16% excluding FX. I mean, this is despite taking increased cost to qualify as SDR compared to '24, when we had a significantly smaller liquidity buffer. Return on equity for the full year, 17.6%, well above our externally communicated targets compared to 16.8% last year. And it is the underlying business that is driving this profitability.

Now continued high investment pace with SEK 9.9 billion, a little bit irritating that we couldn't get that to SEK 10 billion invested in the new portfolios, and a very, very backloaded year. And the portfolio is SEK 33.4 billion. And for the year, we had a strong and stable annual collection performance at 105%. That is now 2 years in a row. We're very happy about that level, although it fluctuates between quarters.

Cost control, solid. They were, of course, helped by the FX. So, they dropped 6%. But if we exclude the FX effect, it's still a drop of 4%. Earnings per share for the year, EPS, SEK 11.59, compared to SEK 10.1, and this gives us a growth of 15% against tough comparables. So, finishing the year, strong capital and liquidity positions well above regulatory requirements.

And also earlier in the year, in July, Moody's adjusted the outlook for our rating to positive from stable. And this year, we entered Finland through a co-investment to strengthen the footprint in Northern Europe. In '24, we opened Portugal, and they have had a fantastic development now in 2025. So, with that, I will hand over to Magnus to take us through the quarter in more detail.

Thank you, Harry. Good morning all, and thanks for calling in. So, we concluded the year with a very strong fourth quarter, both in terms of earnings as well as in the new investment volumes and collection performance. a profit before tax of SEK 492 million. So that's a 76% increase year-on-year, and an annualized ROE of 21.8% compared to last year's 15.5%.

So, starting with the interest income, including the co-investments, we see a 2% growth year-on-year. Since the income from co-investments gradually impacts the P&L more and more, we should note that this is a net income. So, this means that the SEK 55 million we see as interest income is coming from SEK 91 million of interest income and SEK 36 million of costs. This is obviously also true for the SEK 28 million we see from last year, but the cost part has grown by SEK 29 million year-on-year. So, considering this, we have an underlying growth of 9%, which is more in line with our portfolio growth.

We do also have an impact from the majority of the investments coming in during December, meaning we don't see the full impact in interest income coming from these new volumes in the quarter, whereas Q4 of last year was more from COVID. We also see the full cost of the NSFR requirements, where we had a lesser impact in Q4 of 2024. The net interest margins overall remained stable and aligned with the previous 3 quarters of this year or 2025.

Looking at the net interest income, adjusting for the built-in costs coming from the co-investments and the FX, the growth is positive by 1%, and this is not taking the timing impact from later investments into consideration. So, we are seeing favorable returns in the market and very good return levels in the SEK 4 billion of new volumes we acquired during the quarter.

As I mentioned, we saw a record-strong collection performance in the quarter at 108%. And this, combined with the positive revaluation triggered by the good health of the book, brings a strong impairment gain for the quarter. Furthermore, we sold 2 portfolios, bringing a net gain of SEK 64 million in the other income line. And if and when we see an opportunity to sell certain segments of our book with a favorable outcome, we will obviously explore it. It is part of our everyday business. And this was 2 very successful transactions for us.

In other income, we also see gains from real estate sales in Spain and a small portion of servicing revenue in Germany. And looking at the costs, the direct costs are flat year-on-year but are also impacted by a provision coming from an over VAT case related to Poland. That's SEK 65 million. Excluding for this and FX, we see a 6% drop in the direct costs, which we are very happy with.

For the indirect costs, Q4 of last year included SEK 57 million of restructuring costs related to Spain. So, adjusting for this, the costs remained flattish year-on-year. So, all in all, we are very happy to conclude that our efforts in controlling the costs remain successful. And all of this leads up to a profit before tax of SEK 492 million, and we are obviously very happy with the strong outcome of this quarter. We move to the next slide.

Looking at our investment portfolio acquisition. So, after a slow start of the year, we see a sharp bump in the last quarter. As mentioned, we closed these deals at attractive return levels and a healthy geographical spread. No single market represents more than 22% out of the new investments in the quarter.

And considering the somewhat slow start of the year, we end up at a strong SEK 10 billion for the full year. This, in combination with the favorable returns we have seen over the year is a clear result of the quality of our investment organization and acquisition capabilities. All in all, a very strong investment year. And we are well on track to reach our ambition of a SEK 36 billion portfolio book value during 2026.

Moving to the asset class mix. So, as we're growing, we're also improving our geographical spread, no market representing more than 16%. The split of unsecured and secured remains similar to previous quarters, where we do see a gradual increase of secured over the last couple of years. And this is something we are happy with as both asset classes offers great opportunities and brings us a diversified risk.

We can move to the next slide. Looking at our funding, the mix remains similar. We have a competitively priced and stable funding base, which is supporting our growth. The average cost is going down, and we are now at an average 3.4%, where the funding cost in relation to our NPL book value remains at around 4.4%, and this is clearly an edge for us.

We issued one senior preferred bond for the quarter, and our own deposit platform is in Germany is off to a flying start with roughly EUR 150 million of deposits since the start of November. Over time, this will improve our funding costs even further, and we are now in the planning phase of setting up the next one.

Looking at the 5 quarters cost trend. We continue to deliver on our ambitions of having the direct costs move in line with collection and indirect to stay flat. The nonrecurring part in direct cost in Q4 is coming from the VAT case I mentioned. Underlying, we remain at the same level of cost to collect as the previous quarters. We see an uptick in legal costs as the courts in our southern markets become more active after the Q3 summer vacation period. And all in all, we are very pleased with the development.

So, our capital position. The movement from last quarter's 12.2% to the 10.8% now in Q4 is mainly driven by the large volume of new investments and also the SEK 6 per share dividend. And the pro forma section shows the sharp impact coming from the backstop release, providing a very solid base to keep growing the business. So, we basically see the 2.5-ish percent increase that we have guided for in earlier calls.

LCR and NSFR at stable levels compared to previous quarters, NSFR of 143% with a good margin to the regulatory required 130% the size of our liquidity reserve in comparison to the portfolio book value, the NPL portfolio book value remains at lower levels than before, and the increased use of our own platforms will enable us to keep tightening this ratio over time.

And then if we look at the full year of 2025, so in short, we're achieving roughly a SEK 1.5 billion profit before tax to be compared to the SEK 1.3 billion in 2024, a 16% growth, excluding FX. If we include the impact from the increased underlying costs in the interest income from co-investments, this means a 20% growth year-on-year. And this is with a full year of SDR costs where the interest expense increase is mainly driven by the SDR qualification and then obviously, the growth of the NPL portfolio.

The return on equity of 17.6% compared to last year's 16.8%. So, all in all, a very strong year. We managed to reach a collection performance of 105% and demonstrated a strong cost discipline throughout the year. We collected almost SEK 1 billion more in '25 versus '24 at lower cost. Our operational capabilities have become more flexible and hybrid between in-sourced, outsourced collection activities, and this will continue to be a benefit for us also during 2026.

So, in short, we have established a cost base and structure that will create a strong operating leverage as we continue to grow the business. And despite the slow start of the year, we ended strongly to reach the SEK 10 billion invested. And now we move into this year with a strong pipeline and many interesting opportunities and also ample capital and a bigger addressable market. So, all in all, a really, really strong year with an exciting 2026 ahead of us. So, with that, I hand back to you, Harry.

Thank you, Magnus. Yes. So how are we tracking against our financial targets? Well, if we look at our core target, which we are all measured on, the ROE is at 18% for the full year, driven by the underlying business, as you can see in the graph here. In terms of capitalization, with a 13.5% CET1 ratio post SDR or as SDR, we will have ample purchasing power for this year and beyond.

Over time, we will, of course, strive to get back down into the gold corridor. And with the regulatory stability that the SDR gives us and the growing size, we will be able to use the capital more efficiently going forward. And looking then at earnings per share CAGR over the last 3 years, 28%, but also very, very proud of the fact that we managed to do 15% growth year-on-year against really tough comps.

And finally, as communicated, SEK 6 per share dividend, out of which SEK 3.26 is the ordinary and SEK 2.74, the extraordinary on the back of the SDR status. So doing well against the targets.

So then key takeaways. As you've heard many times during this presentation already, the core business is really delivering solid investments, solid collections for the quarter, but also throughout the full year. Continued profitability improvements, increasing the ROE. And then in terms of the market, we do see rising NPL ratios across Europe, especially in France, Germany. We also see certain asset classes in Spain. And we expect that the NPL market in 2026 to be at least the same or larger than '25. And with all these benefits that we get with the SDR status, we will strive to take market share. As always, though, provided that it is at attractive and accretive returns.

And with that, it's time to open up for questions.

[Operator Instructions] The next question comes from Björn Olsson from SEB.

With the CMD in Q3 next year, can we still expect you to target the 36% by year-end next year and for investments to be sort of in a similar fashion as this year? Or should we view the sort of momentum you're into now, including the SDR capital addition as an upgrade on investment pace for this year?

I think I mean, we're indicating that we want to increase our market share. So, I think we will try to beat the investment level of last year, obviously. And we expect to reach the SEK 36 billion ambition at the latest by the end of the year and hopefully before.

Great. And on the funding side, could you give some flavor on the inflow in the German deposit platform and how that in combination with the sort of possible trimming of the NSFR might impact your funding costs?

Yes, I can take that. So, as I said, we have taken in roughly EUR 150 million of deposits so far, which is an amazing start with the platform. And I mean the core purpose of this is obviously to make us more NSFR efficient. So, we will be able to attract a wider range of products and still keep a very high NSFR efficiency. And it will definitely help us tighten all of the metrics related to the funding of the company. So yes. And also, we are soon going into the Spanish market to further increase this capability.

Great. And just final question on costs. A non-named Swedish peers of yours recently talked about cost savings as a potential to improve margins, including in the collection side of business. You talk about keeping the indirect costs flat and the direct costs going upwards. Do you think that this is maybe even a bit a cost area where you could find improvements? Or do you differ in your view of how costs develop?

I think we've spent many years now working to get the cost base down, and we can now see that we are delivering on this, and we have behaved in a very disciplined way also in 2025. Could we be more efficient? Potentially, yes. But keep in mind that we are collecting SEK 1 billion more in 2025 versus '24 at a lower direct cost. So I think we are at a pretty decent efficiency level as of today.

The next question comes from Markus Sandgren from Kepler Cheuvreux.

Congrats to a good result. I was thinking about your collection performance. Is that just natural volatility between quarters? Or is it related to that it's easier to collect in certain markets that you've gone into? And what do you expect going forward, basically? So that's the first one.

Markus, I would say Q4 is sort of traditionally a strong collection quarter. We have the activities in all of the southern markets sort of coming back to life after a vacation period. And then in some markets, we have an additional salary, et cetera, so we have some upside coming from that as well. But the 108% is an exceptionally strong outcome, and we're obviously very pleased with this. But I would say Q4 is normally a strong quarter. I don't know if that answers your question, Markus.

Sort of, yes. Okay. And then moving on to costs, the VAT thing you had in the quarter, is there anything else that might be coming in the coming quarters in terms of one-off extraordinary costs?

Not that we expect at this point. We have a provisional amount for ongoing cases, and we have contingent liabilities to the tune of SEK 60 million roughly, I think now. So no, nothing of this size that we anticipate at this point in time more in the near-term future.

Great. And then lastly, at least I expected some buybacks and apparently, you didn't announce anything about that. Is that related to that you need or want the money for growing the business? Or is there anything about that the capital buffer has not yet been on the higher pro forma level that we will see in Q1?

Markus, no, this is obviously, as we've communicated before, we want to keep as much capital as possible for growth. We did the -- the Board is proposing this extra dividend now on the back of the SDR and the onetime release. If and when we decide to complement that with share buybacks, we will let you know. But prime -- it's growth.

The next question comes from Ulrik Zürcher from Nordea.

So 2 questions. I just one clarification or thoughts about how long you can keep indirect expenses roughly flat for basically how many years? Or is it constrained by portfolio size at all? Secondly, just if you could tell us a little bit about your win rate because obviously, you can run at a very high leverage and very low funding cost compared to basically all other peers. So are there any threats you're seeing like with other players becoming SDR approved or thoughts on the competitive environment basically? Thank you.

Maybe I can answer the competitive environment question. Well, the win rate is not something we typically communicate. But with the outcome of the fourth quarter, I think it's clear that we had a high share of wins during this quarter. There will be other SDRs popping up. Will they be able to address our asset classes in our geographies? Well, I guess time will tell. So far, we continue operating as we operate and like the asset classes that we like, and we will continue to compete in those areas. And the other question was, sorry?

Yes, on the indirect cost.

Yes, there is obviously a limit to how much you can handle. I mean, if we grow the book radically in the coming years, the indirect costs will probably move up a bit, but we don't foresee any sort of sudden upticks in the near-term future and not for 2026.

The next question comes from Ermin Keric from DNB Carnegie.

Maybe continuing on Ulrik's question to some extent. You mentioned that in Q4, you mainly acquired in unsecured. Was that mainly a coincidence? Do you have more appetite for unsecured now that you're on SDR? Or do you expect it to be kind of in line with your overall book mix in the coming years when you think about your acquisitions?

I think it is not intentional. Let's say, we still have the same appetite for secured. It was just that what was out there on the market was a very high share of unsecured portfolios. The secured portfolio market, let's say, has opened up actually during Q4 for -- but then for, let's say, Q1, Q2 transactions. So I expect we will see more secured in the first 3 quarters of next year. Typically, that's what we've seen in the last years in terms of split. But no sort of bias towards unsecured in any way. We like them both.

Got it. Then I know SDR, that's not an application process, but have you had any feedback from the SFSA on your actual notification?

I think we have, during the year, kept a very close dialogue with the SFSA. So after each quarterly report, we have discussed sort of and we've showed how we live up to the criteria. We did so also for the fourth. And so we feel comfortable that what we have notified is also valid.

Then the last is just on your capital range. So clearly, you want to use most of the excess capital to grow more. Could you provide any sort of time line for when you expect to be within your range or how we should think about it?

Yes. I think what we can say is that I'm sure you've done the math. But, so we expect to have a strong investment year or at least that's our ambition for 2026 as well. And that is, of course, the first priority. We want to make sure that we also have capacity left for '27, '28. Should we see that there is capacity or, let's say, excess capital, we will trim it down to the goal period. But it cannot say if it's going to be '26 or '27.

[Operator Instructions] There are no more phone questions at this time. So, I hand the conference back to the speakers for any written questions or closing comments.

Okay. So, we have a written question here around AI and how we are using that across the organization.

Yes. Let me try to answer that one. So I think we are using AI actually most -- well, first of all, in the portfolio onboardings, et cetera, we're using a lot of AI tools to sort of find what belongs to what basically, right, so that we have the data as good as possible, as complete as possible before we start collecting on a portfolio. So there, we use various tools out in the markets to make sure that we start off the work with the portfolio in a good way. Very, very valuable contribution. And then I would say, during this year or, let's say, '25, we have been starting using it more actually in the support functions or at head office, where we see a lot of opportunity, right, in legal compliance, yes, basically sort of checking on various items and efficiency improvements with through Copilot and so on, right?

So, I think that's where we are now. We are not in a stage where we will be rolling out large scale any agents to talk to our client base. I think so far, the complexity, we have a little bit larger cases than most competitors, and they are simply too complex for the agents at the moment. I'm sure they will improve over time.

Another question here is where we see the biggest opportunities for efficiency gains or value creation going forward?

I think that was the AI. I think it's the next one. Well, I think biggest opportunity.

For value creation going forward in investments, I guess?

Yes, absolutely.

Investments across Europe?

Yes. In portfolios, absolutely.

Okay. Good. And then there is a question here on our tax rate. What we see will be our tax rate going forward? It's a bit high in this quarter.

Yes. I think excluding the one-off or sorry, the SEK 13 million extra we booked, I think we ended up at 24% which is perhaps a bit on the high side, but there are also impacts coming from where we do our business. We have some I mean, it's a blended tax rate, right? And I would still say we're fairly consistent now when we apply DTAs and DTLs. So, I would expect the tax rate to be at around 20% to 23%. That's the best guidance I can.

As it has been in the previous years.

Yes.

Very good. That's all the questions we have.

Excellent. Then thank you all for listening in at this earnings call, and have a great Friday and weekend when you get there. Thanks. Bye-bye.

Welcome to Hoist Finance Q3 Report for 2025. [Operator Instructions] Now I will hand the conference over to CEO, Harry Vranjes; and CFO, Magnus Söderlund. Please go ahead.

Thank you very much. Good morning, everyone, and welcome to this Hoist Finance earnings call for the third quarter of 2025. I am Harry Vranjes, CEO of Hoist Finance. And next to me, I have Magnus Söderlund, our CFO; and Karin Tyche, our Chief Investor Relations Officer.

So first of all, thank you all for joining. Thank you for your interest in Hoist Finance. We will try to run through this presentation in 30 minutes, to leave as much time as possible for any questions that you may have.

Now before we dive into the material, I usually sort of do a small introduction to sort of our core business model, and I will do the same this quarter. Basically, our business model is very simple. We acquire portfolios of nonperforming loans from banks at significant discount.

Historically, on average, we paid around 10% of nominal value. Now to reach our financial targets, we then manage these portfolios, and we collect roughly 20%. And we do this in a banking suit or more specifically a credit market company suit supervised by the Swedish FSA. And this enables us to have stable and cost-effective funding source in the form of deposits from the public, which we are unique in the industry.

Now in the last years, I've often gotten the question of whether we are sort of in some sort of a transition mode now waiting for the SDR status. And it is true. We are very much looking forward to the SDR status, and we have been following this regulation developed for the last 2.5 years.

But at Hoist, this so-called waiting mode means that we have invested SEK 20 billion and built Europe's largest nonperforming loan portfolio during that time. We have rolled out an operating model based on decentralization and a flexible cost base and we have completely rebuilt our funding base during this time.

Now we will continue to grow profitably up until and beyond the SDR notification, which we plan to do in February next year. And we fully intend to reach our volume ambitions and growth targets for years to come.

So the third quarter 2025 has been another very active quarter, and the activity has been in our core business around Europe, primarily. And now I am supposed to change slides here. So here, you see a picture of myself and Magnus.

And now we go to the key highlights. So yes, the third quarter. Headlines, well, profit before tax came in at a strong SEK 349 million compared to SEK 363 million last year. Now last year, we had some net positive one-offs of around SEK 50 million, SEK 52 million. And adjusting for that, profit before tax has grown 13%. Now despite taking on SEK 80 million higher funding cost in this quarter compared to last year.

Now we typically don't talk about adjusted numbers, but just as a comparison, right, if you would adjust for all of this, right, one-offs last year, the added funding cost and the currency drag, you would see a growth in earnings before tax of more than 40%.

So Magnus will take you through this later in the presentation. Return on equity came in at a strong 17.6%, well above our financial targets, also pushing the year-to-date return on equity above 16% and above our financial targets. And the profitability is driven by the core underlying business.

We closed portfolio investments of SEK 2.4 billion in the quarter at accretive and attractive returns. As we talked about already in the Q2 earnings call, there is a lot of activity in the market, and this continues. So we are now busy working on portfolio transactions that should close before the end of the year. So typically, we have these 2 time lines or these 2 distinct moments during the year where portfolios closed before holidays, before the summer holidays and before New Year. Now we're working on the new year batch.

So the pipeline is strong. We are well capitalized. And in the SEK 2.4 billion that we have now invested, there's about SEK 600 million of co-investments. So in practice, we have sourced around SEK 3 billion in the quarter. And then our half of that SEK 1,200 million becomes [seized at]. We will continue to do co-investments also after we qualify as SDR, where we see that as beneficial.

Now our portfolio stands at SEK 32 billion, which corresponds to a 9% increase compared to Q2 last year if we adjust for currency. Quarter-by-quarter, we are getting closer to our ambition of having a total portfolio size of SEK 36 billion by the end of 2026.

Now in the quarter, we also opened up the Finnish market in August through a co-investment. And we plan to grow our activity in Finland going forward. And this also expands our geographical footprint for capital deployment, and we now operate in 14 markets.

Very happy to see the collection performance came in at a solid 103%, 1 percentage point higher than Q3 last year. And we are continuously improving efficiency in all units and with our collections partners around Europe.

On the cost side, happy to see tight cost control with cost flat year-on-year despite portfolio and collections growth. Now this is a result of both asset class mix and operating model, but still very happy to see. We remain well capitalized with a CET1 ratio significantly above regulatory limits, around 12.2%, and our liquidity reserve is at SEK 25 billion, something we are working on optimizing going forward.

We continue to meet the full SDR criteria now, so 3 out of 4 quarters in the year. We have an NSFR ratio of 142%. And as mentioned, we aim to notify as specialized debt restructure in conjunction with our Q4 report in February next year.

With that, I will hand over to Magnus to take us through the quarter in more detail.

Thank you, Harry. Good morning all. So we had a strong third quarter, profit before tax of SEK 349 million, 17.6% return on equity versus last year's SEK 363 million and a 15.8% return with an underlying profit before tax of SEK 308 million.

So we saw some one-offs in Q3 last year, as mentioned by Harry, related to a deferred profit in Poland with a positive impact of SEK 77 million and also a negative one-off item, SEK 22 million of project costs. So that means a total net positive one-off P&L impact of some SEK 55 million.

As we had no material one-offs in Q3 of this year, this means an underlying growth in profit before tax of roughly 13%. Looking at the interest income combined for own portfolios and co-investments, we see a year-on-year growth of 7% or roughly 10%, excluding FX.

This in relation to a book value growth of 4% or 7% excluding FX. So this indicates we are maintaining a supportive pricing in the market, resulting in increased total interest income over book value. Net interest income is 1% down on a reported basis, 2% positive growth, excluding FX, impacted by the higher net interest expense related to the NSFR minimum target of 130% and the SDR status.

And the increased stable funding requirement obviously impacts the net interest margin, which moves from roughly 13% in Q3 of last year to 12% in this year. So it's at similar levels we have seen during the first half of the year.

The net funding cost over portfolio book value increases from 3.5% in Q3 last year to roughly 4.4% in this year, a similar level as we saw in Q2. So half of the increase is related to SDR buildup and the rest mainly driven by other measures to strengthen our capital base.

We see gains from real estate sales, particularly in Spain and some other smaller asset sales in other income, in line with our strategy as this capital will be redeployed to where we see higher return levels.

We had a strong and stable collection performance for the quarter, 103.4% to be exact versus the 102% in Q3 of last year. This demonstrates the continued good health of our book, and we are at a year-to-date collection performance of 104%, which is the same level as last year. And to note, the SEK 77 million one-off of last year is reported in the impairment line for Q3 2024.

Looking at the costs, we see a continued disciplined development with a good cost control in place. The direct costs are flat year-on-year, and so is the underlying indirect cost, where we had SEK 22 million one-off cost in Q3 of last year. So underlying flat also here. We are very pleased with this cost performance that we are demonstrating.

So all in all, we are happy with the outcome of Q3. We are kicking off another quarter on our journey to notify as an SDR. We are carrying the increased costs related to this, whilst not seeing the benefits in the P&L yet, and at the same time, delivering strong returns with a SEK 350 million EBT and a return on equity of 17.6%.

We have strong investment volume for the quarter, and we continue to see many opportunities for the rest of this year and also in the beginning of next.

So go to the next slide, please. The portfolio acquisitions. So we are roughly keeping the pace of Q2, and we come in at SEK 2.4 billion of new investments for the quarter. This keeps us on track to reach the planned SEK 36 billion portfolio book value by the end of next year.

The acquisitions completed during the quarter was spread around 8 different markets. So we are very pleased with the diversification and the Q3 investment activities. We see a continued strong pipeline, as I said, and we see ample opportunities moving into Q4.

We're very happy to have acquired our first portfolio in Finland. And as per our quick entry strategy, we are now set up with a very core of local staff and outsourced servicing already ongoing. We continue to see healthy return levels in the portfolios we acquired with sustained collection overperformance in the total portfolio.

And we are sticking to the risk profile we want. That is granular risk and no big single risk exposures. And we have a very positive outlook with ample opportunity, as I said, now in Q4 and also we see the same for the beginning of next year.

So if we go to the next slide. We see a similar mix of our 2 main asset classes and the geographical spread compared to the first half of the year, with no single market representing more than 18%. We see a slight increase in the secured side of the portfolio. The secured side of the business has increased significantly over the past 3 years.

This is not a goal in itself, but it provides the diversification that we want. And our ambition is to stay at this healthy level of spread across geographies with an ongoing focus on new additions in the sort of near-term future.

We go to the next slide. Also here, we see a similar mix of funding compared to last quarters with a slight decrease in deposits from the public, roughly SEK 500 million. Our cost of funding is also at a slight decrease to 3.5% with a continued funding cost over portfolio book value at roughly 4.4% and this keeps us at a very competitive level in the market.

We issued a SEK 200 million AT1 at an attractive price, is to optimize our capital structure and take advantage of a really strong market. And in July, Moody's affirmed all of the ratings and assessments of Hoist Finance, we are Baa2, whilst also changing the outlook on our long-term issuer and senior unsecured debt ratings as positive from stable.

We go to the next one. This slide we had also last quarter, and this is to illustrate our development of net funding cost over portfolio book value, as also mentioned in the P&L slide. And we can see that the funding cost of our portfolio book value in Q3 stays similar to the first half of the year. Roughly half of this increase, as I said, is related to SDR costs and the rest is related to other items such as costs for the senior non prefer bond replacing the call AT1. We have higher deposits in Poland compared to last year as examples.

As communicated in Q2, we are currently in preparation for setting up our own euro deposit platforms in select markets with a planned rollout in Germany before year-end. And this will increase our sort of toolbox to increase the funding efficiency and related costs. So the funding rate has increased in this transitional year of becoming SDR, but we still remain very competitive and in a good place to keep growing.

We are very pleased with the cost development. As we have indicated, the direct costs are planned to move with the collection levels and the indirect cost to remain flat. Legal costs come in at a fairly low number, seasonally driven by closed court during vacation period in the southern parts of Europe.

Overall, a very strong cost to collect in the quarter, especially driven by a very successful secured collection in Spain. So this is not to be considered a new level of cost to collect, but rather as a very strong performance in the quarter.

For the indirect cost, we see a fairly flat development in line with plan. We see a lower FTE figure for the quarter. The reduction of direct FTEs is driven by the closing of our servicing entity in Romania and the increase in indirect is driven by HoistSpar and the rollout of our platform, to the next slide.

So we maintained a strong capital position, well above regulatory requirements and still above our target range. We are well positioned to deliver on the opportunities we see now in Q4. And we expect a CET1 increase of roughly 2.5 to 3 percentage points when achieving SDR status.

Looking at our liquidity position, LCR remains at very high levels compared to the regulatory 100% requirement. For NSFR, we arrived at 142%, a similar level to Q2 with a safe margin down to the 130% requirement related to the SDR criteria. As also mentioned in Q2, this is something we are focusing on trimming, of course, with a healthy headroom to the SDR required limit.

We see a decrease in the liquidity portfolio, which we are very pleased with, considering the portfolio book value was at roughly SEK 29 billion in Q1 with a liquidity reserve of SEK 27 billion to now be at SEK 25 billion with a portfolio book value of SEK 31.5 billion. This means that the liquidity reserve has decreased in size whilst the NPL book have increased.

And this is accomplished primarily by shifting the deposit base from short-dated euro deposits affected by the legal opinion to either longer-dated euro deposits or SEK deposits on our own platform. And this will, of course, be further enabled by our future plans to launch platforms outside of Sweden, starting now than before year-end in Germany. And that was it. With that, I hand back to you, Harry.

Yes. Lots, we have spoken about the SDR for quite some time now. It is a new regulation and not 100% easy for nonbanking regulated NPL investors to understand, and there are very few of those regulated NPL investors like Hoist. So, we are and we will continue to be regulated in the same framework as the selling banks who are our clients, and this helps us.

The people we negotiate with on the other side, when we buy portfolios, they know that we live by the same high standards of AML, customer protection, DORA, et cetera, all the regulation that they live under. And this is a benefit when it comes to portfolio sales for a bank. It is sometimes difficult, not just for financial reasons, but more often not reputational. So they need to know that they are handing over their customers to a partner that will treat them right.

With the SDR regulation, we will be able to keep the benefit of being banking regulated and at the same time, be able to handle any type of nonperforming loan without those restrictions that normally apply to banks or sort of non-SDR banks and primarily the backstop regulation.

So this is a long-term benefit to Hoist. We will stay banking regulated and can operate without the restrictions that we have been living under since 2019. Now short term, as we notify, we will be able to release the capital deduction that we have for the backstop affected claims on our balance sheet. As Magnus mentioned, this will strengthen our CET1 ratio by 2.5 to 3 percentage points, freeing up capital for further growth and capital repatriation to shareholders.

Now long term, we will be able to act together with co-investors or partners when we see fit, not because of the backstop regulation. We will, for instance, continue to do what we just now did in Finland, invest together with a collection partner to gain access to new markets, new volumes and expertise. And we will be able to put, and for other portfolios, we'll be able to put the full volume on our balance sheet and therefore, basically increase both earnings and growth.

So taking more volume directly on our own balance sheet will also simplify our operating model. So this is a long-term benefit, stay banking regulation, but with banking regulated, but without the restrictions that we have been living for the last 6 years.

And then before we open up for questions, just leaving you with a few key takeaways from this quarter. So obviously, strong return on equity, 17.6% without major or material one-offs. So it is the underlying business delivering this result.

Attractive and accretive IRRs in a highly active market, also high activity internally with more than 100 investment committee meetings held so far during 2025, which is a new record. Further expanded our investable footprint, increasing flexibility in capital deployment with Finland now, and we will continue to look at other geographical locations.

Costs are under control, and we will continue on our continuous improvement path to ensure that we constantly get a little bit more efficient every quarter. And we have now finally met the SCR criteria for 3 out of the 4 required quarters in 2025, and we intend to notify the status in February 2026. With that, I think let's open up for questions. Now I need to press button somewhere.

[Operator Instructions] The next question comes from Markus Sandgren from Kepler Cheuvreux.

I had 2 questions, one related to growth and the second about margins. So when it comes to growth, I think you are a price taker given your size versus the total market. And you are and will be even more cash rich. How come that you have not changed your growth target? Is it due to capacity or anything else? So that's my first question.

Didn't quite follow the question.

Okay. I'll take it again, my point is that you have cash so you can grow. And you, so is the reason you're not, that you don't want to grow even more than your growth target, is that because you don't have capacity? Or are you afraid of driving up the prices because it's not a capital restraint anymore?

So I think our growth target in terms of, well, we have the SEK 36 billion volume ambition by the end of next year. That stays. It is an ambition. So if we would, if that turns out to be 35.5% or 37.5%, we're happy, right? The base, the core of that ambition is basically to have a critical mass portfolio. And then when it comes to sort of earnings growth or EPS growth, the 15% that we have communicated, I guess that is over a cycle, and we intend to keep that.

And perhaps just to augment a bit on that. I mean, we are remaining disciplined in what we buy. You can call that not wanted to drive the price up, but we remain disciplined in everything we look at, and we are very careful with the return levels.

Okay. Okay. And then secondly, when it comes to margins, so now when you say NSFI trimming, what levels are you looking to go to? And how much will that impact costs? And secondly, when you move over to more deposits on your own platforms, how much will that impact margins as well?

Well, the first question, Markus, so we are at 142% in this quarter. I think the way to look at it is SEK 1 million of cost per quarter and percentage point is the impact. So we obviously, we are careful to not go down towards 130% because this is not, we need to be careful on that, but we do see room for trimming it a bit further below the 142%. And then if you could repeat your second question, Markus?

Yes. When you move more of your deposits to own platforms, how much will that impact in the same way as you talked about NSFR?

I mean if we look at the liquidity reserve in relation to our portfolio book value, that's roughly at 79%, I think, in Q3. As we launch our own platform, we will have an easier access to gain NSFR efficient liquidity. And then where is the limit, that's a good question. But I think we will definitely be able to go below the 79% ratio we see today.

The next question comes from Bjorn Olsson from SEB.

First, just to double-click on Markus's question. When you go to more funding on your own platform in Germany as well, for example, do you have any anticipation or targets of how much of your funding that will be shifted to platform, to your own platform versus resin?

I think over time, we expect all the shorter-term funding to be transferred to own platforms. And this work starts when the platform goes live, and the marketing campaign starts in Germany. And then it will gradually shift.

Do you have a launch date or an indicative launch? You have a date? Sorry, guys. Do you have a date?

Date? No, we've just said Q4.

Yes, for the launch.

Yes, Q4.

And on back to investments then, can we expect an uptick in investments from your side in next year once you qualify as SDR? I mean, you sort of touched upon it in a few places in your presentation. 

Well, I think like-for-like, if we would have put on a balance sheet the same amount that we sourced this quarter via co-investments, for instance, that would mean a sort of 25% increase in deployment. And I think that is a reasonable ratio to think about. Then you never know, right, quarter-by-quarter, it is lumpy deals and so on, but it will certainly help our deployment going forward. 

Yes. Okay. So great. On the cost side, then, it's very impressive how you're trimming IT costs, et cetera. But could you give any guidance for 2026 and maybe even '27 on how you view the indirect or administrative cost line? Are you expecting any significant IT investments, cost to tick up, for example, with the platform rollout? Or have you got like FCP investments that are due? Or how should we sort of view that line looking at the years to come?

I think we should look at that line basically, as we have communicated that we have this operating leverage where we keep indirect costs flattish, growing with inflation, and then direct costs growing in line with the portfolio growth. And I think that still goes. We will not have any material sort of IT investments for this platform for the savings platform, et cetera. So no, I think we can just stick with the normal. 

If I can just add, I mean, we have put a lot of work and money to get in this cost that we're now in on this cost base, and we will fight extremely hard to remain in this. And I think we're doing a great job so far in 2025, as Harry said, I see no sort of increase in cost in the next year. So we remain very disciplined in the cost side of the business. 

Okay. Great. Finally, on SDR, I mean, and the excess capital, do you have any more guidance on how we should view that excess capital for next year? I mean, you can play around with dividends, buybacks. And have you been giving any more thoughts to inorganic growth as well, in addition to just portfolios, but even like smaller players? 

No, can you still hear us? 

We need the remote... 

Maybe you can hear us, but we cannot hear you. Let me see if we can, our speakers just went out here.

Just in case you can hear us, basically, we stick to our dividend policy and so on, right? So obviously, we want to ensure that we can keep growing the business. capital will go to that. But with the release, I'm sure there will be discussions, and those will be communicated during the Q4 presentation in February. And with that, I hope that you heard the answer. Let's see if we can get now, I get a text here saying that we can hear you or that you can hear us. We can, however, not hear you, Bjorn, unfortunately. I think that's... Now we can hear you. Sorry, did I answer your question? 

You answered on the dividend side, but have you been given any reasoning to sort of inorganic platform growth? I mean, basically acquiring or merging with a competitor or sort of a competitor's business in a part of... 

M&A is always a growth option, of course, looking to sort of leapfrog growth. And it is something we look at. And if there is something that fits our profile or that we think is accretive to shareholder value, we will, for sure, look at it. 

The next question comes from Ermin Keric from DNB Carnegie. 

Maybe just to start off a follow-up. What did you say on how much more you would invest if you were an SDR? Is it 25% more we should think kind of like-for-like? Or would that also mean that you would have more sourcing, you would still do the co-investment, but still take 25% more on your own balance sheet? 

Basically, what I was what we were saying was that if you would have used Q3 as a proxy, it would have been 25% more. This will vary between quarters. But in general, obviously, the SDR status will mean a higher share of sort of own investments compared to co-investments. Although co-investments are still an attractive tool to open up markets to gain access and expertise, or to just handle very large transactions. So we will continue with that. 

Got it. Then, back a little bit to the funding questions. You've been showing us kind of the funding cost in relation to the NPL book, which has stabilized around 4.4% now for the last few quarters. What level do you expect you could get that one down to when you've kind of optimized both the NSFR level and the NSFR efficiency? 

Yes. I think, as Magnus mentioned earlier, I think in Q1, we were at sort of 94% of portfolio, I think, with 29% versus 27%. And now we're at 79%, right? So we have, I guess, trimmed 5% per quarter. We will continue to trim exactly what the level is. I guess it can be sort of calculated in theory, but we need to get there in practice. And so we will not give any guidance on that, but we will continue to trim it, and you should expect to see improvement in that ratio going forward next year. 

Got it. Then just on your investment returns and so on. Given that you increased your investments in secured, should we expect any lower gross returns, and then that to be recouped by, I don't know, lower cost to collect, or maybe get a neutral net impact on returns? Or how should we think about it? 

No, I think we strive to sort of keep the diversification we have. We're very happy with it at the moment. When it comes to the return levels, I wouldn't recommend thinking about that. We expect to see the same returns independent of the asset class. But then certain metrics are, of course, different cost to collect is usually, or tend to be slightly lower on the secured side. But on the returns level, the sort of bottom line returns, I wouldn't anticipate any change with the change in asset class. 

I agree on the bottom line, right? But I suppose on the top line, here you would have typically a bit lower returns unsecured, wouldn't you? 

I wouldn't say significantly lower, no. 

[Operator Instructions] There are no more phone questions at this time. So, I hand the conference back to the speakers for any written questions or closing comments. 

Thank you very much. Thank you all for listening in to this Q3 earnings call. And well, with the key takeaways that we left you with before the Q&A session, strong return on equity, highly active markets, costs under control, as they are in February, we say thank you very much and wish you a pleasant Friday and weekend when it comes.

Thank you.

Thank you.