Hoist Finance Aktie

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

With that, I'll open up for questions.

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

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

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

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

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

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

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

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

The next question comes from Ermin Keric from DNB Carnegie.

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

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

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

Yes, exactly.

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

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

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

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

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

Was collection performance.

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

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

The next question comes from Markus Sandgren from Kepler Cheuvreux.

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

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

Yes, please.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Thank you very much.

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

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

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

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

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

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

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

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

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

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

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

Thank you.

Bye-bye.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

The next question comes from Markus Sandgren from Kepler Cheuvreux.

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

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

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

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

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

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

The next question comes from Ulrik Zürcher from Nordea.

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

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

Yes, on the indirect cost.

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

The next question comes from Ermin Keric from DNB Carnegie.

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

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

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

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

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

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

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

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

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

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

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

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

For value creation going forward in investments, I guess?

Yes, absolutely.

Investments across Europe?

Yes. In portfolios, absolutely.

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

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

As it has been in the previous years.

Yes.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Didn't quite follow the question.

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

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

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

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

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

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

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

The next question comes from Bjorn Olsson from SEB.

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

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

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

Date? No, we've just said Q4.

Yes, for the launch.

Yes, Q4.

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

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

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

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

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

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

No, can you still hear us? 

We need the remote... 

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

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

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

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

The next question comes from Ermin Keric from DNB Carnegie. 

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

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

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

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

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

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

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

I wouldn't say significantly lower, no. 

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

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

Thank you.

Thank you.

Thank you very much. Good morning, everyone, and welcome to this Hoist Finance earnings call for the second quarter of 2025.

I am Harry Vranjes, the CEO of Hoist Finance. And next to me today, I have Magnus Söderlund, our recently appointed CFO; and Karin Tyche, our Chief Investment Relations and Comms Officer.

So I just want to start by thanking you all for your interest in Hoist Finance. As usual, we will try to run through the presentation in 30 minutes to leave room for questions you may have. But before we dive into the material, a bit of repetition for those of you who are new to Hoist Finance.

So Hoist Finance's business model on a high level is very simple. We acquire portfolios of nonperforming loans from Tier 1 banks around Europe at a significant discount. Historically, we've had an average price of around 10% of nominal value. Now then to reach our financial targets, we then manage the portfolios and we collect circa 20%. So we do this in a banking suit or more specifically a credit market company suit. And this enables us to have a stable and cost-effective funding source in the form of deposits from the public.

Now in an industry that is undergoing significant change, we are and will continue to be a capital-heavy industrial actor, and we strive to become the leading investor and asset manager of consumer and SME nonperforming loans in Europe.

During this second quarter of 2025, again, it has been a very active quarter. And I'm happy to report that this activity has mainly been in our core business. When I meet investors around Europe, typically, I get 2 questions. They always pop up. One, are there still NPLs for sales? The NPL ratios in the European banking sector have gone down. Is there anything left to buy? The answer, and as you can -- I think you can see from our activity during this quarter is that we see, if anything, a larger pipeline than last year. Yes, there are NPLs for sale.

The second question I typically get is, how are you doing on the SDR criteria, the specialized debt restructure criteria? And here, we did most of the heavy lifting during the first quarter, as those of you who followed us are aware. And we are now comfortably reaching all criteria. We will, of course, continue to monitor this and trim our very competitive funding costs. But for now, we prefer to be on the conservative side of the KPIs required for the SDR status, and we still expect to become an SDR in 2026.

Now let's dive into the material. Next slide, please. Q2 highlights. Well, profit before tax came in at SEK 310 million compared to SEK 377 million last year. Now this quarter, we had a negative VAT ruling from the Netherlands that brought down the result. And last year, as those of you who have followed us know, we had onetime profits from portfolio sales in the quarter and also some higher costs due to restructurings. Now adjusted for that, the underlying result for the quarter is SEK 335 million, and Magnus will take you through this later in his presentation.

Return on equity came in at a strong 14.7%, in line with our external financial targets. And again, driven by the core underlying business. We have mentioned before that we want to have as little sort of one-offs as possible. I think we have delivered that so far this year. Some one-offs are sort of unavoidable, but I think we have delivered on that promise so far this year. Now making the same adjustment as on profit before tax, this would mean an underlying return on equity of very strong 16.1% compared to 13.7% last year.

Now one of the highlights of the quarter, and I guess we flagged for that already in the Q1 report has been the investment volumes, SEK 2.6 billion booked in the quarter at stable returns. It has been a busy period. It has continued into July with an additional signed volume of SEK 1.9 billion so far in Q3. And we see basically increased volumes in mid-Europe and let's say, still significant unchanged volumes in the South. Our portfolio now stands at SEK 31 billion. And adjusted for currency, that means a 17% increase compared to the same quarter last year. Now -- and quarter-by-quarter, we are getting closer to our ambition of having a total portfolio size of SEK 36 billion by the end of 2026.

Also core business collection performance came in at a solid 104 -- even 104.4% as we continuously keep improving efficiency in all our units around Europe and together with our collection partners.

Tight cost control with underlying direct costs trending in line with collections and indirect costs flattish adjusted for the one-offs. Now this cost control and not unimportantly, cost flexibility is helped by this cost structure that we have spent the last years building with outsourcing partners in select geographies and for select asset classes around Europe.

We have a strong capital and liquidity position with a CET1 ratio of 12.5% and a significant liquidity reserve of SEK 26 billion and we continue to meet the full SDR criteria with an NSFR at safe 143% in the quarter.

And as I hope most of you have noticed in July, Moody's Ratings affirmed all the ratings and assessments of Hoist Finance and also changed the outlook on the group's long-term issuer and senior unsecured debt ratings to positive from previously stable.

And I think with that, I'm going to hand over to Magnus to take you through the numbers and the details of the quarter.

Thank you, Harry, and thank you all for joining this call. So we had a very solid and good quarter with a profit before tax of SEK 310 million with a 14.7% ROE compared to last year's SEK 377 million and 17.5% ROE. So we see a really positive intake of volume in the quarter, SEK 2.6 billion. And as Harry mentioned, continued high level of cost control.

And regarding the one-offs, as we're expecting to see fewer and less material one-off items in 2025 that is sort of disturbing the year-on-year comparisons and underlying business development, we did have some impact in Q2 of this year, but even more so in the second quarter of last year, as mentioned by Harry as well.

In this quarter, we see a negative SEK 25 million impact, which is the net of the VAT court ruling that we mentioned in the Q1 report. But then we also have some accrual releases related to VAT and other items. So the net was SEK 25 million.

Last year, we saw a material impact from several extraordinary items with a net positive profit before tax impact of SEK 62 million for the quarter. And this was a combination of asset sales and costs related to improvement and restructuring activities.

As an example, our in-sourcing of IT, where we see the benefits in this year. And for further reference, we have a detailed slide in the pack in the appendix, illustrating the nonrecurring items by quarter.

So if we look at the underlying performance of the business, we see a SEK 335 million profit before tax in the quarter versus the equivalent SEK 315 million in 2024. So this gives us a 6% underlying growth.

If we look more into the details, we see a total interest income growth of 14% year-over-year. If we also include the co-invested interest income, which we should. And this is in line with the portfolio growth.

The investments in Q2 were heavily tilted towards June, which leads to a lesser impact in terms of interest income for the quarter coming from these new investments. They will, of course, be fully realized during Q3. The 4% growth in net interest income reflects that we are now fully financed for a whole quarter in relation to the NSFR criteria to qualify as an SDR.

Our net funding cost versus book value is tracking at 4.4%, same level as in Q1 as we saw in Q1. And we have an NSFR ratio of 143%. And here, we see some room to trim going forward.

We see a continued strong operational performance, 104.4%. This demonstrates our collection abilities and the good health of our portfolio. And the really strong investment volume for the quarter, SEK 2.6 billion, as mentioned, we are continuously buying portfolios at attractive levels that are accretive to our overall quality of the portfolio.

Looking at the costs, they are tracking at a very good level as we also did in Q1. We have an increased flexibility in our direct expenses. This will be further demonstrated in a future slide, facilitated by our expanded outsourced servicing optionality, and we have a stable indirect cost base, which will enable us to leverage a robust platform going forward.

So all in all, we are very happy with this quarter. We're kicking off the second quarter of the year on our journey to achieve SDR status. We saw a sharp and very positive increase in investments with a continued strong potential for the second half of the year. We are on top of our costs. We maintain our cost control and solid performance.

Underlying ROE for the quarter adjusted from the one-off items comes in at 16.1% versus the equivalent of 13.7% in last year. And as this is sort of a transitional period for us in 2025, considering we are carrying the SDR costs, but not seeing the benefits yet. We are very happy with the results of the quarter, maintaining a healthy return level.

So if we can move to the next slide, please. So we're picking up pace from Q1 with a really strong intake of the volume in Q2. This is the third highest single quarter in the past 3 years. And looking further into the second half of the year, we see a very strong pipeline with many interesting opportunities in the short as well as the midterm. And this really brings us to a good place to reach the plan of a SEK 36 billion portfolio book value by 2026.

Already now in July, as I think Harry mentioned, we have an additional SEK 1.9 billion signed, and this is ready to be implemented in Q3, part of it possibly sliding into Q4. So we have a really good momentum in our investment activities.

To mention some specifics, very happy to increase our presence in the Portuguese market with an additional deal closed during Q2. So far, we are very happy with the performance of this latest addition to our footprint. Overall, we're seeing return levels in our new investments this year that are accretive to the quality of our total portfolio. We, as always, remain disciplined in our investment and pricing strategy with a healthy risk level in our portfolio. This is also proven by our collection performance remaining above forecasted levels. And we are also continuing working with our strategic partnerships, both for servicing and for expanding our sourcing network, and our funding cost remains a very competitive edge for us in the market.

I think we can move to the next slide. Looking at our asset class mix. The mix of our assets and the geographical spread remains similar to last quarters. We have a healthy diversification of the book with granular risk monitoring and a very low single risk exposure. We have a solid pan-European presence and geographical diversification. Our main 2 asset classes we invest into remains to be secured and unsecured.

The secured part of the book is gradually increasing over the past year and years. But still at a rather moderate pace. All in all, we believe we have a very healthy portfolio, and we manage it with the aim to deliver stable and predictable performance. We have a continued positive tilt in the book. And with this, I mean, we have materially more portfolios overperforming than underperforming in the mix of the total book. And we will continue to focus at holding these levels and believe the quality of the book is supporting that.

If we go to the next slide, please. Looking at our funding, we see a similar mix to the one we presented in Q1. So we have 80% or [SEK 41 billion] consists of our deposits now have that contractual maturity, 3 months or longer. We issued 2 bonds during Q1 to a total of SEK 1.3 billion, and we repurchased SEK 230 million of older senior preferred. Our funding cost remains at similar levels as the previous 2 quarters. To sum it up, we have a diversified and competitively priced funding base, which is really bringing us to the forefront in the debt purchasing market.

We go to the next. So this slide is to illustrate our development of net funding cost over portfolio book value. So we go from 3.4% in last year to a 4.4% now in Q2. We also saw the same in Q1. Roughly half of the increase, the 100 bps we see is related to SDR costs and the rest is related to other items such as the [indiscernible] bond replacing the call AT1 in Q1 and further bond issuance to safeguard our rating, so other activities.

We're currently in preparation for setting up our own euro deposit platforms in select markets. This will bring a diversified set of tools and also bring lower costs. For this quarter, we are at a rather high level of NSFR, as I mentioned before. This is something we will actively work to tighten a bit moving into Q3 and the second half of 2025.

But also with this increased funding rate, we remain extremely competitive and in a really good place to keep growing.

Next slide. Also in Q1, we see the continued trend of flexible direct cost versus collection with a slightly improved cost to collection in the first half of this year, mainly coming from increased level of outsourcing and other efficiency improvements.

Looking at the indirect costs, we see a fairly flat underlying cost development. We are very cost conscious and focused to maintain the benefits of the former rejuvenation program and other cost-saving activities such as the in-sourcing of IT. We're obviously also continuously looking for further optimization. But with this stability, we're in a very good place to leverage the future growth of our portfolio.

We go to the next slide. So this slide is basically describing the past 5 quarters ROE, excluding -- this is the reported number, so not the underlying. In summary, what we see is a continued strong quarter-to-quarter ROE trend with underlying returns above 15%. So this is also after absorbing all costs associated with becoming an SDR organization, but before being able to see the full impact of the benefits yet. So we're very happy with the 15% ROE in Q2. And with a strong pipeline, tight cost control and more than adequate capital, we are set to continue to grow in a very active market.

And we can go to the capital position. We maintain a very strong capital position, materially above regulatory requirements. We moved from 13.1% in Q1 to the illustrated 12.5% in the slide in Q2. This decrease is mainly driven by increased level of backstop and net investments for the quarter that were really high. So we have a continued strong and significant purchasing power sufficient to meet our growth plans for the remainder of this year.

And looking at our liquidity position, looking at the LCR, we continue to maintain a very high level, driven by the materially increased liquidity portfolio associated with becoming SDR. We have the 143% NSFR, as mentioned. And this is something we will look to trim at reasonable levels during the second half of this year. And the liquidity portfolio remains at similar high levels as the past 2 quarters, driven by the SDR criteria fulfillment.

And I think that concludes the sort of results slide. So with that, I hand back to you, Harry.

Thank you. Thank you. And with the risk of being repetitive again here, before we open up for questions, I'll leave you with a few key takeaways. The strong underlying return on equity of 16.1% after including the full cost of the SDR. We're very happy about that.

We do see still attractive and accretive IRRs in a highly active market. We have talked about before how seller and buyer have had difficulties meeting each other and that some deals have sort of been gone back or been canceled. And we don't see that so much anymore. I don't think we have had a single deal that has been pulled back after being sort of launched. So I think seller and buyer are on the same expectation level to a greater extent now this year.

As mentioned multiple times, we have a strong pipeline. It is -- there is a lot of activity out there in Europe. Our costs are under control. This doesn't mean that we are done with optimizations, et cetera. We will continue doing that day by day, week by week, quarter-by-quarter out in the markets and also in the functions. We are well capitalized, and we have, as you've seen, ample liquidity for managing our business. And we continue to meet the full SDR criteria, and we expect to notify in 2026. So that was faster than 30 minutes.

Thank you all for listening. And now it's time to open up for questions, I guess.

[Operator Instructions]

Next question comes from Ulrik Zürcher from Nordea.

2. You're right that the IRR has stabilized, as I say it. But I noticed if you take the investment portfolio of SEK 31 billion when we look at the estimated remaining collection next 15 years, you get quite a drop Q-on-Q in the implied gross IRR -- is there anything going on there?

Sorry, Ulrik, you're referring to the gross IRR?

Yes, exactly.

Okay. Because what we see, we saw an increase in the net IRR during 2024 driven by certain events. And we see a stabilized level now in 2025, which is still accretive to the sort of underlying quality of our book. And in the gross IRR, I would say it's pretty much at stable levels as well. But regarding your calculation, that's something I would have to sort of look into and come back, I guess. But...

It is a bit simplified, but you had like an upward sloping trajectory for some years now because you reinvest at higher levels, but there's a bit of a weird drop now.

Okay. But I will have to look at that, Ulrik and get back to you.

Okay. Great. And just secondly, there's a lot of moving parts on the deposit side, and you're talking about being a bit more efficient on the NSFR liquidity position. Should we expect roughly flat deposit cost like nominally out the year now? Or how will the margin develop? And any comments you can give on that very helpful.

I guess I guess I mean the liquidity buffer will grow in line with the portfolio, right? So if portfolio grows, that one will also increase. But in terms of the rates, et cetera, I guess we -- well, the Swedish Riksbank lowered the rates and we adapted to that. And I think in Europe, we are sort of adapting to the, let's say, NSFR efficiency of the platforms we are using, right? So on that side, I would expect us to be flat to slightly lower on the rates. And then in terms of like I said, the full liquidity portfolio, it will grow in line with the portfolio growth basically at similar rate.

What about -- yes, okay. what about the margins in euro and SEK going forward because they're a bit high now because you changed your deposit base, but should the margins go down in the next years?

It's difficult to say where the interest rates and sort of the deposit base moves. But yes, in general, we were more attractive, let's say, in Q1 and Q2 for the -- especially the 3-month and the 6-month offering. And I would expect that to normalize over time.

Next question comes from Ermin [Keric].

So maybe if we start on the collection performance, which was pretty good here in Q2. Do you think it's fair to just extrapolate that from here? Or how should we think about it? It sounds like you don't really see much gray clouds forming on the horizon either.

No, I mean, no gray clouds. We still have a positive [tilt] on the book. We were at 103% in Q1, now at 104%. We are still very actively managing our book to perform at stable levels. We're obviously happy with everything above the 100% forecast. But this item is very stable at the moment.

Excellent. And then I'm just thinking on the kind of investment composition. Do you think that will change anything when you become an SDR? You touched upon it that you've increased the exposure to secured somewhat over the year. Do you think that kind of mix change will continue in the coming years? Or does unsecured become relatively more attractive to you than it was before you became an SDR before you have become an SDR?

Yes. I mean considering the sort of backstop schedule for the 2 asset types, unsecured is normally a bigger problem from a backstop perspective. So that's going to facilitate -- or this is going to bring us -- it's going to put us in a better place to keep buying more unsecured. The secured, as I said, the backstop schedule makes it fairly less complex at the moment for us. We also see portions of backstop in secured as well. But I think the real benefit is the unsecured for us once we achieve the SDR status.

But I think we could also add that typically now secured our secured asset class we're mostly active in the south of Europe. What we do see now is that mortgages, et cetera, are coming for sale in smaller volumes than in the South, but it's starting to pop up further north as well. So it might be that if those markets continue to develop that way, that it will basically open up for a larger share of secured. But from a sort of backstop perspective and from an SDR perspective, it's fully like Magnus says, right, the unsecured will become relatively more attractive.

Got it. And then one last question, coming back a little bit to what Ulrik was on as well. But just thinking here now about the NSFR you have and kind of where you would want to operate going forward? How much you think you can take out from opening up your own platform? And then kind of balancing that against the strong pipeline you see of new investments, how to think about kind of the liquidity you intend to hold?

I mean we definitely are in the high range in Q2. I think it's a combination of us sort of understanding more about the customer behavior now with the fixed terms that we are entering since Q1. But with that, we will also be better to sort of foresee the movements in the market. And our ambition is definitely to be below the 143% level where we are today. But obviously, during this year and also in future years, the 130% mark will be extremely important to stay above for obvious reasons. But we will definitely be able to end up in a better position than in Q2. And I'm completely convinced...

Next question comes from Björn Olsson from SEB.

My first question comes a bit back to what Ermin was touching on sort of thinking about your pipeline for the second half of the year. And I mean, you clearly guide on it continuing to be strong. I'm just thinking, should we expect a pipeline or sort of expect something in the range of the second half of 2024? Or sort of what size should we expect? And could you sort of elaborate a bit on sort of how busy are people? You're writing that they're busy now during summer. How busy are they compared to last year?

And obviously, like Ermin was touching upon regarding unsecured portfolios, you're right, currently, your unsecured portfolio is basically eating roughly 1.5% of your CET1 per quarter now. So is that sort of a restraint on your ability to acquire unsecured portfolios for the second half of this year as you still are not formally qualified as SDR? Or sort of could you guide on that as well as a constraint on acquisitions for the second half of this year?

I'll take that one. I think, yes, I mean, the team is busy. That is clear. And I guess there are 2 reasons for that. One, typically in the North, people want to close the deals before mid-summer. In the South, people want to close the deals before, let's say, the first, second week in August before they go on holidays, right, or at least sign them and then make sure that they are implemented later in the quarter after the holidays. So it is a busy time.

And I think there is a shift in -- for many years, Q4 has been the absolute biggest volume quarter. And as you saw last year as well, which was Q2, Q3 or summer, let's say, early -- late Q2 and early Q3 have become more important from a volume perspective. And that trend looks to continue this year. We are absolutely not guiding for any SEK 4.5 billion in Q3. But we see the activity, and we will, of course, capture the share we think is at attractive returns. So it's difficult to give you a number there. But basically, the pipeline is in line with last year, and we are tracking towards the ambition of [SEK 36 billion by '26] as before. And there was a second part to your question there as well. Did I -- or no...

Yes. More technical one, I guess. Basically, currently with the NPL backstop continuing to eat capital, you're basically stating that -- backstop has increased by roughly SEK 0.5 billion since the start of this year or -- and you're right that your CET1 would be 2.9% higher hadn't it been for the NPL backstop.

Yes, and like Ermin was touching upon, it's mainly unsecured that drives this. So given that you still have 6 months until you qualify as SDR, is this sort of a constraint on the second half's ability to acquire unsecured portfolios? Or how should we view this? Sort of I guess, how low can you go in terms of CET1 pressure in the second half?

Obviously, it's an important criteria when we look at the portfolio. And we do have the co-investment partnerships and the tools that we have been using. And as you can see in the report, the income from that area is increasing. So we don't skip interesting portfolios. Obviously, when we co-invest, we get a smaller share. We don't get the 100%. But we still bid for those, right? So we are -- obviously, with an SDR status, then we have no constraints whatsoever in that space, right? But we are still able to go after unsecured portfolios together with our partners plan, which has been working out really nicely.

Fair enough. Another question then on your new deposit platform. You're writing that you're starting in Germany. When could we expect -- I mean, first of all, the platform to go live. Second, could you give us a ballpark figure of basis points, how much more efficient it is compared to using a platform provider? And likewise for sort of cost effect on the IT side of things?

I think the plan is to be live with the platform in Q4 this year. So a very high tempo project. Now we know Germany since before, obviously, through a partner. We know the platform from before. We're using the same as we have in Sweden, so to minimize risk and to make sure that we get it up and running in time and that we can operate it properly.

The cost for the project and for the setup is, I would say, I don't want the project team to hear me, but it's negligible in relation to sort of the results here. It's below SEK 10 million for the project. Hope the supplier didn't hear me.

But in terms of -- and then comes sort of the marketing and getting the deposit customers on there. And that will start immediately in Q4. Looking at -- the difference in cost compared to using a partner is not something we will go out with. But we could say on a similar volume, let's say, the fee would be 1/2 to 2/3 or something like that, let's say, the operating cost. So it is cheaper on the platform on our own platform. I hope that answers your question.

Yes, I guess as much as you can say. Fine. And final question, always coming back to the backstop. It's currently around SEK 1.1 billion in reserves. When do you think we could expect any guidance on how you plan on utilizing these reserves once you become an SDR?

Any such guidance, I would expect at the Q4 report in month in February 2026, once the Board has made its decision.

Great. And you're basically -- I guess, as you say it's up to the Board, but this is basically to be viewed as something that can either be used as a dividend or buybacks?

Yes. Our dividend policy stays in place. And of course, we need to look at where the pipeline is and what the portfolio market looks like towards the end of the year and of course, also looking forward for the Q1 in next year.

Next question comes from Markus Sandgren from Kepler Cheuvreux.

I was just -- Harry, you said something that it seems like buyers and sellers are more on the same note now to in terms of pricing. What's your take on -- is the lower rates driving -- I mean -- or the increase in the prices of portfolio? So is that not noticeable?

I think you can almost -- for those of you on the call who are from Stockholm, it's very similar dynamics to the housing market in Stockholm basically. So as funding costs went up for the industry, prices for portfolios or bids for portfolios came down. And we saw definitely during 2023, but still under 2024, a number of deals being revoked basically. The sellers did not get what they want.

I would say there has been -- I think the IRRs, as we say, they have stabilized, right? So I think they're not growing at the moment. And I think the sellers on the other hand, have been sort of gotten a new set of expectations, basically. So I think that's basically the answer to the question, I think, I hope.

Yes. So given that rate doesn't move too much, this is what we should expect going forward more or less.

That's what we see for now in the pipeline and our win ratios.

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

All right. We have one written question here today. Is there a preference to buy secured portfolios? And do you find it harder to acquire secured portfolios as they seem to have net higher return on investments but are a smaller part of the total acquired portfolios today?

Well, I can just reiterate, as we said, the mortgage product is typically sold in Southern Europe. If it was sold in the mid of Europe and North of Europe as well, we would definitely be going after it. So I think that's the limitation mostly in terms of sort of availability of those NPLs.

We are very strong in this asset class. It is an asset class where the funding cost advantage is clearer because you value the underlying security, I would say most investors value it similarly. And then, of course, it's a question of how competitive you can be with your financing.

And so that is a very strong point for Hoist Finance. And we are we are seeing although from small volumes, right, but we see this asset class popping up now in mid-Europe or it's moving north. And so we are hoping to be able to expand in that asset class going forward.

Very good. That's actually the only written question we have. So with that, thanks, everyone, for listening in today.

Thank you all very, very much, and we wish you a fantastic summer. And if not sooner, we'll speak to you in another quarter.