Hoist Finance AB (publ)

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 Söderlund, our CFO and Karin Tycke, 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 Azuro 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. 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 MPLs on the balance sheets of the European banks is growing at a relatively modest pace. The stock today generates more MPL 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 MPL topic. and we expect them to be so for the foreseeable future. And all in all, we assess that we will have favourite market conditions for the foreseeable future. There are 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 3.5 billion SEK in the quarter at good returns. That is our highest Q2 ever. Now, combined with the Asura portfolio of 2.6 billion SEX, that means we added about 6.1 billion to the total portfolio in the quarter, another record. 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 39.2 billion SEK, up 26% from last year. And of course with that we have reached and surpassed our volume ambition of 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 632. million SEK compared to 310 last year. Now we did get the VAT refund and adjusting for that and the transaction costs, the last batch of transaction costs I should say for Azure, we end up at an underlying earnings before tax of 501 million SEK, 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 with an underlying 21.6% return on equity above the 20%. Now earnings per share doubled or more than doubled as you said to 5.15 sec 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 MPLs in Europe, you need to have significant presence in the six largest European economies. That is simply where the bulk of the MPLs are. We now have about 80% of our portfolio diversified over those six markets, Germany, France, Italy, Spain, Poland, and now the UK. 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 Azure 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 1 billion SEC. We expect to close those transactions during the second half of the year. The market trend of MPL volumes moving north continues. At present, almost half of the EU MPL volumes are on the balance sheets of French and German banks. and if you then add UK there it's you know they have MPL stocks similar to Germany's but a slightly more active MPL market and let's say before Azure we had strong market positions in in two of these three markets and now we have it in all three so very happy about that And then as per the end of the second quarter, the total portfolio now stands at 39.2 billion SEK book value with an estimated remaining collections of 66.9 billion SEK. 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 Azure acquisition, amongst other things. Profit before tax at 632 million SEK versus 310 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 164 million SEK, which impacts this quarter. We also saw the last bit of the transaction costs related to the Azuro acquisition, 33 million SEK. If we exclude for these one of items, we have an underlying profit before tax of 501 million SEK to be compared to last year's underlying 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 474 million SEK to be compared to last year's 234, rolling up in the same growth percentages as for pre-tax earnings. Excluding the mentioned one-off items, we see an underlying 376 million SEK of net profit for the quarter to be compared to 254 million last year. This leads up to a 48% growth in the underlying net profit, a really strong number. So in the reported figures we arrive at an ROE of 27.5% which adjusted for the one of items becomes 21.6% to be compared to last year's underlying 16.1%. If we look at the P&L in a bit more detail, interest income including the income from co-investments at a combined 1.46 billion SEK 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 2.6 billion SEK investment of Asura 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 20 million SEK 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 report 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 3.1 billion SEK 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 over performance of 447 million SEK where we did timing adjustments for 218 million SEK. We also saw some performance related net negative write downs in the quarter of roughly 50 million SEK. 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 53 million SEK. So all of this leads up to the 135 million SEK we see in the impairment line. Looking at other income, this is where we have booked the refunded VAT of 164 million SEK 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 total operating income of 1.44 billion SEK, 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 Azure transaction. So if we exclude this the underlying indirect costs are on flat levels compared to last year where we also had the aforementioned 25 million impact coming from the VAT case. So to conclude, adjusting for the one of 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 a 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 portfolio book value growth of 18% if we exclude the Azure portfolio book value. And we see a net interest income growth of 23%, further adding the increased liquidity efficiency where we have an MSFR 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 control levels. The net profit reported at the year-on-year 103% growth or 45% growth in the underlying results adjusting for the one-off items. We can move to the next one. Looking at the five-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 two significant payments totaling roughly 180 million SEK. which were timing related so if we adjust for those two we see a quarterly collection of roughly 2.9 billion second 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 Azure 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. 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 the strong growth. And we also did a total 500 million tap into our existing senior preferred instruments. 350 of that at STIBOR plus 125 BIPs and 150 million at STIBOR plus 100. So all in all, we're maintaining and improving our competitive edge on the funding side. 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 27 billion SEK 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 and as far 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 control levels. This to achieve increased earnings and increased profitability moving forward. So I think with that I will hand back to you. Thank you, Magnus.

Yes, so on Azuro, 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 UK. And as you can see, the UK 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 UK. And up until now, as those of you who have been following us know, we have been handling the UK 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 six largest economies in Europe, where the bulk of the MPLs are. UK REPRESENTS, THEY DON'T REPORT STATISTICS THROUGH EURO STAT ANYMORE SINCE BREXIT UNFORTUNATELY BUT IT REPRESENTS CIRCA 30 TO 35 BILLION POUNDS OF MPL'S WHICH WE SEE AS 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 heavy integration.

These teams are highly complementary.

Yeah, 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 strong quarter, we were 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 non-performing 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.

If you wish to ask a question, please dial pound key 5 on your telephone keypad. To enter the queue, if you wish to withdraw your question, please dial pound key 6 on your telephone keypad. The next question comes from Bjorn Olsson from SEB. Please go ahead.

Good morning. 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 margin.

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 rights. 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 runtime, the NSFR efficiency drops. So where we are today, we're at a really good place where we have a lot of our racing deposits and longer tenures on racing. 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 get a bit about we have roughly 3 billion SEC received on our own platforms in Germany and Spain as of today.

Okay, thanks.

And then on the zero 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 UK. How does the UK 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 trampoline for you as well to grow further in the UK?

Thank you, Bjorn. Yes, I mean, this is going to be a platform for further growth in the UK. 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 UK market is in an interesting moment right now. And we believe there will be volume to pick up there at good returns.

Okay, thanks. And just finally, Asuro in itself, as of today, in terms of cost-income row, etc., 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 right-sizing one-off costs to come in this year as well, if you want to slim it and improve it?

I think Azure is performing very nicely. We will not be giving you any ROI or earnings numbers on the call today. We'll see it baked in in the Q3 report. 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 UK 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.

Thank you.

The next question comes from Ermin Karik from DNB Carnegie. Please go ahead.

Good morning. Thanks for the presentation and for taking the question. So maybe first just to check, Magnus, did I hear you right that you said you had two larger collections of 180 million? And what was that? It sounds very high given that you have such a granular book.

Yeah, 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 the early 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 that particular graph. So it's just a coincidence that they both happened in Q2 and they were of such size that I think it's worthwhile highlighting that. And then looking at the gross collection versus direct costs sort of makes sense again in relation to our sort of previous performance.

Got it, thanks. 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 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 limits. 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 backstop. 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?

Yeah, I think it's difficult to say. I think we have typically, I would say, nine months of 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 MPLs. So we have, but I think sort of concrete visibility is sort of nine 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 two, three years, the pipeline.

That's all for me. Impressive results and have a nice summer.

Thank you. You too, Ermin.

The next question comes from Marcus Sandgren from Kepler Shoebrew. Please go ahead.

Good morning, guys. Two for me, please. The first one was the credit loss that you reported. How much of that portfolio that is performing is provisioned, including the cost you took for this quarter. That's the first one. And secondly, 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?

Yeah, I can start with the second one. I think our forecasts are definitely reasonable. If we look at a longer time period, like six quarters, we have sort of stood out in the last two 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 Marcus? Can you just repeat?

The sound was a bit... Yeah, 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 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 yeah, 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 misunderstandings. 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 proven in what we buy. And we are disciplined. And then this comes out. But as Harry said, it has been fluctuating over time, right? And now in the past six to nine 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 markets, that's the 43 million SEC you're referring to, right? Yes. Yes. I'm sorry, if you could just repeat that question, because...

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

Compared to...

I think it's around four or five percent. Four or five percent?

Yeah. Okay. Thanks. That's all for me. Thanks.

Thank you, Markus.

The next question comes from Kyle Koka from Arctic Securities. Please go ahead.

Hey, good morning. You mentioned Germany and France. You mentioned Germany and France as markets with high levels of MPLs and 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, hey, good morning, 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 what we're seeing now is that some of that is bleeding into sort of stage three. 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.

Great. Thank you very much. Just that one there.

Thank you. Thank you.

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, yeah, 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 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. Then the teams dive into each and every asset and look at the liquidation values of those. We never assume that we will turn a business around. We price them at liquidation value. And in terms of return and risk characteristics, I would say... They both... Well, typically we have 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 MPLs, 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 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 best case at any given time. I hope that explains that question.

Great, thanks for that. 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 one. 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.