Interim report Q1 2019

Strong earnings

January – March 2019

• Total operating income increased 13 per cent to SEK 774m (684).
• Profit before tax increased 22 per cent to SEK 226m (185).
• Diluted earnings per share amounted to SEK 1.79 (1.59).
• Return on equity was 17 per cent (18).
• Carrying value of acquired loan portfolios totalled SEK 21,115m (20,605).
• The total capital ratio was 13.70 per cent (14.14) and the CET1 capital ratio was 9.47 per cent (9.66).

Figures in brackets refer to first quarter 2018 for profit/loss comparisons and to the closing balance at 31 December 2018 for balance sheet items.

Events during the quarter

• Continued harmonisation of work methods and organisation in accordance with the One Hoist Finance model, with Hoist Finance France restructured from subsidiary to branch office.
• Customer portal 2.0 implemented in France and FICO collection system implemented in Germany.
• Changes to senior management: Emanuele Reale is new Chief Operating Officer and Fabien Klecha is new Chief Sales Officer.
• Establishment of two Centres of Excellence (one for secured assets and one for unsecured assets) to ensure knowledge transfer and process harmonisation and standardisation across markets.
• Good progress on our mitigating actions to address regulatory changes.

Subsequent events

• Hoist Finance finalised the acquisition of assets totalling PLN 400m from the Polish debt restructuring company GetBack.
• Hoist Finance has won the auction to acquire the business of the Italian debt collection companies Maran S.p.A. and R&S S.r.l. and the last steps of the process is expected to be finalised in the near future. 

Delivering on our strategy

Strong earnings

One year ago, we established our strategy of capturing our lion share of the market through expanding into new asset classes and to become the most efficient operator in the industry. In the first quarter of 2019, I am very pleased to see that we are delivering strong earnings and our best result ever. We did this through continued strong collection performance (105 per cent) and an improved cost to income ratio (71 per cent (74)). If we also include the acquisition of the GetBack portfolios in the first quarter, although this technically was closed late April, the investment level in the first quarter was the best start of the year ever for Hoist Finance.

In the fourth quarter 2018 report, we discussed and explained the consequences of new regulations and our mitigating actions. New regulation is one of the key topics for the Credit Management Services industry, which is expected to remain. Hoist Finance welcomes regulations as these benefit our clients, customers and the most professional companies in the industry. The new regulations will reduce the European banks’ Non Performing Exposures and increase the supply of Non-Performing Loans (NPL), which of course is a very positive trend. However, being regulated as a bank, the same regulations have negative consequences for Hoist Finance that we are now addressing through implementing mitigating actions.

One of the key mitigating actions to address both increased risk weights as well as the prudential NPL backstop is to securitise part of the NPLs. We have made substantial progress since year end and we are confident that we are on the right path towards a sustainable business model in a post NPL backstop world. 

Additionally, working with co-investors is another option for Hoist Finance in order to continue creating shareholder value. We have co-investors working on potential fund structure for a mid-size NPL portfolio. The potential transaction is in documentation and structuring phase where we aim to close by summer.

The work to implement the most cost efficient mitigating actions and to optimise the Hoist Finance business model based on the credit market license will continue, and we believe that the business model will remain both sustainable and competitive.

In the first quarter we have won the auction to acquire the business of Maran Group in Italy and the last steps of the process is expected to be finalised in the near future, and a final agreement to acquire the GetBack portfolios was signed late April. Both transactions strengthen our strategy of focusing on a selected number of markets in Europe.

Strengths in Management and Organisation

As communicated on 18 March 2019, I am happy to welcome Fabien Klecha, previous country manager for France, to my management team as our new Chief Sales Officer. At the same time, our previous Chief Sales Office Emanuele Reale has accepted the role as Chief Operating Officer. With Emanuele and Fabien in their new roles, I am convinced that Hoist Finance now has a complete management team with the right competences to deliver on our goals.

To strengthen the journey of operational efficiency, Hoist Finance has created two centers of excellence, one for secured assets and one for unsecured assets. The purpose of these two centers of excellence is to ensure that the company harmonises and standardises processes across markets and share best practices in an efficient way.

Outlook

The market outlook is strong and the Credit Management Services industry is creating value for shareholders, clients and customers. Our vision is “helping customers keep their commitments”, and we are very encouraged by the positive feedback that we are receiving in our customer satisfaction surveys.

Our front line staff are doing a fantastic job for people who struggle to repay their debts. Our new digital channels are tailored to increase our customers’ flexibility and transparency for them to better deal with their individual circumstances.

In the last year we have integrated our organisation and standardised many of our processes across the group, allowing for rapid transfer of knowledge and best practices. We only develop once and then deploy. Our clear ambition is that Hoist Finance will by 2020 have the best in class digital systems, international infrastructure and standardised operating model among our peers. In a positive market, we strongly believe that our steps of becoming even more digital and effective will ensure that Hoist Finance delivers on our targets.

Klaus-Anders Nysteen

CEO

Hoist Finance AB (publ)

Hoist Finance AB (publ) (the “Company” or the “Parent”) is the parent company of the Hoist Finance group of companies (“Hoist Finance”). As a regulated credit market company, Hoist Finance produces financial statements in accordance with the Swedish Annual Accounts Act for Credit Institutions and Securities Companies.

This information is information that Hoist Finance AB (publ) is obliged to make public pursuant to the EU Market Abuse Regulation. The information was submitted for publication by Julia Ehrhardt at 07:30 AM CET on 14 May 2019.

A teleconference for investors, analysts and media will be held at 09.30 AM (CET), to listen in to the conference live, please dial:

SE: +46 850558354 UK: +44 3333009034 US: +1 8335268380

The presentation will be held in English and can also be followed live at: https://financialhearings.com/event/11523.

For further information please contact:
Julia Ehrhardt, Acting Head of Hoist Finance Investor Relations
Telephone: +46 (0)70 591 73 11 

About Hoist Finance

Hoist Finance is a trusted debt restructuring partner to international banks and financial institutions. We are specialised in serving banks in handling non-performing loans, and supporting individuals in becoming debt free. Through expertise and rigorous compliance we earn the banks’ trust. Through respect, honesty and fairness we earn the trust of our customers. For further information, please visit hoistfinance.com.