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 Vranjes, CEO of Hoist Finance, and next to me I have Christian Valentin, our CFO, and Karin Tycke, our Chief Investor Relations and Coms 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 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 the 2024 has been a year where we have made great advancements on that strategy or on that goal, both commercially and in terms of implementing our strategy on the ground, so to say. So during 24, we invested a record 10.8 billion SEK 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 23, 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 with 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 24, let's call it the continuous improvement plus. So I think the tempo 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 before tax came in at 281 million SEK. We have taken about 56 million SEK in one of costs during the quarter relating to restructuring in Spain and a divestment in Italy. And I think adjusting for those, we would be at the earnings before tax of 336 million for the quarter. Christian, we'll take you through the bridge there later in the presentation. Return on equity came in at a strong 15.5%. And I think the key thing here is that this is now driven by the core business. It is 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 delivering. 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 develop over the year and we'll separate out those numbers for you if and when that becomes material. Now volumes and pricing in the market are 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 going up. So on the full year, this takes us to 10.8 billion invested, basically a 50% increase 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 down a net interest income growth of 36% and with a cost growth of 19% and adjusted for these one-offs, this contributes to strengthening what we call the operating leverage, basically where income and direct cost grows with the book growth and indirect costs track with inflation. Collection performance 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 the sale of our unsecured book in Spain, we are 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. Basically, the strategy these days doesn't include any third-party servicing, so we don't sell third-party services. Now we have managed to divest that to a 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 share repurchase 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 had an unofficial target of becoming a 1 billion net profit company by 2025. So with the closing of 24 now, we're happy to see and happy to announce that we've reached that goal a year in advance, despite taking 140, 150 million SEC of one of indirect costs over the P&L 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, a strong 16.8%. And as I mentioned earlier, this is driven by the core business primarily and to a lesser extent than before than sort of one-off activities. And very, very happy about that. Investment volume, we've covered record year and 50% up 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 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 operational units in Belgium, Netherlands, Germany, UK, Spain, and Italy. So despite that, we are still delivering really solid collection performance. 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 in an upgrade from from Moody's. from our previous BAA3 to a BAA2, 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, 1 billion in Q4 and 4.2 for the year as a whole. We did two rounds of share repurchases, once after the Q4 report in 2023 and once after the Q2. And our earnings per share has grown to basically 10 sec per share now, which we are also very happy with, definitely living 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 large. We have built it up in order to qualify for the SDR, and by the end of 24, we were at 154%, so ample room to the regulatory limits. Now, with that, I will... And 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 saw a strong continued portfolio growth resulting in a total investment portfolio of almost 31 billion, so 30.7 billion at the end of the quarter. This is a net 26% growth, and we say net because we divested our Spanish unsecured book during the quarter. So if we wouldn't have done that, then we would almost have been up 30% 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 and when this happens, then we'll take you through a little bit more in detail how we account and 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 four to this quarter four. And then that we've done despite having tripled the liquidity buffer over the year to prepare for SDR status. So we had a liquidity buffer of 8 billion a year ago, and now it's roughly 24, 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 for 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 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 shin 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 a VAT accruals that we didn't we don't think will is part of business as usual so that's the 56 million and that leads to a underlying growth of 42 percent of profits so despite taking this one off as business as usual we delivered a ROE of 15.5 percent in the quarter compared with 11.2 a year ago. We believe now that we have a really resilient business and the underlying business is delivering really well. So I'll take you through our redevelopment 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 of one-time initiatives to reach our targets. Next page please. yeah 2024 was a really outstanding year for us we our firm delivered a record-setting investment year in in 24. it's was almost 11 billion which is the highest in our history it's also proving to 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 Hoist. 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 are averages around the two billion, if you take a look 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 forecasts. So we minimize assumptions in these valuation 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 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% of volumes or so. And 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, okay, 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 up and when when this 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 the autumn So we want to show that our growth is on track to achieve our long-term target. We set out the target in 21 to double the book, 21 to 26. So over five years, we wanted to go from 18 to 36 billion. And as you can see on this picture, we're 85% 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 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 which was also including a divestment of volumes Or if you look at the overall level, 31 to 36, then it's clearly slightly less than 20% growth 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 to source, we have strategic co-investors, and we are 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 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, we believe that we have a really fit for purpose business model. So our funding 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 market and we're all working collaborative with our partners and co-investors. We're expecting to continue to beat our return targets while we continue to grow. Next page please. Thank you. Here you can see 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 so 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 profile in the collection performance that we're generating. So the stable one of 5%. Next page, please. continue to see really nice operating leverage and scale effects in the business we've grown the book by the investment folder by 26 an underlying profit adjusting for the one-time items that have laid out on a prior page and we grown 42 percent in the um in profit before tax and the 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, interest income growth of 30%, operating income growth of 26%, net earnings growth of 53%, and then an ROE of almost 17% 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 margins. And we also continue to maintain a sound risk profile in the book and delivering strong collection performance of 105% for the full year. And then as Harry said, We had a really high focus on continuous improvements and restructuring across several markets. We sold a third-party servicing business. We sold our Spanish unsecured operations. We changed our Benelux model. We sold portfolios 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 has been a really beneficial change for us during the year. So we've been enjoying both material benefits and then also some one-off costs. And this has not taken away from the overriding result of the year, which is the 16.8% or 17% ROE. 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% ROE, and we grew our book 26%. 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 at 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 we'll unpack this slightly for you. So we can go to page 12 please. Here you see the material net interest margin expansion that I was referring to before. So 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 costs. We have a higher growth in investment portfolio than the direct costs. You can see the 26% compared with the 20% growth in direct costs, which is great. This is what we've been aiming for and we hope to achieve this going forward as well. This is hard work, clearly, but it is something that is really on our radar. On next page, please. OK, before we move on to the go back, so just comment on the direct FTEs. So if you take really the longer term perspective, we have we had almost 1100 direct FTEs and today we're 737. 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 this is a real benefit of what we've been doing. Next page, please. So this is the ongoing improvement focus in the indirect cost. You see that we've been growing the portfolio since, and this is including before we divested the UK book, so the 21. We've grown the book 46% while we've taken down the indirect cost 16%. And this is an ongoing growth. focus and you can see year over year we are flat in essence in a really high inflation environment and this is very much driven by prior year 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 cost reductions. Next page please. And here you can see the development of ROE during the year. So we had reported ROE, which is the light bar. So 18, 17, 16, and 15 and a half. And then the underlying ROE, which if you try to clean out one-time items. We have not done this because we don't want to, we want to have simple numbers. So that said, you can see the underlying ROE 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 in. Next, please. This is the capital position. We have a strong capital position. It's materially above regulatory requirements and we are now within the target range. We see that we will continue to generate strong capital and have a continued high investment capacity. In 2024, we have distributed significant capital repatriation to shareholders. So 200 million of share repurchase during 24, and then now two SEC per share proposed by the board. And this is in total almost 40% of the 24 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't think of any other institution that show these numbers. So we built up the NSFR ratio gradually over the year, and we overshot to ensure that we meet the SDR criteria end of Q4. And that has tripled the liquidity portfolio, the liquidity reserve year over year. And we have an extraordinarily high LCR of 1000%. And by the end of Q4, it is 1400. thousand there is this average over a few quarters and then if you take a moment in time it's it's over 1400 which is uh incredibly resilient i would say next latest if you look at the the funding it's the same family mix as always we've grown the the uh deposit slightly it's a diversified stable and really competitively priced funding base which is supporting our growth We see that the average cost is going down from Q3 to Q4, so now the average is 3.7% or so. We've also issued material market issuance in Q4 and during the year, so 1.7 billion in Q4 and then around 4 billion in 24. and overall the senior unsecured debt is around 10 and then deposits 82 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 hurry yes thank you christian uh so on on the sdr

uh as as you know and as we have communicated we have postponed our notification uh until there is uh more regulatory certainty or less uncertainty and we are in the meantime of course in communication with both the sfsa and and and iba and we are comfortable with our interpretations of these criteria but we are running a business and we we cannot simply wait until EBA's ruling or interpretation comes back. So therefore, we are now also taking steps to sort of harmonize our setup with the interpretation of the SFSA. 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 would get a positive feedback from Eva, which we of course hope for, 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 1st 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 are not an SDR today. We weren't an SDR the previous year. The growth that we have achieved in the last few years, we have achieved as a non-SDR, utilizing our existing tools, right? Securitizations and strategic co-investing. And we will continue to work on with these tools during 2025, 26 as well, if necessary. Our growth ambitions, the 36 billion, et cetera, 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. We have mentioned it a couple of times in the presentation, so I will not dwell on it, but the return on equity. So we have delivered what we think are great results also in 2022 and 2023. However, that has been driven to a larger extent by one of items. If we take out those one-off items, then it would look less attractive in 2022 and 2023. However, this year, now we see with the growth of the book, with the restructured organization, trimmed organization, etc., target setting that steers the company towards return on equity and profitability all the way from external targets to CEO to operations team leader in Spain. This has delivered the 15% ROE. If we look at the CT1 ratio target, yes, we are now within the range. We have been significantly above after selling the UK book back in 22. And we have managed to redeploy that capital into 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% growth per year. Obviously, with the results we see over the past years here, we are crushing that and we expect to continue to deliver above the 15% EPS growth. Now, in terms of the dividend, so this year or for 2024, the board proposes a two SEC dividend. It is, I would say, around 20% of net profit. So it is a start, but it should also be seen in conjunction with the share buybacks that have happened in 2024. So with that, I think we are opening up for questions.

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 Chevroo. 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 expect going forward? It seems almost like a normal part of the business and also underlying cost is also up sharply. Can you give us some help for the future in terms of cost development, please?

I think if you look at the underlying growth of the book, that drives the cost growth. So we are a growing company, so we've been growing year over year 26% of the portfolio and that will drive direct cost growth. And this year it was 20% or so below the growth 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 3%. That is basically inflation. And we've taken it down to combat. We have certain geographies where we have much higher inflation. So we're dealing with the high inflation environment the last few years by really having a high cost focus. So we have 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 last few years, we've taken costs when it delivers real value. and that we will continue to do so if we have a larger item 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 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 you move on and dealt with 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.

Okay, thanks. So the cost growth this quarter excluding the one-offs, is that on the back of your high portfolio acquisitions last quarter since it's more stable this quarter?

I think what we call one-time items in this quarter, so Q4, we have this 56 million, which is a restructuring of the Spanish business when we sold 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 56. And then we also sold our Maran business. So in 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, slightly lower growth for the book over time and then stable indirect.

And I can just echo that. Isn't roughly half of the... No, no, Marcus, please go ahead.

Sorry?

Please go ahead.

No, I was just asking. So out of the... I mean, it's close to 20% cost growth this quarter. Isn't half of that

one-offs 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 direct costs as well yeah So, and that said, I think our overall objective to not classify these as items affecting comparability is to keep the numbers clean. And we want to be transparent with the underlying cost development, that said.

Okay, thank you.

The next question comes from Ermin Karik 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 ups 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, Phil, I mean the collection cost, even if I adjust for those 31 in collection cost, the collection cost 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 during Q4, so it kind of becomes

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're on board and then then we clearly start to work with the portfolios uh more in earnest a slight with a slight delay great thank you and then continuing on 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 in the wrong way before. So I think you mentioned something like 16 million for SPVs. You mentioned that that's been accrued in the wrong way before and that that's not been adjusted. So is that 16 million that impacts the Q4 result and which line item in the P&L is that then?

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

Okay. And then just more generally speaking, how have you and the board kind of discussed when you concluded to pay dividend? 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 I cannot really comment on the dividend. However, I think management and board alike feel that the company is in a very strong position. And regardless of SDR status in 25, 26, we will continue to meet our financial targets.

to add to that if i if i uh put it this way i said i mean go ahead okay sir uh 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 2026. If you would keep the same investment pace as in 24 you would be there, basically in 2025 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. So we have growth ambition, right? So we don't have any financial targets pointing to the 36. We still aim to get there. And the market is what the market is. We will invest what we find on the market at attractive returns. In 24, it was exceptional. We expect the market to be there also 25. And if it is, we will... we will invest.

So, I mean, to add to Harry's point, we are in a very supportive and accommodative market. And 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 36 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 NIM expansion you've seen. Now, when you've come above the MSFR requirement for the SDR, you've scaled the liquidity portfolio. Do you expect that NIM expansion to continue, given that you're still buying, as it sounds, a front book with higher returns than the back book?

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

Great. Thank you very much.

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

Good morning, guys. A few questions, and my first on the SDR. You're now guiding that it possible that you reach it not until 2027 referring to the EBA interpretation issue but this question was known already in November when you press released what new and but back then you said that you you were planning to get the status by 25 so what new information have you received since last last autumn that has changed your guidance

I think since the SFSA came out with their position and made that clear, we had internal discussions of how to handle this and concluded that notifying without actually being fully able to act as an SDR. would would not be the right thing to do so therefore we thought that we we just simply postponed the notification and sent out communication about that so we have not received any new information okay so 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 have a really a strong dialogue clearly with the Swedish FSA and that's why we're postponing this. 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 building some flexibility to cater for this phase, more conservative, I would say, interpretations of the criteria. So that we're working on as well to ensure that we can meet both as soon as possible. Then if we're lucky, that's in 25. And if we're slightly less lucky, then we'll need to manage slightly longer. But again, it doesn't impact our growth ambitions or our view on meeting return targets.

And in terms 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 having the portfolio in your own book?

I think with co-investment and the partnerships that we set up, we also get access to volume 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 that. So I think that's the main answer to that one.

or securitization.

Securitization is more of a funding product because in that one you would invite an investor to take the highest risk in your portfolio. So it's a slightly more expensive equity but it doesn't impact the overall profitability of the company. If we would go for securitization at one point, as you've seen historically, then it's very small volumes that needs to be put in. Because as backstop impacted claims have grown since 19, 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 as for the NSFR, have you received any approval from the Swedish FSA to go ahead with your interpretation of their interpretation, given that Avanza and other Swedish have been going with the Swedish FSA position?

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

Yeah, so we have heard... We have presented...

So we have presented how we interpret this and the legal text behind that. And this we have communicated clearly to the SFSA. And we will be reporting on the 11th of February for the first time.

Okay, so Dan, if they would sort of disagree with how you interpreted it's at that point, they will notify you that that's, 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 NSFR, except for you, do you do you have a pro forma NSFR?

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

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

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

No, we cannot give out that number. Okay.

As Christian said. Just one last technical question.

Shoot, please.

No, go ahead first.

I was just going to reinforce the point from Christian. This is about whether or not you're a deposit broker and whether or not that should be sort of the ASF factor should be 50% or 100%. And depending on how you work with these platforms, they are either a customer or not a customer 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 interpretation is clear over back to the technical question okay yeah

The funniest question, I guess. On page 30, you correct your retained earnings in 2023 by reducing it by 430 millions. Could you just tell us what happened there?

So in note 11, you mean? Or which note are you looking into?

Yes, exactly, exactly.

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

Okay, clear. Thank you very much.

Right. Thank you.

As a reminder, if you wish to ask a question, please dial pound key five on your telephone keypad. Okay, doesn't seem to be question comes from Marcus sand grin from Kepler Chevro. Please go ahead.

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

We have sold, right? We sold in France last year, we sold in Italy earlier this year, we sold in Germany and now we sold in Spain. So typically, we sell if we believe 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 we love having internal platforms. If we are not able to do that, then after some time and after trying operational excellence initiatives, obviously, then we look at this option. So that's in general how we think about sales.

Okay, thanks. Yeah okay 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 be better at predicting it?

I think 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 23 and 24, 105% collection performance. And I think we aim 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 105%. Okay, thanks. And this clearly can be up and down during the course as well. Very good. We have a few written questions as well. So one is... 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 remain until they are changed, 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 normally, in our policy, we say that it is profitable growth or repatriation, and we want to keep a healthy mix of both, obviously, as we did during 2024. The dividends 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 calling in today and listening, and thank you for great questions. We will speak to you soon.

Thank you, everyone.

Thank you for joining. Thank you very much.

Thank you. Bye-bye.