Hoist Finance AB (publ) (HOFI) Earnings Call Transcript & Summary

Welcome to Hoist Finance Q4 Report for 2024. [Operator Instructions] Now I will hand the conference over to CEO, Harry Vranjes; and CFO, Christian Wallentin. 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 2024. I'm Harry Vranjes, CEO of Hoist Finance. And next to me, I have Christian Wallentin, our CFO; and Karin Tyche, our Chief Investor Relations and Comms Officer. So thank you all very much for calling in and for your interest in Hoist Finance. We will try to run through the presentation today in 30 minutes to leave ample room for any questions you may have. And before we dive into the material, let me just take you through a little bit where we are and what the market is looking like. So the NPL market in Europe is still very active, and there is still quite some movement also in the industry as a whole. So many players are finding their strategies and strategic positions in this new landscape. And just to reiterate, Hoist Finance has found its position and it is and will continue to be a capital-heavy player in this industry. And of course, we strive to becoming the leading investor and asset manager of consumer and SME nonperforming loans. And we think that 2024 has been a year where we have made great advancements on that strategy and on that goal, both commercially and in terms of implementing our strategy on the ground, so to say. So during '24, we invested a record SEK 10.8 billion after a very strong second half of the year. Repricing in the market has continued. Christian will take you through that in a few minutes. When we closed the rejuvenation program in '23, that program mainly focused on getting the right steering model in place and setting the right mix of central local execution capability and accountability around the group. And we addressed a lot of indirect costs. Now in 2024, I know we've said that these reports will be easier to track. But in 2024, we have continued with addressing profitability and local return on equity, which is our core target for every single manager in Hoist, in every market, while at the same time, in-sourcing our IT maintenance and also expanding into new markets. So this is sort of continuous improvement, and this will continue forever and ever. However, in '24, let's call it, continuous improvement plus. So I think the tempo has been very high this year. Now, as you know, in the last days of the year, we issued a statement that we are delaying our notification of the SDR status due to the regulatory uncertainty. We'll talk about that later in the material as well. But regardless of regulatory status, we will continue executing on our strategy with the aim to becoming the leading investor and asset manager of consumer and SME nonperforming loans. And our financial goals remain in place as well as our growth ambitions. So now let's dive into the material, if I can flip the slide there. Yes, key highlights of Q4. So profit before tax came in at SEK 281 million. We have taken about SEK 56 million in one-off costs during the quarter relating to restructuring in Spain and the divestment in Italy. And I think adjusting for those, we would be at earnings before tax of SEK 336 million for the quarter. Christian will take you through the bridge there later in the presentation. Return on equity came in at a strong 15.5%. And I think the key thing here is that this is now driven by the core business. It is much less impact of sort of positive one-off effects that we have been fortunate to be able to land during '22 and '23. Now in '24, it is the core business that is delivering this return. In terms of investments, we closed portfolio investments of SEK 1.9 billion in the quarter following our record third quarter. And as you can see now in the material for the first time, we have started growing our co-investments as well. Now this will develop over the year, and we'll separate out those numbers for you if and when that becomes material. Now volumes and pricing in the market are still attractive. The Portuguese portfolio that I just signed in time for the Q3 earnings call for those of you who participated there, is now closed, and we are very happy with our market entry into Portugal. Now investments going forward will continue to be lumpy as our average size in terms of portfolio purchases keeps going up. So on the full year, this takes us to SEK 10.8 billion invested, basically a 50% increase from '23, which gives a book growth of 26%, even after the relatively large portfolio sale we did now in Q4 in Spain. This gives a net interest income growth of 36% and with a cost growth of 19% and adjusted for these one-offs, this contributes to strengthening our what we call the operating leverage basically where income and direct cost grows with the book growth and indirect costs track with inflation. Collection performance came in at 106%. We did expect to bounce back from the 102% in Q3, and we saw that directly in October. The month of December was also very strong, and we see no signs of any adverse macro effects or anything like that in our collections. And now with the sale of our unsecured book in Spain, we are now shifting our operating model for unsecured in Spain. We believe Spain is still an attractive market and both the unsecured and the secured asset classes are attractive for us, and we will continue to pursue and invest in both of those asset classes going forward, but in a new setup. During the quarter, we also sold our servicing unit in Spoleto, this is something that we acquired in 2018. And basically, the strategy these days doesn't include any third-party servicing. So we don't sell third-party services. And now we have managed to divest that to Italian outsourcing specialist. And we're very happy about this. This gives management more time to focus on our core business, investment and asset management. We have been very active in the Swedish bond market during the year, and Q4 was no exception. We issued SEK 1 billion in Q4. And for the first time, we issued a senior nonpreferred bond at good pricing and our capital and liquidity position remains strong, and we have ample purchasing power still. With this report, also the Board of Directors proposed a dividend of SEK 2 per share. And I think that should be viewed also in the light of share repurchase during 2024, which we did 2 rounds of. Full year, I'm going to try not to be too repetitive here. Yes. So internally here at Hoist, we've had an [ unofficial ] target of becoming a SEK 1 billion net profit company by 2025. So with the closing of '24, now we're sort of happy to see and happy to announce that we reached that goal a year in advance despite taking SEK 140 million, SEK 150 million of one-off indirect costs over the P&L and then an additional SEK 30 million direct costs. So very strong result in which we are very, very happy with. The return on equity for the year, a strong 16.8%. And as I mentioned earlier, this is driven by the core business primarily and to a lesser extent than before then of sort of one-off activities and very, very happy about that. Investment volume, we've covered a record year and 50% up from previous year, which was also a record. We have a great geographical spread on the portfolios and good diversification between asset classes. And basically our 45-man strong investment team together with the countries has analyzed and priced hundreds of portfolios this year. And we believe we have had a balanced win ratio. You don't want to win everything, but you want to win the just right amount of deals. And we believe we have found that balance for this year. Now collection performance, 105% for the year, strong. And then despite in-sourcing IT and doing a lot of work on the operational units in Belgium, Netherlands, Germany, U.K., Spain and Italy. So despite that, we are still delivering really solid collection performance. Now the total income, SEK 4.4 million for the year versus SEK 3.5 million last year. So it's a 26% increase. I mentioned the IT in-sourcing that is completed. It has been completed, I think, since Q3 and will give us a saving of some SEK 40 million per year going forward. Or in Q3, we got an upgrade from Moody's from our previous Baa3 to a Baa2. So mid-range investment grade, and we're very, very happy about that. And as I mentioned, we were very active in the Swedish market on the bond market this year, SEK 1 billion in Q4 and SEK 4.2 billion for the year as a whole. We did 2 rounds of share repurchases, once after the Q4 report '23 and once after the Q2. And our earnings per share has grown to basically SEK 10 per share now, which we are also very happy with, definitely living up to our target of growing more than 15% per year. Now our capital and liquidity position, as we said, is very strong and the liquidity reserve, as you can see, is large. We have built it up in order to qualify for the SDR. And by the end of '24, we were at 154%. So ample room to the regulatory limits. Now with that, I will hand over to Christian to take us deeper into the numbers.

Thank you very much, Harry. Good morning, everyone, and thank you for joining this call. So Q4, we saw a strong continued portfolio growth, resulting in a total investment portfolio of almost SEK 31 billion, so SEK 30.7 billion at the end of the quarter. This is a net 26% growth, and we say net because we divested our Spanish unsecured book during the quarter. So if we wouldn't have done that, then we would almost have been up 30% year-over-year. We have done slightly more strategic co-investments in this quarter, and then that's likely to grow in importance. And as Harry mentioned, if and when this happens, then we'll take you through a little bit more in detail how we account and how we think about that in the numbers. Overall, the market is supporting higher IRRs together with the larger investment portfolio that is driving our net interest income higher. So you see that we've grown the book by 26% year-over-year, and we've grown net interest income with 36%. So we have a NIM expansion here. We've gone from more or less 12% to 13% last quarter 4, in this quarter 4. And then that we've done despite having tripled the liquidity buffer over the year to prepare for SDR status. So we had a liquidity buffer of SEK 8 billion a year ago, and now it's roughly around SEK 24 billion. When it comes to collection performance, we had continued strong collection performance. It was 106% across the market, so above our management forecast, that's comparing to 105% the same quarter last year. And we are having a granular risk and collection diversified now over 13 markets. So we entered Portugal in Q3, Q4. And this collection performance and the top line development is supported by stable underlying costs. However, these costs include onetime items due to primarily the sale of the Spanish unsecured book, which disturbs the comparison quarter-over-quarter. So 2 points that we want to make. We are not making any formal adjustments for these onetime costs. We want to take them on the chin, so to speak. And that said, we want to be open with the underlying cost development as well. So if you would isolate the onetime cost that we see will not happen again, then the underlying profit growth is really strong, the PBT. So it's SEK 237 million to SEK 337 million, an increase of 42% if we adjust for these items. And in '23, that would be currency gains of SEK 40 million. We didn't have hedge accounting at that point. So that came in over the P&L. Then also we had other onetime costs of SEK 20 million in '23. And in '24 now Q4, we had Spain divestment, which was SEK 42 million and also VAT accruals that is part of business as usual. So that's the SEK 56 million. And that leads to an underlying growth of 42% of profits. So despite taking these one-off as business as usual, we delivered an ROE of 15.5% in the quarter compared with 11.2% a year ago. We believe now that we have a really resilient business and the underlying business is delivering really well. So I'll take you through the ROE development over the year, but we have now an underlying business that is delivering our financial objectives, and we are not depending on as we were in the past of onetime initiatives to reach our targets. Next page, please. 2024 was a really outstanding year for us. Our firm delivered a record-setting investment year in '24. It was almost SEK 11 billion, which is the highest in our history. it's also proving to us, and I hope to the external world that we have an industry-leading investment capacity and the potential to grow. And also, which I think is a really strong point for us, while accelerating our investment pace, we also managed to expand our return levels, which is speaking to that we are in a supportive market for Hoist. So we're investing at 2014 IRR levels currently, which is very attractive. We're also very disciplined in investing. So while you see blowout quarters like Q3, our average is around the SEK 2 billion if you take a look over 2 years, that's providing the growth long term for us. So in our valuations, we are very data-driven and look at granular cash forecast. So we minimize assumptions in these valuation portfolios. So we price in a disciplined way, both the return levels and also using minimal amount of assumptions. So it's very much data-driven granular approach to this. So we think the risk level in the book is very good. We have now also developed strategic partnerships to expand our sourcing network and work together with key partners. We've done that over the last few years. We include servicers that we work with on the servicing side. They help us to source volumes from the industry, so the banking industry. We also work with industry and financial peers to source and co-invest. And this is part of our strategy going forward. And in Q4, it was slightly less than 20% of volumes or so. And when we present the co-investments, this will always only be our share of the co-investments. So when we talk about co-investments, it's important to say that, okay, so the rest of the co-investments, so to speak that belongs to the partners, we will never show in our numbers. This is only our part. And again, we will detail this going forward in future reports as and when this part of the business grows. Next page, please. On this page, we want to take a step back and look at the bigger picture. You might remember this page from the Capital Markets Day we had during the autumn. So we want to show that our growth is on track to achieve our long-term target. We set out the target in '21 to double the book '21 to '26. So over 5 years, we wanted to go from SEK 18 billion to SEK 36 billion. And as you can see on this picture, we are 85% in achievement of that goal today. And if you take a roughly 8% growth over the next 2 years and then we will get to the SEK 36 billion. If you can compare that average growth of 8% with the last year's growth of 26%, which was also including divestment of volumes. Or if you look at the overall level of [ 31 to 36 ], then it's clearly slightly less than 20% growth to reach our target. And as we have grown, we also expanded our servicing network, as I mentioned, and also the number of markets. So we have servicers helping us to source. We have strategic co-investors, we have covering now 13 markets and counting. We're looking into markets close at home, I would call them. So very the same asset classes and the similar markets. So for example, Portugal is a great example of that. We know Spain very well. And now we have expanded into Portugal on the Iberian Peninsula. We also see a strategic shift in the market to more capital-light business models, which will create a vacuum to fill. So we believe that the market will and is supporting growth at attractive risks and returns. And on top of this, we believe that we have a really fit-for-purpose business model. So our funding model continues to be a competitive edge, particularly in today's environment and when we are becoming a stronger operator overall as well. So to conclude on this page, I believe we are on track to achieve our growth ambitions by end of '26. And we have a strong operating backdrop in market, and we are working collaboratively with our partners and co-investors. We are expecting to continue to beat our return targets while we continue to grow. Next page, please. Thank you. Here, you can see the asset mix and the diversification of the book. We believe we have a very nice diversification in the book. It's, as you know by now, a very granular risk in the underlying portfolios, very low single risk exposure. So it's a data-driven model that we're running. And on top of it, we are across now 13 markets. So we have a really solid pan-European geographical diversification. And then we are investing into 2 asset classes, secured and unsecured on the high level. And then clearly, there's many sub-asset classes below these 2 levels. And we're also having a really sound and healthy risk profile in the book. And you can see that the results from that risk profile in the collection performance that we're generating. So the stable 105%. Next page, please. We continue to see really nice operating leverage and scale effects in the business. We have grown the investment portfolio by 26% and underlying profit adjusting for the onetime items that I've laid out on the prior page, and we've grown 42% in the profit before tax. And the onetime items, as mentioned, is mostly the Spanish restructuring cost in Q4. Next page, please. And now to the full year '24. We delivered a strong performance in Q4 and for the full year '24. Overall, we achieved all our targets and more and delivered an investment portfolio growth of 26%, interest income growth of 30%, operating income growth of 26%, net earnings growth of 53% and then an ROE of almost 17% for the year. This is a result we are really proud of. We were aiming high this for '24, and we beat our targets. We invested a record amount of SEK 11 billion almost. We continue to reprice and expand our margins. And we also continue to maintain a sound risk profile in the book and delivering strong collection performance of 105% for the full year. And then as Harry said, we had a really high focus on continuous improvement and restructuring across several markets. We sold our third-party servicing business. We sold our Spanish unsecured operations. We changed our Benelux model. We sold portfolios in Germany and Italy. So it's a really high pace of change to improve the business. And we see that this is going slightly down over the next year, but this has been a really beneficial change for us during the year. So we've been enjoying both material benefits and then also some one-off costs. And this has not taken away from the overriding result of the year, which is the 16.8%, about 17% ROE. And also the underlying indirect costs have been stable. So this provides a nice operating leverage when we grow. So all in all, we beat our return target in '24 by delivering almost 17% ROE, and we grew our book 26%, so we are in reach of reaching the '26 growth target of SEK 36 billion. Next page, please. And this is the same trends for '24. So strong growth at right price and risk, healthy portfolio driving operating income and then cost control and scale benefits boosting profits in the end. And then on the following pages, we'll unpack this slightly for you. So we can go to Page 12, please. Here you see the material net interest margin expansion that I was referring to before. So we are enjoying strong growth at the right prices, and this is despite us building up a large liquidity portfolio. Next page. So here, we're starting to see the scale effects also in direct costs. We have a higher growth in investment portfolio than the direct cost. You can see the 26% compared with the 20% growth in direct costs, which is great. This is what we've been aiming for, and we hope to achieve this going forward as well. This is hard work, clearly, but it is something that is really on our radar. Next page, please. Okay. before we move on. So just comment on the direct FTEs. So if you take really the longer-term perspective, we had almost 1,100 direct FTEs. And today, we are 737. And this is the result of continuous improvements and restructuring of the business. So we've done that across a number of markets in the model. So this is a real benefit of what we've been doing. Next page, please. So this is the ongoing improvement focus in the indirect cost. You see that we've been growing the portfolio and this is including before we divested the U.K. book, so the '21. We've grown the book 46%, while we've taken down the indirect cost 16% and this is an ongoing focus. And you can see year-over-year, we are flat in essence, in a really high inflation environment. And this is very much driven by prior year work. And then in this year, the in-sourcing of the strategic capabilities in IT, which we actually want to have in and then that also yields cost reductions. Next page, please. And here, you can see the development of ROE during the year. So we had reported ROE, which is the light bar, so 18%, 17%, 16% and 15.5% and then the underlying ROE, which if you try to clean out onetime items. We have not done this because we want to have simple numbers. So that said, you can see the underlying ROE coming higher and higher during the year. So the Q4 levels are very attractive. So this is due to sourcing and disciplined pricing and also cost control and scale benefits coming in. Next page, please. So the capital position. We have a strong capital position. It's materially above regulatory requirements, and we are now within the target range. We see that we will continue to generate strong capital and have a continued high investment capacity. In '24, we have distributed significant capital repatriation to shareholders. So SEK 200 million of share repurchase during '24 and then now SEK 2 per share proposed by the Board. And this is in total, almost 40% of the '24 profit. Page 17. So on this, we see our liquidity position. We have an extraordinarily strong liquidity position and overall resilience as an institution. I can't think of any other institution that show these numbers. So we built up the NSFR ratio gradually over the year, and we overshot to ensure that we meet the SDR criteria end of Q4. And that has tripled the liquidity portfolio, the liquidity reserve year-over-year. And we have an extraordinarily high LCR over 1,000%. And by the end of Q4, it is 1,400. So the 1,000 there is an average over a few quarters. And then if you take a moment in time, it's 1,400%, which is incredibly resilient, I would say. Next slide, please. If you look at the funding, it's the same funding mix as always. We've grown the deposits slightly. It's a diversified, stable and really competitively priced funding base, which is supporting our growth. We see that the average cost is going down from Q3 to Q4. So now the average is 3.7% or so. We've also issued material markets issuance in Q4 and during the year, so SEK 1.7 billion in Q4 and then around SEK 4 billion in '24. Overall, the senior unsecured debt is around 10% and then deposits 82% of the overall funding. And this will vary slightly up and down over quarters, but give or take, this is where we will be. Next page, please. Harry?

Yes. Thank you, Christian. So on the SDR, as you know and as we have communicated, we have postponed our notification until there is more regulatory certainty or less uncertainty. And we are, in the meantime, of course, in communication with both the SFSA and EBA. And we are comfortable with our interpretations of these criteria, but we are running a business, and we cannot simply wait until EBA's ruling or interpretation comes back. So therefore, we are now also taking steps to sort of harmonize our setup with the interpretation of the SFSA. And this status, you will see, for instance, if you go into our deposit platforms that we have opened up 3 months and 6 months deposit products, which we believe will be very attractive. And so we are taking steps here. The SDR status is in our hands, and we can meet all these criteria. So right now, it is a question of time. If we would get a positive feedback from EBA, which we, of course, hope for, then we will, of course, immediately notify as an SDR in 2025. Now if both questions would come back negative, then we still have it in our hands to be an SDR from 1st of January 2027. And if it's a combination of one positive, one negative, it could be 2026. But basically, the message is that this is in our hands. Long term, we still think this is a very attractive status to reach. However, we are not an SDR today. We weren't an SDR in the previous year. The growth that we have achieved in the last few years, we have achieved as a non-SDR, utilizing our existing tools, right, securitizations and strategic co-investing. And we will continue to work on with these tools during 2025, '26 as well, if necessary. Our growth ambitions, the SEK 36 billion, et cetera, are unchanged. Our financial targets remain in place. And as it happens, this is my last slide. So let's follow up on those financial targets. We have mentioned it a couple of times now in the presentation, so I will not dwell on it. But the return on equity, so we have delivered what we think are great results also in '22 and '23. However, that has been driven to a larger extent by one-off items. If we take out those one-off items, then it would look less attractive in '22 and '23. However, this year, now we see with the growth of the book, with the restructured organization, trimmed organization, et cetera, target setting that steers the company towards return on equity and profitability all the way from external targets to CEO to operations team leader in Spain. This has delivered the 15% ROE. If we look at the CET1 ratio target, yes, we are now within the range. We have been significantly above after selling the U.K. book back in '22, and we have managed to redeploy that capital into well high-yielding portfolios. So very happy about that. Now we intend to stay within this band here going forward. Now the earnings per share growth, our target is at least 15% growth per year. obviously, with the results we see over the past years here, we are crushing that, and we expect to continue to deliver above the 15% EPS growth. Now in terms of the dividend, so this year or for 2024, the Board proposes a SEK 2 dividend. It is, I would say, around 20% of net profit. So it is a start, but it should also be seen in conjuncture with the share buybacks that have happened in 2024. So with that, I think we are opening up for questions.

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

So if we first move into costs. So it seems like you have a lot of extraordinary costs. I mean, out of the last 8 quarters, you had extraordinary costs, 6 of them. I mean, what should we expect going forward? It seems almost like a normal part of the business. And also underlying cost is also up sharply. Can you give us some help for the future in terms of cost development, please?

I think if you look at the underlying growth of the book, that drives the cost growth. So we are a growing company. So we've been growing year-over-year 26% of the portfolio, and that will drive direct cost growth. And this year, it was 20% or so below the growth of the book. So when we grow business, there will always be cost growth. And then if you look at the underlying indirect cost, that is basically flat. So we've grown that with 3%. That is basically inflation, and we've taken it down to combat, we have certain geographies where we have much higher inflation. So we're dealing with the high inflation environment in the last few years by really having a high cost focus. So we are very stable on indirect costs, and we see that, that will continue. And then direct costs will clearly continue to grow as we grow, which is natural, I think. Then when it comes to these extraordinary costs, as you can see on the last few years, we've taken cost when it delivers real value and that we will continue to do. So if we have larger items that we want to do or small items that we do that will need cost that we don't see as business as usual that will generate benefits, then we will clearly do this because it's the right thing to do. However, that said, we are now moving into more of an environment where we dealt with, I would say, the large, large majority of issues that we've wanted to address over the last few years. So I think you can expect a lower amount of change, but still a high improvement focus. But as everything in life, you start on the top, you deal with the really high priority items and then you move down the chain to deal with the smaller stuff as you move on and dealt with the big things. And that is exactly where we are now. We have dealt with the big things, and we will continue to improve and look around and always have high focus on improvement.

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

I think what we call onetime items in this quarter, so Q4 we have this SEK 56 million, which is a restructuring of the Spanish business when we sold the unsecured book down there. So that's SEK 42 million of those SEK 56 million. Then we have a VAT accrual, which we don't see recurring again either. So that's the SEK 56 million. And then we also sold our Maran business. So in the direct cost, we have roughly SEK 30 million, so the third-party servicing business we call Maran internally, that we sold that, and that's also a SEK 30 million onetime item, so to speak, in direct costs. So we see the trend is growth, slightly lower growth direct for the book over time and then stable indirect.

And I can just echo that.

Isn't roughly half of the...

No, no. Markus, please go ahead.

Sorry.

Please go ahead.

I was just asking. So I mean, it's close to 20% cost growth this quarter. Isn't half of that one-offs? Or are you saying it's more or...

I'm not sure exactly which numbers you're referring to, but we have in indirect costs, we have this SEK 56 million that we would call onetime items. And then we have SEK 31 million in indirect costs as well. And that said, I think our overall objective to not classify these as items affecting comparability is to keep the numbers clean. And we want to be transparent with the underlying cost development that said.

The next question comes from Ermin Keric from Carnegie.

So just to understand then, so to clarify maybe, SEK 87 million is actual total one-offs, SEK 56 million indirect and SEK 31 million is direct. So that's on collection costs, right, on the P&L?

Yes, it's indirect cost, yes.

If I'm just looking still, I mean, the collection cost, even if I adjust for the SEK 31 million in collection cost, the collection cost in relation to the kind of PD book is up a bit in Q4. Is there any effect of, as Markus alluded to, that you had a lot of acquisitions in Q3 and you had to onboard those during Q4, so it kind of becomes a sequential impact on the following quarter? Or is this level in relation to collections kind of a normalized level as well?

Yes, I would say so. I mean we onboard and then we clearly start to work with the portfolios more in earnest with a slight delay.

Great. And then continuing on the one-off theme actually. You mentioned something in the report about that you've done accruals for your partners on the SPV side, in the wrong way before. So I think you mentioned something like SEK 16 million for SPVs. You mentioned that, that's been accrued in the wrong way before and that's now been adjusted. So is that SEK 16 million that impacts the Q4 result and which line item in the P&L is that then?

No, we set up in '18, '19 2 SPVs in Italy. So we've been reviewing the accounting model. We realized that there was a mistake in the timing of those accruals for the co-investors variable return, and that we have now corrected. So that impacts prior years to the largest degree.

Okay. Understood. And then just more generally speaking, how have you and the Board kind of discussed when you concluded to pay dividend? I mean you are still awaiting clarity on the SDR status. You seem to be increasing your efforts on the co-investment side. I suppose that's giving away part of the upside. So why not keep the capital internally and have it for more direct investments instead?

We can't really comment on that. This is a Board decision. So I cannot really comment on the dividend. However, I think management and Board alike feel that the company is in a very strong position. And regardless of SDR status in '25 or '26, we will continue to meet our financial targets.

To add to that...

If I put it this way then, I mean...

Go ahead, Ermin...

So what I wanted to ask, I mean, you showed the graph of how you've been growing the portfolio in recent years, and you have your SEK 36 billion target for 2026. If you would keep the same investment pace as in '24, you would be there basically in 2025. Is there anything that you can share with us about the plan to kind of reduce the investment pace until you have clarity on the SDR? Or do you think you have sufficient capital to keep on investing or deploying at the same pace as you have recently?

No. So we have a growth ambition, right? So we don't have any financial targets pointing to the SEK 36 billion. We still aim to get there. And the market is what the market is. We will invest what we find on the market at attractive returns. in '24. It was exceptional. We expect the market to be there also '25. And if it is, we will invest.

So I mean to add to Harry's point, we are in a very supportive and accommodative market. And as long as we can invest at these levels, we will continue to invest. And then over the long term, that means growth to the SEK 36 billion. And in the short term, it might be lumpy between quarters, as you can see when you look back over the last 2 years as well.

That's very clear. Last question, if I may, just on the NIM expansion you've seen now when you've come above the NSFR requirement for the SDR, you scale the liquidity portfolio. do you expect that NIM expansion to continue given that you're still buying as it sounds, a front book with higher returns than the back book?

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

The next question comes from Bjorn Olsson from SEB.

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

I think since the SFSA came out with their position and made that clear, we had internal discussions of how to handle this and concluded that notifying without actually being fully able to act as an SDR would not be the right thing to do. So therefore, we just simply postponed the notification and sent out communication about that.

So we have not received any new information, Bjorn.

Okay. So...

We can add to this. It's a notification. So if we would want to, we could notify now. However, we want to have a really strong dialogue with clearly with the Swedish FSA, and that's why we're postponing this. And we will just continue as normal. So this presents no issue to us operationally. So I think that's really important to understand that we want to remain an SDR as we see it and then building some flexibility to cater for this phase more conservative, I would say, interpretations of the criteria. So that we're working on as well to ensure that we can meet both as soon as possible. And if we're lucky, that's in '25. And if we're slightly less lucky, then we'll need to manage slightly longer. But again, it doesn't impact our growth ambitions or our view on meeting return targets.

And in terms then for your sort of mitigating actions with sort of securitizations and co-investment structures, et cetera, could you give any guidance on the sort of negative margin impact that could have compared to having the portfolio on your own book?

I think with co-investments and the partnerships that we set up, we also get access to volume that we would not have access to, right? So this actually brings volume as well, right? So from that point of view, we don't expect there to be any negative impact on that. So I think that's the main answer to that one.

And on securitization?

On securitization, it's more of a funding product because in that one, you would invite an investor to take the highest risk in the portfolio. So it's a slightly more expensive equity, but it doesn't impact the overall profitability of the company. So if we would go for a securitization at one point, as you've seen historically, then it's very small volumes that needs to be put in because as backstop impacted claims have grown since '19 when the backstop was introduced, it is still quite small volumes that can be dealt within this and then have a large impact.

And as for the NSFR, have you received any approval from the Swedish FSA to sort of go ahead with your interpretation of their interpretation given that Avanza and other Swedish sort of players have been going with the Swedish FSA decision?

The Swedish FSA doesn't give approvals normally. So you have a dialogue. Normally, this is the way it works. You have a dialogue and you do your interpretation of legal text and then you're very clear how you've done things and then that's about it. Yes. So we have heard...we have presented. So we have presented how we interpret this and the legal text behind that. And this we have communicated clearly to the SFSA, and we will be reporting on the 11th of February for the first time.

Okay. So then if they would sort of disagree with how you interpret it, it's at that point, they will notify you that or how would that work? And if so, I mean, since basically everyone else has been sort of changing the way they calculate NSFR except for you, do you have a pro forma NSFR?

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

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

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

No, we cannot give out that number. As Christian said, there are...

Just one last technical question. No, go ahead first.

I was just going to reinforce the point from Christian, right? This is about whether or not you're a deposit broker and whether or not that the ASF factor should be 50% or 100%. And depending on how you work with these platforms, they are either a customer or not a customer of the institution, Hoist in this case. And so our view is that clearly, the way we use this and others might be using it in a different way, the interpretation is clear. Over back to the technical question.

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

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

Yes, exactly. Exactly.

Yes. This is what I referred to before. So we were looking at the SPV model. So in prior years, it's SEK 72 million for all prior years adjustments. And then for DTLs, deferred tax liabilities, it's SEK 54 million in prior years. So it's those 2 together, the SEK 126 million that hits the prior years. It's important to note that this is an accounting adjustment. So there's no cash impact, and it's also a timing. So there's no additional cost. It's just a matter of adjusting the timing of those costs.

The next question comes from Markus Sandgren from Kepler Cheuvreux.

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

We have sold, right? We sold in France last year. We sold in Italy earlier this year. We sold in Germany, and now we sold in Spain. So typically, we sell if we believe that our setup is not living up to the return targets we have, not necessarily just at this moment, but it's basically about our competitiveness on the market as well. So if we assume that we will continue to win at attractive returns, then we love having internal platforms. If we are not able to do that, then after some time and after trying operational excellence initiatives, obviously, then we look at this option. So that's in general how we think about sales.

Okay. And then secondly, it seems like we or at least I and I guess, several of my colleagues are underestimating the impairment income that you're having and you have had a good income from that line for many quarters now. Can you just help us to be better at predicting it?

I think the way we think about it internally is that we have a large number of portfolios across many markets. So there's a larger number of overperforming portfolios than underperforming by definition, if you have collection performance because you beat your expectations. And that has been the case for the last few years. So we call it a healthy book. And that has generated in '23 and '24, 105% collection performance. And I think we aim to have that healthy tilt in the book, so a healthy book. So I think we expect that this will continue. And clearly, that also provides a buffer for, if anything would happen in the environment, anything like that as well. So it's been pretty stable over the last 2 years at 105%. And this clearly can be up and down during quarters as well, but [indiscernible]. Very good. We have a few written questions as well. So one is you are -- sorry...

Markus, did you have any more questions?

No more questions from Markus.

Are there any other questions on the call?

No.

All right. So let's have a look at the written questions on the chat then. I think most of them have been answered. But there is one here. You are at your targets or even beating them. Will you set new targets?

I think we got that question after the Capital Markets Day as well. And I think we will give the same answer. Obviously, it is a Board question to set the financial targets. We are happy with the targets we have at the moment, and they will remain until they are changed is the boring answer. Obviously, we intend to continue beating them. And if we do so for a longer period of time, then I'm sure they will be adjusted upwards.

So we have one final question then around we had share buybacks last year, and now we have a dividend. So how do you guys think about the split between dividends and buybacks going forward?

Again, this is a topic for the Board. But I think what we normally, in our policy, we say that it is profitable growth or repatriation. And we want to keep a healthy mix of both, obviously, right, as we did during 2024. The dividends are more long term, whereas the buybacks are a little bit more flexible. So we will just try to work with a healthy mix of both basically.

Good. And that's all the questions we had.

And we are 4 minutes over time. Then thank you all very, very much for calling in today and listening, and thank you for great questions. We will speak to you soon. Thank you everyone.

Thank you very much.

Thank you. Bye-bye.