Interim report Q3 2018

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Focus on growth and efficiency improvements 

July – September 2018

  •  Total operating income increased 24 per cent to SEK 731 million (589). 
  •  Item affecting comparability before tax totalled SEK 42 million and is attributable to bond restructuring effects. 
  •  Profit before tax increased 33 per cent to SEK 243 million (182).  
  •  Profit before tax excluding item affecting comparability totalled SEK 201 million. 
  •  Diluted earnings per share amounted to SEK 1.87 (1.68). 
  •  Return on equity excluding items affecting comparability was 16 per cent. 
  •  Return on equity was 20 per cent (20). 
  •  Carrying value of acquired loans totalled SEK 19,189 million (14,766).  
  •  The total capital ratio was 17.19 per cent (17.71) and the CET1 capital ratio was 10.79 per cent (11.70). If the new share issue had been included in the calculation, the CET1 capital ratio would have been 13.13 per cent.  

Figures in brackets refer to the third quarter of 2017 for profit comparisons and to 31 December 2017 closing balance for balance sheet items.

Events during the quarter

  •  Björn Hoffmeyer appointed COO of Hoist Finance.  
  •  Strong volume growth with portfolio acquisitions of SEK 2,606 million, well diversified between countries and asset classes.  
  •  Hoist Finance strengthened its equity through a directed new share issue of SEK 568 million.  
  •  Hoist Finance issued senior bonds totalling EUR 250 million and repurchased EUR 186 of senior bonds issued in 2016.  

Subsequent events

  • Hoist Finance entered into an agreement to acquire the operations in the Italian credit management companies of Maran Group, thereby broadening its offer to the Italian banking sector. 


Pursuing growth and increased efficiency 

Positive market fundamentals drive growth 

Hoist Finance continues to enjoy a positive market outlook. The European banking sector is still working to reduce their Non Performing Exposures (NPE). In 2017, distressed debt amounted to EUR 900 billion or about five per cent of all outstanding loans. The level of Non-Performing Loans (NPL) is still more than two times higher than what was the level before the financial crises 10 years ago. Even though both European regulators and changes in accounting principles have required banks to recognize non-performing loans earlier and to reduce their exposures, in reality the NPL-reduction has progressed at a slow pace. Hence, looking ahead we see strong underlying dynamics in favour of the services that Hoist Finance provide.  

Hoist Finance offers value added services to banks in Europe by reducing tied-up capital and enabling them to focus on their core banking business. Through our amicable approach to collections we offer our customers support and a way forward to settle their debt and to re-enter the financial ecosystem. In many ways, the latter is even more important than the former. Our customers remain with Hoist Finance, typically for up to 10 years. Our “licence to operate” is to ensure that collection practices always have the customers best interest in mind. Recovering NPLs through payment plans and negotiations requires a long-term perspective, analytics, highly qualified agents and a values-based approach. We are proud to progress towards our vision; “helping people keep their commitments”. By always striving to do our work slightly better, we also increase our relevance and importance of being a trusted partner to other banks in our markets.  

Continued strong growth and expansion into newer asset classes 

In the quarter we have seen continued strong growth with SEK 2,606 million in portfolio acquisitions. Equally important is that we are making headway with our expansion into new asset classes, with acquisitions of secured non-performing loan portfolios in France and Italy and performing loans in Germany and the UK during the quarter. The expansion into new asset classes follows a period of building up capacity, both in terms of competence and systems, which now allows us to enter other asset classes in a disciplined way. This ongoing broadening of our product offering provides significant intangible benefits as it increases our reliability as a one-stop partner to banks and financial institutions. We expect that portfolios in the performing, mortgage, and secured space will be an increasingly important ingredient in our business mix going forward.   

On October 11 we announced that we entered into an agreement to acquire Maran, a reputable servicer in Italy with longstanding relationships with important institutions in the Italian market. We are pleased to expand both our capacity and offering in one of the most important markets in Europe. 

Looking ahead we also see acquisition and consolidation opportunities in other countries, for example in the Polish market where we intend to place a firm bid for assets held by the company GetBack.  

Financial development - Major steps forward to increase efficiency paying off   

After 6 months of intense efforts to increase operational efficiency we are now beginning to see some positive signs. Two important contributors to this development have been the site consolidations in Germany and the UK, where the accelerated shut-down of our site in Bremen and consolidation to Duisburg, enabled expected cost savings to materialise in Q3, as opposed to Q4 as initially expected. The consolidation of all our UK operations to Manchester is another major step in the right direction. Our self-service platform in the UK is delivering above our expectations, and now approximately 25 percentage of monthly collections comes through this digital channel. The roll-out of our Hoist Finance standardized solution to other markets continues.   

The strong portfolio growth over the last 12 months combined with our initial steps towards an increased operational efficiency is now starting to show in bottom-line profitability. Excluding the item affecting comparability, profit before tax amounted to SEK 201 million, an increase of 10 percentage compared to the same quarter last year. Looking ahead we will continue on our growth journey as well as improve our efficiency and improve our cost/income ratio. 

Strengthening of funding structure with directed share issue and new EUR notes 

The strong market outlook offering portfolio investment opportunities at attractive returns has also prompted us to strengthen our financial position to finance larger portfolio invest­ments. To finance future larger port­folio investments or acquisitions of companies we made a directed share issue of SEK 568 million during the quarter. We also issued EUR 250 million of 4.5-year senior unsecured notes at attractive terms, following the tender of our senior unsecured. The transaction improves our maturity profile as well as our preparedness
to capture further growth in our markets. 
 

Furthermore we entered into a revolving credit facility amounting to 150 MEUR. With a solid and diversified funding structure, with a stable base of retail deposits at its core, we are now better equipped than ever to pursue our growth agenda.  

Management team in place for the Capital markets Day in November  

I am very pleased that the whole Executive Management Team now is in place in advance of our Capital Markets Day on the 15th of November. Since I joined on the 15th of March, it has been a very high priority to build a very competent and professional management team in Hoist Finance, and I am very pleased that Björn Hoffmeyer joined us as our new COO during the third quarter and that Viktoria Aastrup started as our Head of Business Development and Communication in October.  

I am convinced that we now have the right team in place to deliver on our goals, and we are all looking forward to welcoming investors, financial analysts and media to our Capital Markets Day in Stockholm. Here we will have the opportunity to go into further detail on our view of the market, our strategy, operations and financial targets, as well as provide a chance to getting to know the members of our management team.  

While we already see some positive effects of cost saving in the third quarter numbers, the management team and I remain committed to a continued high activity on all fronts to bring down costs, capture growth and increase efficiency on all levels going forward.  

Klaus-Anders Nysteen 

CEO 

Hoist Finance AB (publ)

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: +46 856 642 508 UK: +44 203 008 98 15 US: +1 855 753 22 36 

The presentation will be held in English via a telephone conference or audio broadcast at https://financialhearings.com/event/10492.

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

The information in this interim report has been published by Hoist Finance AB (publ) pursuant to the EU Market Abuse Regulation. This information was submitted by Michel Fischier for publication on 25 October 2018 at 8:00 AM CET.

For further information please contact:

Michel Fischier

Group Head of Investor Relations

Tel: 46 8 555 177 19

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.

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