Hoist Finance AB (publ)

Thank you very much. Good morning everyone and welcome to this Hoist Finance earnings call for the fourth quarter and full year of 2024. I'm Harry Bragners, CEO of Hoist Finance and next to me I have Christian Valentin, our CFO and Karin Tykke, our Chief Investor Relations and Combs Officer. So thank you all very much for calling in and for your interest in Hoist Finance. We will try to run through the presentation today in 30 minutes to leave ample room for any questions you may have. And before we dive into the material, let me just take you through a little bit where we are and what the market is looking like. So the MPL market in Europe is still very active and there is still quite some movement also in the industry as a whole. So many players are finding their strategic strategies and strategic positions in this new landscape. And just to reiterate, Hoist Finance has found its position and it is and will continue to be a capital heavy player in this industry. And of course we strive to becoming the leading investor and asset manager of consumer and SME non-performing loans. And we think that 2024 has been a year where we have made great advancements on that strategy and on that goal, both commercially and in terms of implementing our strategy on the ground, so to say. So during 2024 we invested a record 10.8 billion SEC after a very strong second half of the year. Repricing in the market has continued. Christian will take you through that in a few minutes. When we closed the rejuvenation program in 2023, that program mainly focused on getting the right steering model in place and setting the right mix of central local execution capability and accountability around the group. We addressed a lot of indirect costs. Now in 2024, I know we've said that these reports will be easier to track, but in 2024 we have continued to addressing profitability and local return on equity, which is our core target for every single manager in Hoist. In every market, while at the same time insourcing our IT maintenance and also expanding into new markets. So this is sort of continuous improvement and this will continue forever and ever. However, in 2024, let's call it the continuous improvement plus. So I think the tempo has been has been very high this year. Now, as you know, in the last days of the year, we issued a statement that we are delaying our notification of the STR status due to the regulatory uncertainty. We'll talk about that later in the material as well. But regardless of regulatory status, we will continue executing on our strategy with the aim to becoming the leading investor and asset manager of consumer and SME non performing loans and our financial goals remain in place as well as our growth ambitions. So now let's dive into the material if I can flip the slide there. Yes, key highlights of Q4. So profit for tax came in at 281 million SEC. We have taken about 56 million SEC in one of course during the quarter relating to restructuring in Spain and the divestment in Italy. And I think adjusting for those, we would be at the earnings before tax of 336 million for the quarter. Christian will take you through the bridge there later in the presentation. Return on equity came in at a strong 15.5%. I think the key thing here is that this is now driven by the core business. It is less, much less impact of sort of positive one-off effects that we have been fortunate to be able to land during 22 and 23. Now in 24, it is the core business that is that is delivering these this return. In terms of investments, we closed portfolio investments of 1.9 billion SEC in the quarter following our record third quarter. And as you can see now in the material for the first time, we've started growing our co-investments as well. Now this will this will develop over the year and will separate out those numbers for you if and when that becomes material. Now volumes and pricing in the market are still still attractive. The Portuguese portfolio that I just signed in time for the Q3 earnings call for those of you who participated there is now closed. And we are very happy with our market entry into Portugal. Now investments going forward will continue to be lumpy as our average size in terms of portfolio purchases keeps keeps going up. So on the full year, this takes us to 10.8 invested 10.8 billion invested, basically 50% increase from from 23. Which gives a book growth of 26%, even after the relatively large portfolio sale we did now in Q4 in Spain. This gives them a net interest income growth of 36% and with a cost growth of 19% and adjusted for these one offs. This contributes to strengthening our what we call the operating leverage basically where where income and cost growing income and direct cost grows with the with the book growth and indirect costs track with inflation. Collection performance came back came in at 106%. We did expect to bounce back from the 102 in Q3 and we saw that directly in October. The month of December was also very strong and we see no signs of any adverse macro effects or anything like that in our collections. And now with with the sale of our unsecured book in Spain, we're now shifting our operating model for unsecured in Spain. We believe Spain is still an attractive market and both the unsecured and the secured asset classes are attractive for us and we will continue to pursue and invest in both of those asset classes going forward, but in a new setup. During the quarter, we also sold our servicing unit in Spoleto. This is something that we acquired in 2018. And basically we don't the strategy these days doesn't include any any third party servicing, so we don't sell third party services. And now we have managed to to divest that to a to Italian outsourcing specialist. And we're very happy about this. This gives us more. This gives management more time to focus on on our core business investment and asset management. We have been very active in the Swedish bond market during the year and Q4 was no exception. We issued one billion SEC in Q4 and for the first time we issued a senior non-preferred bond at good pricing and our capital and position capital liquidity position remains strong and we have ample purchasing power still. With this report, also the board of directors propose a dividend of two SEC per share. And I think that should be viewed also in the light of of share repurchase during during 2024, which we did two rounds of. Full year. I'm going to try not to be too repetitive here. Yes, so. Internally here at hoist we've we've had an inofficial target of becoming a one billion net profit company by 2025. Now, so with the closing of 24 now, we're happy to see and happy to announce that we reached that goal a year in advance, despite taking 140 150 million SEC of of one of indirect costs over the PNL and then an additional 30 million direct costs. It's a very strong result in which we're very, very happy with the return on equity for the year. Strong .8% and as I mentioned earlier, this is driven by the core business primarily and to a very to a lesser extent than before than of sort of one of activities and very, very happy about that. Investment volume we've covered record year and 50% up from from from previous year, which was also a record. We have great geographical spread on the portfolios and good diversification between asset classes. And basically our 45 man strong investment team together with the countries as analyzed and priced hundreds of portfolios this year. And we believe we have had a balanced win ratio. You don't want to win everything, but you want to win the just just right amount of deals. And we believe we have found that balance for this year. Now, collection performance 105% for the year strong. And then, you know, despite the insourcing IT and doing a lot of work on the on the operational units in Belgium, Netherlands, Germany, UK, Spain and Italy. So despite that, we are we are still delivering really solid collection forms. Now, the total income 4.4 for the year versus three and a half last year. So that's 26% increase. I mentioned the IT insourcing that is completed has been completed, I think, since Q3 and will give us a saving of some SEC 40 million per year going forward. And late or in Q3, we got an upgrade from from Moody's from our previous BAA three to to a BAA two. So mid range investment grade. And we're very, very happy about that. And as I mentioned, we were very active in the Swedish market on the bond market this year. One billion in Q4 and four point two for for the for the year as a whole. We did some two two rounds of share repurchases once after the Q4 report and 23 and once after the Q2. And our earnings per share has grown to to 10, basically 10 SEC per share now, which we are also very happy with. Definitely leading up to our target of growing more than 15% per year. Now, our capital and liquidity position, as we said, is very strong and the liquidity reserve, as you can see, is is is large. We have built it up in order to qualify for the SDR. And by the end of 24, we were at 154 percent. So ample, ample room to the regulatory limits. Now, with that, I will hand over to Christian to take us deeper into the numbers.

Thank you very much, Harry. Good morning, everyone. And thank you for joining this call. So Q4, we see we saw a strong continued portfolio growth resulting in a total investment portfolio of almost 31 billion. So thirty point seven billion at the end of the quarter. This is a net 26% growth. And we say net because we divested our Spanish on SecureBook during the quarter. So if you would, if we wouldn't have done that, then we would almost have been up 30% a year over year. We have done slightly more strategic co-investments in this quarter, and that's likely to grow in importance. And as Harry mentioned, if this if and when this happens, then we'll take you through a little bit more in detail how we count and how how we think about that in the numbers. Overall, the market is supporting higher RRs together with the larger investment portfolio that is driving our net interest income higher. So you see that we've grown the book by 26% year over year and we've grown net interest income with 36%. So we have a NIM expansion here. We've gone from more or less 12% to 13% last quarter to last quarter fourth to this quarter fourth. And then that we've done despite having tripled the liquidity buffer over the year to prepare for for SDR status. So we had a liquidity buffer of 8 billion a year ago and now it's roughly 24 or around 24 billion SEC. When it comes to collection performance, we had continued strong collection performance. It was 106% across the market. So above our management forecast, that's comparing to 105% the same quarter last year. And we are having a granular risk and collection device applied now over 13 markets. So we entered Portugal in Q3, Q4. And this collection performance and the top line development is supported by stable underlying costs. However, these costs include one time items due to primarily the sale of the Spanish on secure book, which deserves the comparison quarter over quarter. So point two points that we want to make. We are not making any formal adjustments for these one time costs. We want to take them on the chin, so to speak. And that said, we want to be open with the underlying cost development as well. So if you would isolate the one time cost that we see will not happen again, then the underlying profit growth is really strong. The PBT. So it's 237 to 337, an increase of 42% if we adjust for these items. And in 23, that would be currency gains of 40 million. We didn't have hedge accounting at that point. So that came in over the P&L. Then also we had other one time costs of 20 million in 23. And in 24, now Q4, we had Spain divestment, which was 42 million. And also that accruals that we don't think is part of business as usual. So that's the 56 million. And that leads to an underlying growth of 42% of profits. So despite taking these one off as business as usual, we delivered a ROE of .5% in the quarter compared with 11.2 a year ago. And we believe now that we have a really resilient business and the underlying business is delivering really well. So I'll take you through the ROE development over the year. But we have now an underlying business that is delivering our financial objectives. And we are not, depending on as we were in the past, one time initiatives to reach our targets. Next page, please. 2024 was a really outstanding year for us. We are firm delivered a record setting investment year in 24. It was almost 11 billion, which is the highest in our history. It's also proving to us and I hope to the external world that we have an industry leading investment capacity and the potential to grow. And also, which I think is a really strong point for us, while accelerating our investment pace, we also managed to expand our return levels, which is speaking to that we are in a supportive market for hoists. We're investing at 2014 IRR levels currently, which is very attractive. We're also very disciplined in investing. So while you see blowout quarters like Q3, our average is around the two billion. If you take a look over over two years, that's providing the growth long term for us. So in our valuations, we are very data driven and look at granular cash forecast. So we minimize assumptions in these valuation of portfolios. So we price in discipline way, both the return levels and also using minimal amount of assumptions. So it's very much data driven, granular approach to this. So we think the risk level in the book is very good. We have now also developed strategic partnerships to expand our sourcing network and work together with key partners. We've done that over the last few years. We include servicers that we work with on the servicing side. They help us to source volumes from the industries of the banking industry. We also work with the industry and financial peers to source and co invest. This is part of our strategy going forward. And in Q4, it was slightly less than 20 percent of volumes or so. And this is when we present the co investments. This will always only be our share of the co investments. So when we talk about co investments, it's important to say that, OK, so the rest of the co investments, so to speak, that belongs to the partners, we will never show in our numbers. This is only our part. And again, we will detail this going forward in future reports at the end when this part of the business grows. Next page, please. On this page, we want to take a step back and look at the bigger picture. You might remember this page from the capital markets day we had during the autumn. So we want to show that we are on that our growth is on track to achieve our long term target. We set out the target in twenty one to double the book at twenty one to two with twenty six. So over five years, we want to go from 18 to 36 billion. And as you can see on this picture, we're 85 percent in achievement of that goal today. And if you take a roughly eight percent growth of the next two years versus if you compare that and then we will get to the 36 billion. You can compare that average growth of eight percent with the last year's growth of 26 percent, which was also including a divestment of volumes. Or if you look at the overall level, thirty one to thirty six, then it's clearly slightly less than 20 percent growth to to reach our target. And as we have grown, we also expanded our servicing network, as I mentioned, and also the number of markets. So we have servicers helping us the source. We have strategic co-investors. We have covering now 13 markets and counting. We're looking into markets close at home, I would call them. So very the same asset classes and the similar markets. So, for example, Portugal is a great example of that. We know Spain very well. And now we're we have expanded into Portugal on the Iberian Peninsula. We also see a strategic shift in the market to more capital like business models, which will create a vacuum to fill. So we believe that the market will and is supporting growth at attractive risks and returns. And on top of this, it would be that we have a really hit for purpose business model. So our only model continues to be competitive edge, particularly in today's environment. And when we are becoming a stronger operational operator overall as well. So to conclude on this page, I believe we are on track to achieve our growth ambitions by end of 26. And we have a strong operating backdrop in markets and we are working collaborative with our partners and and co-investors. We're expecting to continue to to beat our return targets while we continue to grow. Next page,

please.

Thank you. Here you can see the the asset mix and the diversification of the book. We believe we have a very nice diversification in the book. It's as you know by now, a very granular risk in the underlying portfolios, very low single risk exposure. So it's a data driven model that we're running. And on top of it, we are across now 13 markets. We have a really solid pan-European geographical diversification. And then we are investing into two asset classes, secured and unsecured on the high level. And then clearly there's many sub asset classes below these two levels. And we're also having a really sound and healthy risk profile in the book. And you can see that the results from that risk profiling collection performance that we're generating. So the stable one of five percent. Next page, please. We continue to see really nice operating leverage and scale effects in the business. We have grown the book by the investment portfolio by 26 percent, an underlying profit adjusting for the one time items that have laid out on the prior page. And we've grown 42 percent in the profit before tax. And the one time items as mentioned is mostly the Spanish restructuring cost in Q4. Next page, please. And now to the full year 24. We delivered a strong performance in Q4 and for the full year 24. Overall, we achieved all our targets and more, delivered an investment portfolio growth of 26. And just income growth of 30 percent operating income growth of 26 percent net earnings growth of 50 percent and then an hour away of almost 17 percent for the year. This is a result we are really proud of. We were aiming high this for 24 and we beat our targets. We invested a record amount of 11 billion almost. We continue to reprice and expand our margin margins. We also continue to maintain a sound risk profile in the book and delivering strong collection performance of 105 percent for the full year. And then as Harry said, we had we had a really high focus on continuous improvements and restructure across several markets. We sold our third party servicing business. We sold our Spanish on secured operations. We changed our Benelux model. We sold in Germany and Italy. So it's a really high pace of change to improve the business. And we see that this is going slightly down over the next year. But this is in a really beneficial change for us during the year. So we've been enjoying both material benefits and then also some one of course. And this has not taken away from the overriding result of the year, which is the 16.8 to 17 percent. Are we so all in all and also the underlying indirect costs have been stable. So this provides a nice operating leverage when we grow. So all in all, we beat our return target in 24 by delivering almost 70 percent. Are we and we grew a book 26 percent. So we are in reach of reaching the 26 growth target of 36 billion. Next page, please. And this is the same trends for 24. So strong growth that right risk and right price and risk healthy portfolio driving operating income and then costs control and scale benefits boosting profits in the end. And then on the following pages will unpack this slightly for you. So we can go to page 12. Here is who you see the material net interest margin expansion that I was referring to before. So we have we are enjoying strong growth at the right prices. And this is despite us building up a large liquidity portfolio. Next page. So here we started to see the scale effects also in direct cost. We have a higher growth in investment portfolio than the direct cost. You can see the 26 percent compared with the 20 percent growth in direct costs, which is great. This is what we've been aiming for and we hope to to to achieve this going forward as well. This is hard work clearly, but it is something that is really on our radar. And on next page, please. OK, before we move on to the back. So just comment on the direct FTEs. So if you take really the longer term perspective, we have we had almost one thousand one hundred direct FTEs. And today we're seven hundred thirty seven. And this is the result of continuous improvements and restructuring of the business. So we've done that across a number of markets and then the model. So so this is a a real benefit of what we've been doing. Next page, please. So this is the ongoing improvement focus in in in the indirect cost. You see that we've been growing the portfolio since. And this is including before we divested the UK books of the 21. We've grown the book 46 percent while we've taken down the indirect cost 16 percent. And this is an ongoing focus. So you can see year over year we are flat in essence in a really high inflation environment. And this is very much driven by by prior work. And then in this year, the insourcing of the strategic capabilities in IT, which we absolutely want to have in. And then that also yields a cost reductions. Next page, please. And here you can see the development of our way during during the year. So we had reported our way, which is the light bar. So 18, 17, 16 and 15 and a half. And then the underlying are we wish if you tried to clean out one term items, we have not done this because we don't want to. So we want to have simple numbers. So that said, you can see the underlying are we coming more coming higher and higher during the year. So the Q4 levels are very, very attractive. So this is due to sourcing and discipline pricing and also cost control and scale benefits coming. Next page, please. So it's the capital position. We have a strong capital position. It's it's materially above regulatory requirements. And we are now within the target range. We see that we will continue to to generate strong capital and have a continued high investment capacity. In twenty four, we have distributed significant capital repatriation to shareholders. So 200 million of share repurchase during twenty four and then now two sec per share proposed by the board. And this is in total almost 40 percent of the twenty four profit. So on this we see our liquidity position. We have an extraordinarily strong liquidity position and overall resilience as an institution. I think this is I can think of any other institution that that show these numbers. So we built up the NSFRA ratio gradually over the year. And we overshot to ensure that the media's the arbitrary end of Q4. And that is triple the liquidity portfolio, the liquidity reserve year over year. And we have an extraordinarily high LCR, the thousand percent. And by the end of Q4, it is one thousand four hundred. So the thousand there is an average of a few quarters. And then if you take a moment in time, it's it's over one thousand four hundred percent, which is incredibly resilient. I would say next. If you look at the funding, it's the same funny mix as always. We've grown the the deposit slightly. It's a diversified, stable and really competitive price funding base, which is supporting our growth. We see that the average cost is going down from Q3 to Q4. So now it's the average is three point seven percent or so. We've also issued material markets, issuance in in Q4 and during the year. So one point seven billion in Q4 and then around four billion in in twenty four. And overall, the senior on secure debt is around 10 percent and then deposits 82 percent of the overall funding. And this will vary slightly up and down over quarters. But give or take, this is where we will be. Next page,

please. Yes. Thank you, Christian. So on on the SDR, as as you know, and as we have communicated, we have postponed our notification until there is more regulatory certainty or less uncertainty. And we are in the meantime, of course, in communication with both the .S.A. and and and IBA. And we are comfortable with our interpretations of these criteria, but we are running a business and we cannot simply wait until a bus ruling or interpretation comes back. So therefore we are now also taking steps to sort of harmonize our setup with with with the interpretation of the .S.A. And this status, you will see, for instance, if you go into our deposit platforms that we have opened up three months and six months deposit products, which we believe will be very attractive. And so we are taking steps here. The SDR status is in our hands and we can meet all these criteria. So right now it is a question of time. If we if we would get a positive feedback from Eva, which we of course hope for, then we are still in this year. Then we will, of course, immediately notify as an SDR in 2025. Now, if both questions would come back negative, then we still have it in our hands to be an SDR from first to first, first of January 2027. And if it's a combination of one positive, one negative, it could be 2026. But basically, the message is that this is in our hands long term. We still think this is a very attractive status to reach. However, we we are not an SDR today. We weren't an SDR the previous year. The growth that we have that we have achieved in the last few years we have achieved as a non non SDR utilizing our existing tools, right? Securitizations and strategic co-investing. And we will continue to to work on with these tools during during 2025, 26 as well, if necessary. Our growth ambitions, the 36 billion, etc. are unchanged. Our financial targets remain in place. And as it happens, this is my last slide. So let's follow up on those financial targets that we have mentioned a couple of times in our presentation. So I will not dwell on it, but. The return on equity, so we have delivered what we think great results also in 22 and 23. However, that has been driven to a larger extent by one of items. If we take out those one of items, then it would look less attractive in 22 and 23. However, this year now we see with the growth of the book, with the restructured organization, trimmed organization, etc. Target setting that that steers the company towards return on equity and profitability all the way from from external targets to CEO to to to operations team leader in Spain. This has has delivered the 15 percent. If we look at the CT one ratio target, yes, we are now within the range. We have been significantly above after selling selling the UK book back in 22. And we have managed to read, you know, to redeploy that capital into well high yielding portfolios. So very happy about that. Now we intend to stay within this band here going forward. Now the earnings per share growth, our target is at least 15 percent growth per year. Obviously, with the with the results we see of the past years here, we are crushing that and we expect to continue to deliver above the 15 percent EPS growth. Now, in terms of the dividend, so this this year or for 2024, the board proposes a two sec dividend. It is, I would say, around 20 percent of net profit. So it is a start, but it should also be seen in in conjunction with with share buybacks that that happened in 2024. So with that, I think we are opening up for questions and

over. If you wish to ask a question, please dial pound key five on your telephone keypad to enter the queue. If you wish to withdraw your question, please dial pound key six on your telephone keypad. The next question comes from Marcus Sandgren from Kepler Chevrolet. Please go ahead.

Good morning, everyone. So if we first move into costs, so it seems like you have a lot of extraordinary costs. I mean, out of the last eight quarters, you had extraordinary costs, six of them. What should we I mean, what should we expect going forward? It seems almost like a normal part of the business and also underlying costs is also up sharply. What can you give us some help for for the future in terms of cost development, please?

And the I think if you look at the the underlying growth, the of the book that drives the cost growth. So we are a growing company. So we've been growing year over year, 26 percent of the portfolio. And that will drive direct cost growth. And this year it was 20 percent or so below the growth of the of the book. So when we grow business, there will always be cost growth. And then if you look at the underlying indirect cost, that is basically flat. So we've grown that with three percent. That is basically inflation. And we've taken it down to combat. We have certain geographies that we have much higher inflation. So we're dealing with with the high inflation inflation environment the last few years by really having a high cost focus. So we have very, very stable indirect costs. And we see that that will continue. And then direct costs will clearly continue to grow as we grow, which is natural, I think. Then when it comes to these extraordinary costs, as you can see on the the last few years, we've taken costs when it delivers real value and that we will continue to do. So if we have larger items that we want to do or small items that we do that will need cost that we don't see as business as usual, that will generate benefits, then we will clearly do this because it's the right thing to do. However, that said, we are now moving into more of an environment where we dealt with, I would say, the large, large majority of issues that we've wanted to address over the last few years. So I think you can expect a lower amount of change, but still a high improvement focus. But as everything in life, you start on the top, you deal with the really high priority items, and then you move down the chain to deal with the smaller stuff as as as you move on and dealt with the the big things. And that is exactly where we are now. We have dealt with the big things and we will continue to improve and look around and always have a high focus on improvement.

OK, thanks. So so the cost growth this quarter, excluding the one of is that on the back of your high portfolio acquisitions last quarter, since it's more stable this quarter. I

think the the what we call one time items in this quarter, so Q4, we have we have this 56 million, which is a restructuring of the of the Spanish business when we sold the the unsecured book down there. So that's 42 of those 56 million. Then we have a VAT accrual, which we don't see recurring again either. So that's the that's the 56. And then we also sold our Maran business when the direct cost we have roughly 30 million. So the three third party business, third party servicing business, we called Maran internally. We sold that. And that's also a 30 million one time item, so to speak, in direct costs. So we see the trend is growth is slightly lower growth or direct for the book over time and then stable indirect.

And I can just echo that isn't

roughly half of

the. So no, no, Marcus, please go ahead.

Sorry,

please go ahead.

I was just asking. So out of the I mean, it's it's close to to 20 percent cost growth this quarter. Isn't half of that one of or are you saying it's more or.

I'm not sure exactly which numbers you're referring to, but we have in indirect costs. We have these 56 that we would call one time items. And then we have 31 in indirect costs as well. Yeah. So and that said, I think probably to not classify these as items affecting comparability is to keep the numbers clean. And we want to be transparent with the underlying costs development. That said.

OK, thank you.

The next question comes from Herman Carrick from Carnegie. Please go ahead.

Good morning. Thanks for taking my questions. So just understand them. So to clarify, maybe 87 million is actual total one of 56 million indirect and 31 million is direct. So that's some collection costs that right on the panel.

Yes, it's indirect costs.

Yes. If I'm just looking still, I mean, the collection cost, even if I adjust for those 31 in collection costs, the collection costs in relation to the kind of PD book is up a bit in Q4. Is there any effect of as Marcus alluded to that you had a lot of acquisitions in Q3 and you had to onboard those Q4? So it kind of becomes a sequential impact on the following quarter or is this level in relation to collections kind of a normalized level as well?

Yes, I would say so. I mean, there's a we onboard and then we clearly start to work with the portfolios. So more in earnest, it's like with a slight delay.

Great. Thank you. And then continuing on the one of theme, actually, you mentioned something in the report about that you've done accruals for your partners on the SPV side. Which in the wrong way before. So I think you mentioned something like 16 million for SPVs. Yes, that's been accrued in the wrong way before. That's not been adjusted. So is that 16 million that impacts the Q4 result and which line item in the PNL is that then?

No, it's a it's we set up in 1819 a two SPVs in Italy. So when we're reviewing the accounting model, we realized that there was a mistake in the timing of those accruals for the co-investors variable return. And that we have now corrected. So that impacts prior years to the largest degree.

OK, and then just more generally speaking, how have you and the boards kind of discussed when you concluded to pay dividends? I mean, you are still awaiting clarity on the SDR status. You seem to be increasing your efforts on the co-investment side. I suppose that's giving away part of the upside. So why not keep the capital internally and have it for more direct investments instead?

We can't really comment on that. This is a board decision. So we cannot really comment on the dividend. However, I think I think management and board alike feel that the company is in a very strong position. And regardless of of of SDR status in twenty five, twenty six, we will continue to to meet our financial targets.

To add to that, if I

put it this way, I mean,

go ahead.

OK, sir. So what I wanted to ask, I mean, you showed the graph of how you've been growing the portfolio in recent years and you have your 36 billion target for twenty twenty six. If you would keep the same investment pace as in twenty four, you would be there basically in twenty twenty five. Is there anything that you can share with us about the plan to kind of reduce the investment pace until you have clarity on the SDR? Or do you think you have sufficient capital to keep on investing or deploying at the same pace as you have recently?

So thank you, Ermin. No. So we have a growth ambition, right? So we don't have any financial targets pointing to the thirty six. We still aim to get there. And we the market is what the market is. We will invest what we find on the market at attractive returns in in twenty four. It was exceptional. We expect the market to be there also. Twenty five. And if it is, we will we will we will invest.

So, I mean, I have to add to Harry's point, we are in a very supportive and accommodative market. And as long as as long as we can invest at these levels, we will continue to invest. And then over the long term, that means growth to the thirty six billion. And in the short term, it might be lumpy between quarters, as you can see when you look back over the last two years as well.

That's very clear. Thank you. Last question, if I may just on the name expansion you've seen now when you've come above the NSF our requirement for the SDR, you scale the liquidity portfolio. Do you expect that name expansion to continue given that you're still buying as it sounds a front book with higher returns to the back book?

It's slightly difficult to say. I mean, it's a mix of different things. I mean, we clearly NSF are we we overshot into Q4 because we want to be really certain that we we hit the NSF our target. So we will likely manage that slightly lower than what it is is now. So that will take out some cost and then interest rates, I think, is is anyone's inflation and interest. I think we all have our personal views, but it is slightly difficult to to forecast. And that clearly plays a lot into that as well. And then the market prices, we are always hoping to to expand NIM, but we're not always counting on it. So I think we're just going to have to do it like that.

Great. Thank you very much.

The next question comes from Bjorn Olsen from SEB. Please go ahead.

Good morning, guys. A few questions. And my first on the SDR. You're now guiding that it's possible that you reach it not until twenty twenty seven, referring to the EBA interpretation issue. But this question was known already in November when you pressed released. What new and back then you said that you were planning to get the status by twenty five. So what new information have you received since last last autumn that has changed your guidance?

I think since the SSA came out with their position and made that clear, we we had internal discussions of how to handle this and concluded that notifying without actually being fully able to act as as an as an SDR would would not be the right thing to do. So therefore we thought that we just simply postponed the notification and sent out communication about

that. So we have not received any new information. OK,

so.

We can add to this. I mean, the timing is it's a notification. So if we would want to, we could notify now. However, we want to to have a really strong dialogue with clearly with the Swedish SSA. And that's why we're we're we're postponing this. And we have no we will just continue as normal. So this presents no issue to us operationally. So I think that's really important to understand that we want to remain an SDR as we see it. And then we're building some flexibility to cater for this face more conservative, I would say, interpretations of the criteria so that we're working on as well to ensure that it's we can meet both as soon as possible. Then if we're lucky, that's in twenty five. And if we're slightly less lucky, then we'll need to manage slightly longer. But again, it doesn't impact the the overall conditions or view on meeting return targets.

And in terms then then for your sort of mitigating actions with sort of securitizations and co-investment structures, et cetera, could you give any guidance on the sort of negative margin impact that could have compared to to having the portfolio in your own book?

I think there's with co-investment and the partnerships that we set up, we also get access to volume that we that we would not have access to. So this actually brings volume as well. So from that point of view, we don't expect there to be any negative impact on on that. So I think that's the that's the main answer to that one.

And also your session

on the session is more of a funding product because you in that one you would invite an investor to take the highest risk in your portfolio. So it's a it's a slightly more expensive equity, but it doesn't impact the overall profitability of the company. So if we would go for a securitization at one point, as you've seen historically, then then it's very small volumes that needs to be put in because as backstop impacted claims have grown since nineteen when the backstop was introduced. It is still quite small volumes that can be dealt with in this and then have a large impact.

And for the NSF bar, have you received any approval from the Swedish FSA to to sort of go ahead with your interpretation of their interpretation given that, you know, Avansa and other Swedish sort of points have been been going with the Swedish FSA position.

The Swedish FSA doesn't give approvals normally. So you you have a dialogue. Normally this is where it works. You have a dialogue and you do your interpretation of legal text and then you're very clear how you done things. And then that that's about it.

Yeah, so we have heard that we have presented. So we have presented our how we interpret this and the legal text behind that. And and this we have communicated clearly to the SSA and we will be reporting on the 11th of February first time.

OK, so then if they would sort of disagree with with how you interpret it, it's at that point they will notify you that. Or how would that work? And if so, have you I mean, since since basically everyone else has been sort of changing the way they calculate NSF bar, except for you. Do you do you have a pro forma NSF bar?

Regardless of which which interpretation you choose, we are above regulatory limits, well above regulatory limits.

And I think it's also important to to note that what about various various banks have different ways of using these platforms. So it's very different how different entities use them.

Yeah.

Could you to repeat, could you give a guidance if if your pro forma figure is above or below 130 percent?

No, we cannot give that give out that number. OK, as Christian says, just

one last technical question.

Shoot,

please. No, go ahead first.

I was I was just going to reinforce the point from Christian, right? This is about whether or not your deposit broker and whether or not that should be sort of the the actual ASF factor should be 50 percent or 100 percent. And depending on how you work with these platforms, they are either a customer or not a customer of of the institution hoist in this case. And then so our view is that clearly the way we use this and others might be using it in a different way. The the the the interpretation is clear. Over back to the technical question.

OK. Yeah, the the funniest question, I guess on page 30, you correct your retained earnings in 2023 by reducing it by four hundred and thirty million. Could you just tell us what happened there? Which one is?

So in note eleven, you mean. Or which which note are you looking into?

Yeah, exactly, exactly.

Yeah, this is what what I referred to before. So we were looking at the SPV SPV models. So in prior years, it's a 72 million for all prior years adjustments and then for details. So deferred tax liabilities is 54 in prior years. So it's those two together, the 126 that hits the the prior years. That's important to note that this is a a accounting adjustment. So there's no cash impacts and it's it's also a timing. So there's no additional cost. It's just a matter of adjusting the timing of those costs.

OK, clear. Thank you very much.

Thank you.

As a reminder, if you wish to ask a question, please dial pound key five on your telephone keypad.

OK, doesn't seem to be question

comes from Marcus Sandgren from Kepler Chevrolet. Please go ahead.

Yeah, hi again. I was just thinking the the portfolio sold in Spain. What how I mean, what's your thinking behind it? When do you sell portfolios basically?

We and we have sold right. We sold in France last year. We sold in Italy earlier this year. We sold in Germany. We now we sold in Spain. So typically we sell if we believe that that our setup is not living up to the return targets we have. Not necessarily just at this moment, but it's basically about our competitiveness on the market as well. So if we assume that we will continue to win at attractive returns, then then then we love having internal platforms. If we are if we are not able to do that, then after some time and after trying operational excellence initiatives, obviously, then then we look at this option. So that's in general how we think about about sales.

Thanks. And then. Yeah, OK. And then secondly, it seems like we or at least I and I guess several of my colleagues are underestimating the impairment income that you're having. And you have had a good income from that line for many quarters now. Can you just help us to to be better at predicting it?

I think the the way we think about it internally is that we have a we have a large number of portfolios across many markets. So there's a larger number of overperforming portfolios than underperforming by definition if you have collection performance because you beat your expectations. And that has been the case for the last few years. So we call it a healthy book and that has generated in twenty three and twenty four hundred five percent collection performance. And I think we aim to to have that healthy tilt in the book. So a healthy book. So I think we expect that this will continue. And clearly that also provides a buffer for if anything would happen in the environment, anything like that as well. So it's been pretty stable over the last two years at the one hundred five percent.

OK, thanks.

And this clearly can be up and down during during courses. OK, thanks. Very good. We have a few written questions as well. So one is you are sorry.

Marcus, did you have any more questions? No more questions for Marcus.

Are there any other questions on the call?

No.

All right. So let's have a look at the written questions on the chat then. I think most of them have been answered, but there is one here. You are at your targets or even beating them. Will you set new targets?

I think we got that question after the capital markets day as well. And I think we will give the same answer. Obviously, it is a board question to set the financial targets. We are happy with the targets we have at the moment. And they will they will remain until they are changed. Is the is the is the boring answer. Obviously, we intend to continue beating them. And if we do so for a longer period of time, then I'm sure they will be adjusted upwards.

Very good. So we have one final question then around we had share buybacks last year and now we have a dividend. So how do you guys think about the split between dividends and buybacks going forward?

Again, this is a topic for the board. But I think what we what we normally, you know, in our policy, we say that it is profitable growth or repatriation. And as long as we want to keep a healthy mix of both, obviously, as we did during twenty twenty four. The the dividends are are are more long term, whereas the buybacks are a little bit more flexible. So we will just try to work with a healthy mix of both basically.

Good. And that's all the questions we had.

And we are four minutes over time. Then thank you all very, very much for for calling in today and listening. And thank you for great questions. We will speak to you soon. Thank

you,

everyone. Thank you. Thank you very much.

Thank you. Bye bye.