Hoist Finance

Quarterly Report • Oct 27, 2023

Interim report Q3 2023

Key highlights

• » Profit before tax amounted to SEK 282 million, corresponding to a growth of 143 per cent. Adjusted for costs within the rejuvenation programme, the result was SEK 339 million, corresponding to a growth of 123 per cent compared to the previous year1)
• » The overall result in the third quarter is driven by a strong underlying business and positive one-off effects
• » Return on equity was 19 per cent. Adjusted for normalised capital levels and one-off costs, the return on equity was 28 per cent2)
• » Investments in new portfolios totalled SEK 1.7 billion in the third quarter, with an additional SEK 1.6 billion signed with sellers after the closing of the quarter
• » Collection performance came in at 103 per cent, meaning 3 per cent above forecast
• » The Hoist Finance rejuvenation programme was closed according to plan at the end of the quarter. All targets set two years ago have been met or exceeded
• » The funding base remains stable and our competitive advantage strengthened in an uncertain and volatile macro environment
• » Successful issuance of two senior unsecured bonds with a total value of SEK 750 million
• » Strong capital and liquidity position, significantly above regulatory requirements with a CET1 ratio of 13.86 per cent

1) To illustrate the development in the underlying business, the comparison quarters 2022 are adjusted for the divested UK business and in accordance with the hedge accounting introduced on 1 July 2022, see pages 6 and 9.

2) See pages 6 and 9.

Key ratios1)

SEK m	Quarter 3 2023	Quarter 3 2022	Change, %	Jan-Sep 2023	Jan-Sep 2022	Change, %	Full-year 2022
Total operating income	916	595	54	2,585	1,961	32	2,613
Profit/loss before tax	282	116	>100	604	486	24	490
Adjusted profit/loss before tax2)	339	152	>100	755	342	>100	N/A
Profit/loss for the period	270	153	76	524	547	–4	801
Return on equity, %	19	12	7 pp	12	15	–3 pp	17
Normalised return on equity, %2)	28	10	18 pp	17	8	9 pp	N/A
Portfolio acquisitions	1,675	342	>100	4,724	4,161	13	6,928
Basic and diluted earnings per share, SEK	2.34	0.70	>100	4.44	3.35	33	3.55
SEK m	30 Sep 2023	30 Sep 2022	Change, %	31 dec 2022
Gross 180-month ERC	37,261	28,846	29	32,946
Portfolio book value	23,834	19,370	23	21,624
CET1 ratio, %	13.86	12.23	1.99 pp	15.85

1) See Definitions. 2) See page 6 & 9.

Developments 2023

Statement by the CEO

SEK 23,834m

Portfolio book value

19% Return on equity

SEK 2.34

Earnings per share

13.86% CET1 ratio

Quarterly review Assurance Financial

statements Notes Definitions About

Statement by the CEO

Dear shareholders,

Despite a continued challenging macro environment, the third quarter was yet another solid quarter for Hoist Finance. The quarter was characterised by continued strong collections, a maintained investment pace and the closing of our rejuvenation programme. Profit before tax adjusted for costs for the rejuvenation programme amounted to SEK 339 million (SEK 152 million), which corresponds to a growth of over 120 per cent compared to the third quarter previous year. Return on equity, calculated on annualised basis, was 19 per cent for the quarter. The quarter's overall result is mainly due to a strong underlying business performance boosted by a number of positive one-off effects.

Investment management

The total investment volume during the third quarter amounted to SEK 1.7 billion. The market continues to be favourable and we have constructive dialogues with both primary and secondary sellers in the market.

The price level in the market continues to trend in a positive direction for Hoist Finance. The number of bidders in the processes has decreased, although there is still intense competition for select portfolios. Our strong capital base and unique funding model make us a stable and recurrent buyer for both banks and industry colleagues.

After quarter closing, we have entered into agreements to acquire portfolios of an additional SEK 1.6 billion. We have thus committed to SEK 6.3 billion so far in 2023. We see excellent opportunities to close the year with approximately SEK 8 billion in total investment volume.

After the closing of the quarter, we have also divested our single largest risk exposure at book value (a credit in Italy from 2018 of over SEK 300 million). Our largest single risk exposure today amounts to SEK 25 million, and we only have 7 claims exceeding SEK 10 million. In relation to our total portfolio book value of SEK 23 billion, this means that we have a portfolio consisting of granular claims with statistically low risk.

Loan management

In the third quarter, our collection performance was 103 per cent, meaning that on average, we have collected three per cent more than forecasted on our portfolios. We still see limited negative effects from the challenging macro environment in our collection performance.

Compared to the same period last year, we now have a larger share of loan management performed by strategic partners, especially in Greece, Sweden, UK and Spain. This contributes positively to our cost flexibility and scalability in loan management. In addition, the partnerships provide new channels to new sellers of debt portfolios.

Capital and funding

Hoist Finance continues to have a strong capital and liquidity position that enables continued strong growth. We successfully issued two senior unsecured bonds with a total volume of SEK 750 million during the quarter.

Quarterly

The rejuvenation programme

At the end of September, we closed our rejuvenation programme that began in the autumn of 2021. Strategy and governance have been reviewed and re-designed to ensure that Hoist Finance will be a longterm profitable and growing company with a return on equity of at least 15 per cent.

Investment management, loan management and the way we run our central functions have been fundamentally reorganised. This work is guided by principles of increased profit/loss responsibility for our business units, simplification and streamlining of decision-making processes, and ensuring that decisions are taken at the right level with the necessary expertise and efficiency required by a constantly changing market.

It is with pride and pleasure that I state that all the targets set out two years ago under the programme framework have either been met or have already been exceeded. The reorganisation of our investment management has put us well on the way to doubling our book with materially higher returns and quality in the debt portfolio. Loan management productivity has increased through incremental operational improvements in the markets. Adjusted for currency effects, we have reduced our indirect costs by more than 20 per cent despite high inflationary pressures.

Statement by the CEO Statement by the CEO Developments 2023

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statements Notes Definitions About

In addition to all organic initiatives, we have strongly improved the risk profile of our debt portfolio by proactively divesting portfolios that did not contribute to our targets. The most important example of this is selling our UK business, where we are now back as an active buyer in a partnership model. As a result of these initiatives, we are on track to meet our return on equity target, while our capital base has grown by 50 per cent over these two years.

Regulatory update

the CEO3 Statement by the CEO Hoist Finance ▪ Interim report January – September 2023 The EU's work on renewing and improving the so-called banking package is progressing. To our understanding, the package will be finalised in the autumn. As I updated you last time, the political agreement included that regulated specialised banks exempt from the backstop regulation should support reducing the risk to systemically important banks' balance sheets by reducing their exposure to non-performing loans. We do not have any new updates this quarter, but we will keep you informed on an ongoing basis regarding developments on this issue. If the legislation becomes a reality, it would be further proof that specialists like Hoist Finance, working in a regulated environment, are delivering significant value to the financial system.

Over the past summer and quarter, legislative proposals in Italy have contributed to speculation about the future shape of the industry in the country. The proposals have been heavily criticised by European institutions as well as by the Italian Ministry of Finance. The proposals, if implemented, are expected to have far-reaching consequences for Italy's banking system and economy. Similar proposals have been presented but not prepared or adopted in recent years. At present, the proposals have not reached Parliament. It is our understanding that the issue is not currently being pursued for decision. Hoist Finance will therefore continue to invest in Italian debt portfolios.

Future prospects

At Hoist Finance, we look brightly to the future. After our two-year long rejuvenation journey, we are now a simpler, more effective and more efficient company. We are well capitalised, we have the lowest cost of funding in the industry, and primary and secondary market portfolio volumes for sale in Europe are high. We are in an excellent position to continue to grow our business with attractive returns.

I would like to extend my gratitude to all of you who invest in Hoist Finance, both on the equity and debt side, for your continued trust. I would like to thank our customers and partners for their confidence in our capabilities and last but not least, a big thank you to the team at Hoist Finance! We are now in the seasonally most important quarter of the year, and a lot of hard work remains before we can pass another milestone on our path towards becoming Europe's leading asset manager of debt portfolios.

Kind regards, Harry Vranjes

Developments during the quarter, Group

Comparative figures for developments during third quarter 2023 pertain to third quarter 2022.

Operating income

Operating income totalled SEK 916m (595) during the period. Net interest income increased to SEK 732m (560). The change is mainly attributable to interest income from the larger loan portfolio and to higher yield levels as compared with the comparative quarter. Interest income from acquired loan portfolios totalled SEK 900m (675) and interest expense amounted to SEK –212m (–129), with the increase attributable to a growing portfolio and higher interest on deposits as compared with Q3 2022. Other interest income, which was positively impacted by returns on the liquidity portfolio due to higher interest rate levels, totalled SEK 44m (14).

Collection performance was 103% during the quarter. Collections against projections amounted to SEK 93m (167). Portfolio revaluations conducted during the period amounted to SEK –48m (–125), of which timing effects1) accounted for SEK –39m (–70) mainly due to faster incoming payments than forecasted.

Net result from financial transactions totalled SEK 83m (–24). Hoist Finance manages FX risk by hedging the Group's currency exposure through continuously holding FX hedging contracts denominated in EUR, which had an increase in market value during the quarter due to a stronger SEK against the EUR.

Operating expenses

Developments2023Breakdown, total carrying amount of Operating expenses totalled SEK –693m (–522) and include items affecting comparability of SEK –57m pertaining to the change programme. The change in operating expenses is otherwise attributable to the larger total portfolio book, which increased costs as well as revenue. The year-on-year change in expenses was also driven by exchange rate fluctuations. Personnel expenses totalled SEK –236m (–191), with SEK 24m attributable to non-recurring expenses related to the change programme. The change is otherwise attributable to inflation-adjusted pay increases and exchange rate fluctuations. Increased portfolio acquisitions during the period affected interest income from acquired loan portfolios, as well as collection costs which totalled SEK –243m (–172), of which legal collection costs totalled SEK –94m (–72). The change in legal collection costs is attributable to the larger portfolio size as compared with the comparative quarter. Collections related to these activities are expected to contribute positively to earnings in coming quarters. Administrative expenses increased during the quarter to SEK –189m (–132), of which SEK 33m is attributable to the change programme. The increase is otherwise attributable to FX effects, costs for updating existing data systems and increased audit costs.

Net profit for the quarter

Earnings from participations in joint ventures amounted to SEK 59m (43) during the period, driven by the initiated dissolution of the Polish joint venture and the divestment of the relevant portfolio over book value. The Group has a related deferred profit amounting to SEK 78m posted against other receivables. Net profit/loss totalled SEK 270m (153). Income tax expense for the period totalled SEK –12m (–19). The effective tax rate for the period was 4.4% (15.9). The lower effective tax rate is due in part to the use of unbooked losses by subsidiaries.

Quarterly

1) See Definitions.

Breakdown, secured/unsecured portfolio book value

portfolio book value

¹⁾ Other countries are Netherlands, Belgium and Cyprus

SEK m	Quarter 3 2023	Quarter 3 2022
Interest income acquired loan portfolios	900	675
Other interest income	44	14
Interest expense	–212	–129
Net interest income	732	560
Impairment gains and losses	44	42
of which, realised collections against active forecast	93	167
of which, portfolio revaluations	–49	–125
Fee and commission income	22	15
Net result from financial transactions	83	–24
Other operating income 1)	35	2
Total operating income	916	595
Personnel expenses	–236	–191
Collection costs	–243	–172
Other administrative expenses	–189	–132
Depreciation and amortisation	–25	–27
Total operating expenses	–693	–522
Share of profit from joint ventures	59	43
Profit before tax	282	116
Income tax expense	–12	–19
Net profit for the quarter from discontinued operations Net profit for the quarter	– 270	56 153
Statement by Developments2023 Developments Quarterly the CEO 2023

Profit/loss after tax from continuing operations, SEK m

Return on equity,%

1) Fourth quarter 2022 includes capital gains result from divested operations.

review Assurance Financial

statements Notes Definitions About

Adjusted comparative figures of the underlying business

Items affecting comparability

Items affecting comparability	Quarter 3 2023	Quarter 3 2022	Full year 2022
Personnel expenses	–24	–	–
Administrative expenses	–33	–	–
Total	–57	–	–

Adjusted comparative figures of the underlying business Quarter 3 2022 In addition to the ordinary financial statements, an illustrative adjusted Quarter 3 Quarter 3 Adjusted for SEK m 2023 2022 comparison income statement and normalised return on equity are provided to facilitate the comparison of the underlying business performance com Interest income 900 675 675 pared to the same period last year. Other interest income 44 14 14 Interest expense1) –212 –129 –93 Earnings before taxes, adjusted for non-recurring expenses, totalled Net interest income 732 560 596 SEK 339m (152) during the third quarter, an increase by over 100%. Op Other income (incl Impair erating income, amounting to SEK 916m (631), increased by SEK 285m. ment gains and losses 101 59 59 In addition to a solid underlying performance, other key drivers are a Net result from financial transactions 83 –24 –24 realised one-off gain of SEK 59m on a divested portfolio in Poland, a VAT case decision representing SEK 26m and financial net profit of Total operating income 916 595 631 Total operating expenses –636 –522 –522 Share of profit from joint ventures 59 43 43 Total Operating Income increased 45% and total operating expenses increased 22%. Direct costs increased SEK 106m, driven mainly by Profit before rejuvenation 339 116 152 growth in loan portfolios and also significantly impacted by exchange Rejuvenation cost –57 – – rate fluctuations during the quarter. Indirect costs totalled SEK 247m, Profit before tax 282 116 152 as compared with SEK 240m during the comparative quarter. The vari Net profit for the quarter ance is entirely attributable to exchange rate fluctuations. The under from discontinued operations2) – 56 – lying indirect cost is lower than during last year's comparative period. Net profit/loss for the quarter 270 153 121 Items affecting comparability Items affecting comparability totalled SEK 57m (0) for the third quarter, distributed between personnel and administrative expenses, and is a Quarter 3 2022 Adjusted for part of Hoist Finance rejuvenation programme where central IT, Data Quarter 3 Quarter 3 2023 2022 and Operations functions has been re-organised to align to the new Key ratios comparison decentralised operating model. The last part of the programme an Return on equity, % 19 12 N/A nounced in May, concluded during quarter 3 2023 and is expected to Normalised return on equity, % 28 N/A 10 reduce indirect costs by approximately SEK 130m per year, exceeding Portfolio acquisitions 1,675 342 342 the original savings goal of SEK 85m. Overall the indirect costs were reduced by 23% on a constant currency basis since the initiation of Portfolio book value 23,834 19,370 19,370 the programme, from SEK 284m in the second quarter 2021, including 1) Third quarter 2022 interest expenses adjusted by SEK 36m pertaining to the funding divested UK-operation, to SEK 221m in the third quarter 2023. of the divested UK operations. 2) Third quarter 2022 adjusted to not include net profit from discontinued operations. The rejuvenation programme, characterised by larger and substantial changes, was implemented with the aim of giving the capability for Hoist Finance to meet their financial objectives in the longer term. Quarter 3 Quarter 3 Full year 2023 2022 2022 –24 – – –33 – –	Development 2023						Hoist Finance ▪ Interim report January – September 2023
								Change vs
								Adjusted, %
								33 >100
								>100
								23
								71
								>–100
	SEK 83m.							45 22
								37
								>100
								N/A
								86
								N/A
								>100
								Change vs Adjusted, %
								N/A
								18 pp
								>100
								23
	Items affecting comparability
	Personnel expenses
	Administrative expenses Total	–57	–	–
A normalised return on equity is shown to illustrate the return The normalised return on equity for comparative periods is adjusted
on equity adjusted for rejuvenation costs/ IACs and normalised for the Income Statement impact of the divested UK operations
capitalisation levels. Normalised capitalisation represents and as if hedge accounting for all interest rate swaps would have
capitalisation in line with the financial target regarding capital been implemented in comparative periods.
structure, i.e. in the middle of the target range of the CET1 ratio
2.3–3.3 percentage points above overall CET1 requirements
specified by the Swedish Financial Supervisory Authority.
	Statement by the CEO	Developments2023 Developments 2023	Quarterly review	Financial statements	Notes	Assurance	Definitions	About Hoist Finance

Key ratios	Quarter 3 2023	Quarter 3 2022	Quarter 3 2022 Adjusted for comparison	Change vs Adjusted, %
Return on equity, %	19	12	N/A	N/A
Normalised return on equity, %	28	N/A	10	18 pp
Portfolio acquisitions	1,675	342	342	>100
Portfolio book value	23,834	19,370	19,370	23

Developments during January – September, Group

Comparative figures for developments during January – September 2023 pertain to January – September 2022.

Operating income totalled SEK 2,585m (1,961) during the period. Net interest income increased to SEK 2,097m (1,579). The change is mainly attributable to interest income from the larger loan portfolio and to higher yield levels as compared with the comparative period. Interest income from acquired loan portfolios totalled SEK 2,528m (1,957) and interest expense amounted to SEK –560m (–395). Other interest income, which was positively impacted by returns on the liquidity portfolio due to higher interest rate levels, totalled SEK 129m (17).

Realised collections against active forecast totalled SEK 457m (471). Portfolio revaluations conducted during the period totalled SEK –225m (–353), of which timing effects1) accounted for SEK –201m (–247) mainly due to faster incoming payments than forecasted. Adjusted for timing effects1) collection performance was 105% for the period.

Net result from financial transactions totalled SEK 77m (204). The change is attributable to the fact that Hoist Finance did not apply hedge accounting for interest rate hedging contracts during the comparative period, during which outstanding interest rate hedging contracts increased in market value. The market value of EUR- denominated FX hedging contracts decreased during the period due to a weaker SEK against the EUR. Other operating income totalled SEK 52m (11) during the period due to Hoist Finance's disposal of portfolios in France and Poland.

Operating expenses

Developments2023Operating income Operating expenses totalled SEK –2,069m (–1,537) and include items affecting comparability of SEK –151m attributable to the change programme. The change is otherwise mainly due to the larger total portfolio book, which increased direct costs as well as revenues. The total change in operating expenses also includes currency effects of SEK –78m. Personnel expenses totalled SEK –736m (–545), with SEK 80m attributable to non-recurring expenses related to the change programme. The change is otherwise attributable to retained UK staff that were accounted for in the divested UK entity during the comparative , to exchange rate fluctuations and to inflation-adjusted pay increases. The larger portfolio is the main reason for the increased collection costs which amounted to SEK –739m (–530) for the period, of which legal collection costs accounted for SEK –261m (–234). These collection costs are expected to contribute positively to earnings in coming quarters. Administrative expenses increased to SEK –519m (–383), of which SEK 33m is attributable to the change programme. The increase is otherwise attributable to FX effects, costs to update and change data systems, and increased audit costs.

Net profit for the period

Net profit/loss totalled SEK 524m (547). The Group has a related deferred profit amounting to SEK 78m posted against other receivables. Income tax expense for the period totalled SEK –80m (–91). The effective tax rate for the period was 13.3% (18.7). The lower effective tax rate is due in part to the use of non-capitalised losses by subsidiaries.

Quarterly

1) See Definitions.

Statement by the CEO

Developments 2023

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statements Notes Definitions About

SEK m	Jan-Sep 2023	Jan-Sep 2022
Interest income acquired loan portfolios	2,528	1,957
Other interest income	129	17
Interest expense	–560	–395
Net interest income	2,097	1,579
Impairment gains and losses	232	118
of which, realised collections against active forecast	457	471
of which, portfolio revaluations	–225	–353
Fee and commission income	81	49
Net result from financial transactions	77	204
Other operating income	98	11
Total operating income	2,585	1,961
Personnel expenses	–736	–545
Collection costs	–739	–530
Other administrative expenses	–519	–383
Depreciation and amortisation	–75	–79
Total operating expenses	–2,069	–1,537
Share of profit from joint ventures	88	62
Profit before tax	604	486
Income tax expense	–80	–91
Net profit for the quarter from discontinued operations Net profit for the quarter	– 524	152 547
Statement by Developments2023 Developments Quarterly the CEO 2023

Profit/Loss before tax, from continuing operations, SEK m

Return on equity,%

review Assurance Financial

statements Notes Definitions About

Adjusted comparative figures of the underlying business

Items affecting comparability

Items affecting comparability	Jan–Sep 2023	Jan–Sep 2022	Full year 2022
Personnel expenses	80	–	–
Administrative expenses	71	–	–
Total	151	–	–

Development 2023						Hoist Finance ▪ Interim report January – September 2023
Adjusted comparative figures of the underlying business						Jan-Sep
In addition to the ordinary financial statements, an illustrative adjusted				Jan-Sep	Jan-Sep	2022 Adjusted for	Change vs Adjusted,
income statement and normalised return on equity are provided to			SEK m	2023	2022	comparison	%
facilitate the comparison of the underlying business performance.			Interest income Other interest income	2,528 129	1,957 17	1,957 17	29 >100
Earnings before tax, adjusted for non-recurring expenses, totalled			Interest expense1)	–560	–395	–283	98
SEK 755m (342) for the period. Operating income, amounting to SEK			Net interest income	2,097	1,579	1,691	24
2,585m (1,853), increased by SEK 732m. The increase is driven primar			Other income (incl Impair
ily by increased investments with higher returns, the sale of a portfolio in France above book value, and a one-off VAT revenue. Net result			ment gains and losses Net result from financial	411	178	178	>100
from financial transactions increased SEK 93m as compared with the			transactions2)	77	204	–16	>–100
adjusted result for 2022.			Total operating income	2,585	1,961	1,853	40
			Total operating expenses3)	–1,918	–1,537	–1,573	22
Operating expenses increased SEK 345m as compared with 2022, driv en primarily by growth in loan portfolios and also significantly impacted			Share of profit from joint ventures	88	62	62	42
by FX effects during the year. Normalised return on equity increased			Profit before rejuvenation	755	486	342	>100
9 percentage points to 17%.			Rejuvenation cost	–151	–	–	N/A
			Profit before tax	604	486	342	77
Items affecting comparability Items affecting comparability totalled SEK 151m (0) for the period,			Net profit for the period from discontinued operations4)	–	152	–	N/A
distributed between personnel and administrative expenses, and is a			Net profit/loss for the period	524	547	272	93
part of Hoist Finance rejuvenation programme where central IT, Data
and Operations functions has been re-organised to align to the new
decentralised operating model. The last part of the programme an nounced in May, concluded during quarter 3 2023 and is expected to				Jan-Sep	Jan-Sep	Jan-Sep 2022 Adjusted for	Change vs Adjusted,
reduce indirect costs by approximately SEK 130m per year, exceeding			Key ratios	2023	2022	comparison	%
the original savings goal of SEK 85m. Overall the indirect costs were			Return on equity, %	12	15	N/A	N/A
reduced by 23% on a constant currency basis since the initiation of			Normalised return on equity, %	17	N/A	8	N/A
the programme, from SEK 284m in the second quarter 2021, including divested UK-operation, to SEK 221m in the third quarter 2023.			Portfolio acquisitions Portfolio book value	4,724 23,834	4,161 19,370	4,161 19,370	14 23
The rejuvenation programme, characterised by larger and substantial			1) Jan-Sep 2022 interest expenses adjusted by SEK 112m pertaining to the funding of the divested UK operations.
changes was implemented with the aim of giving the capability for			2) Jan-Sep 2022 net result from financial transaction adjusted for SEK 221m unrealised changes in value aligned with the hedge accounting introduced 1 July 2022. 3) Jan-Sep 2022 operating expenses adjusted by SEK –36m for retained UK Group staff,
Hoist Finance to meet their financial objectives in the longer term.			previously accounted for in the divested UK legal entity. 4) Jan-Sep 2022 adjusted to not include net profit from discontinued operations.
Items affecting comparability	Jan–Sep 2023	Jan–Sep Full year 2022 2022
Personnel expenses	80	– –
Administrative expenses	71	– –
Total	151	– –
A normalised return on equity is shown to illustrate the return			The normalised return on equity for comparative periods is adjusted
on equity adjusted for rejuvenation costs/ IACs and normalised capitalisation levels. Normalised capitalisation represents			for the Income Statement impact of the divested UK operations and as if hedge accounting for all interest rate swaps would have
capitalisation in line with the financial target regarding capital			been implemented in comparative periods.
structure, i.e. in the middle of the target range of the CET1 ratio
2.3–3.3 percentage points above overall CET1 requirements
specified by the Swedish Financial Supervisory Authority.
Statement by Developments		Quarterly Financial					About
Developments2023 the CEO 2023		review statements	Notes	Assurance	Definitions		Hoist Finance

Key ratios	Jan-Sep 2023	Jan-Sep 2022	Jan-Sep 2022 Adjusted for comparison	Change vs Adjusted, %
Return on equity, %	12	15	N/A	N/A
Normalised return on equity, %	17	N/A	8	N/A
Portfolio acquisitions	4,724	4,161	4,161	14
Portfolio book value	23,834	19,370	19,370	23

Other information

Balance Sheet

Comparative figures for the balance sheet pertain to 31 December 2022. Total assets, has slightly increased from 31 December 2022, totalled SEK 33,792m (32,499). Cash and cash equivalents and interest-bearing securities decreased SEK 1,900m, while the portfolio carrying amount increased SEK 2,210m to SEK 23,834m (21,624). Other assets amounts to SEK 2,579m (1,625).

SEK m	30 Sep 2023	31 Dec 2022	Change, %
Cash and interest-bearing securities	7,341	9,241	–21%
Portfolio book value	23,834	21,624	10%
Value change of interest-hedged items in portfolio hedging	38	9	>100%
Other assets1)	2,579	1,625	59%
Total assets	33,792	32,499	4%
Deposits from the public	19,835	18,581	7%
Debt securities issued	4,468	5,545	–19%
Subordinated debt	917	903	2%
Total interest-bearing liabilities	25,220	25,029	1%
Other liabilities1)	2,638	1,726	53%
Equity	5,934	5,744	3%
Total liabilities and equity	33,792	32,499	4%

1) This item does not correspond to an item of the same designation in the balance sheet,but to several corresponding items

Total interest-bearing debt amounted to SEK 25,220m (25,029). In Sweden, deposits from the public amounted to SEK 6,077m (6,687), of which SEK 2,183m (2,771) is attributable to fixed term deposits of one to three-year duration. Deposits from the public in Germany totalled SEK 12,337m (10,854), of which SEK 9,569m (7,926) is attributable to fixed term deposits of one- to five-year duration.

As of 30 September 2023, the outstanding bond debt totalled SEK 5,385m (6,448), of which SEK 4,468m (5,545) was comprised of senior unsecured liabilities.

Other liabilities totalled SEK 2,638m (1,726). Equity totalled SEK 5,934m (5,744).

Cash flow

Comparative figures for cash flow pertain to the period January – September 2022.

SEK m	Jan–Sep 2023	Jan– Sep 2022	Change, %
Cash flow from operating activities	2,767	4,655	–41%
Cash flow from investing activities	–1,625	–4,033	60%
Cash flow from financing activities	–525	–777	32%
Cash flow for the period	617	–154

Cash flow from operating activities totalled SEK 2,767m, as compared with SEK 4,655m during the 2022 comparative period. Amortisation of acquired loan portfolios totalled SEK 2,949m (3,564). In addition, changes in other assets and liabilities amounted to SEK –264m (666), attributable primarily to other liabilities and to pledged assets in the risk management of interest rate and currency risk.

Cash flow from investing activities totalled SEK –1,625m (–4,033), with portfolio acquisition activity totalling SEK –4,724m (–4,161). Cash flow from disposed loans totalled SEK 574m. Portions of the liquidity portfolio corresponding to SEK 2,361m (1,254) have reduced, of which SEK 99m referred to government securities.

Cash flow from financing activities totalled SEK –525m (–777). Net inflow from deposits from the public totalled SEK 762m (–612), where the increase was mainly driven by deposits in Germany. During the period, the inflow of debt securities issued amounted to SEK 601m.

Total cash flow for the period amounted to SEK 617m, as compared with SEK –154m for the 2022 comparative period.

Capital adequacy

Comparative figures for capital adequacy pertain to 31 December 2022.

At the close of the quarter the CET1 ratio was 13.86% (15.85) for the Hoist Finance consolidated situation. CET1 capital totalled SEK 4,202m (4,172). The risk-weighted exposure amount has increased to SEK 30,326m (26,313) since the turn of the year.

The decrease in the CET1 ratio since the turn of the year was due mainly to new portfolio acquisitions, which reduced the ratio by –2.54%. In contrast, collections on existing NPL portfolios contributed to an increase of 1.28%.

Group's positive result for the quarter, recognised in own funds, increased the CET1 ratio by 1.39%. Exchange rate revaluations in NPL portfolios reduced the ratio by –0.26%. The NPL backstop also had an impact of –0.34% on the CET1 ratio. Open FX positions increased the Group's market risk and reduced the ratio by –0.29%. Other risk exposure, which has increased since the turn of the year, reduced the ratio by –1.06%.

All capital ratios meet regulatory requirements. A 30% deduction for future dividends has been taken from consolidated profit/loss.

Total capital amounts to SEK 6,228m (6,181) and the total capital ratio is 20.54% (23.49).

For Parent Company the CET1 ratio was 11.78% (14.62).

Parent Company

Comparative figures for the Parent Company pertain to third quarter 2022.

Net interest income for the Parent Company totalled SEK 276m (329) during the third quarter, which is mainly attributable to a growing share of portfolio acquisitions in combination with rising interest levels. Net result from financial transactions totalled SEK 42m (83). This has been impacted by a change in the market value of bonds and interest rate and FX hedging contracts, as well as by a positive decision in VAT cases from 2014, 2015 and 2017 of net SEK 26m, of which SEK 29m is attributable to income and SEK –3m to related cost (see also Other Disclosures).

Total operating income, which was significantly higher during the third quarter, amounted to SEK 747m (449) and is attributable to dividends in subsidiaries in Poland and Cyprus. Operating expenses were somewhat

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higher and amounted to SEK –422m (–334), with the increase in expenses due mainly to impairment costs for projects and costs related to change programmes. Profit before credit losses totalled SEK 325m (115).

Impairment losses totalled SEK –54m (27), attributable mainly to portfolio revaluations and credit reserves for performing loans. During the quarter there was no write-down requirement for shares in subsidiaries (–).

Earnings before tax, which totalled SEK 425m (159), were positively impacted by the SEK 129m sale of portfolios in the Polish joint venture. Tax expense for the quarter amounted to SEK –86m (–43). Comprehensive income for the Parent Company totalled SEK 339m (116).

Risks and uncertainties

The macroeconomic landscape during the past quarter showed signs of an economic downturn, with rising interest rates and continued high inflation. The labour market remains strong, although there are some signs of a slowdown. Households consumption are decreasing and international trade is declining. The macroeconomic situation has a double-acting effect for Hoist Finance. While an increased number of acquired loans may present greater business opportunities, this may potentially reduce return on invested capital. The Company has not seen any indication of this, however, as overall collection performance for credit portfolios exceeded forecast during the quarter.

Development of risk

During the period Hoist Finance closed out hedge positions for all outstanding Additional Tier 1 capital instruments issued 7 June 2018, with a total outstanding nominal amount of EUR 40,000,000.

The Company's business activities involve various types of risk, primarily credit risk but also market risk, liquidity risk and operational risk. Despite uncertainty in the global environment, driven by geopolitical macroeconomic circumstances, the risk situation has remained stable. Credit risk in the liquidity portfolio remains low, as investments are made in government, municipal and covered bonds of high credit quality. An internal framework is used to ensure that all operational risks within the Group are monitored. Hoist Finance is committed to continuously improving the quality of its internal procedures to minimise operational risks. Overall, operational risk is unchanged from previous quarters.

Hoist Finance continuously hedges interest rate and FX risks in the short and medium term and, accordingly, market risks remain low. Additional information on developments during the quarter is provided in the Net Profit section. Liquidity risk is also deemed to be low, as Hoist Finance has high liquidity and access to favourable borrowing rates via HoistSpar, particularly with the current interest rate environment. The securitisation of asset portfolios is an effective method of managing the regulatory changes introduced in December 2018 (the NPL prudential backstop regulation).

Related-party transactions

The nature and extent of related-party transactions remain essentially unchanged since 31 December 2022, the only change being the agreements entered into during the first six months of 2023 by Lars Wollung, via Wollung & Partners, and Christopher Rees, via 4Cadvisory Ltd, for consultancy work over and above their board work.

Group Structure

Hoist Finance AB (publ), corporate identity number 556012-8489, is the parent company in the Hoist Finance Group. Hoist Finance is a Swedish publicly traded limited liability company, headquartered in Stockholm, Sweden. Hoist Finance AB (publ) has been listed on NASDAQ Stockholm since March 2015.

Hoist Finance AB (publ) is a credit market company under the supervision of the Swedish FSA. The operating Parent Company, including its subgroup, acquires and holds loan portfolios, which are managed by the Group's subsidiaries or foreign branch offices. These units also provide commission-based administration services to third parties and services within the Hoist Finance Group.

Other disclosures

Recovery of VAT

Hoist Finance's so called sectorised partial exemption method for recovery of input value added tax has been investigated by the Swedish Tax Agency for quite some time. For the years 2014, 2015 and 2017, the Swedish Tax Agency has now in principal accepted the model that is applied for these years, which has resulted in a net refund of value added tax amounting to SEK 26m, which is reported in the income statement for the third quarter. Hoist Finance has requested additional refund of input value added tax according to the applied recovery method for the years 2012-2013, 2016, 2018-2020. It is still uncertain which parts of the recovery method that will be approved by the court for these years.

Tax audit in Germany

A decision will also be issued soon in an ongoing tax audit in Germany concerning the years 2013-2016, where the monetary consequences are not assessed to result in any further impact on the result, as the parent company throughout the process already has provisioned for the expected outcome (SEK 91m). The audit concerns transfer pricing, i.e. distribution of profits between countries and companies within the same Group. A process to handle the corresponding issue for subsequent years has been initiated, where it remains to be seen how the parent company and the German and Swedish tax authorities can agree on a distribution of the profits in a correct way between the countries. The parent company has also provisioned for subsequent years from 2017 in line with the expected outcome for these years (SEK 29m).

New subsidiaries

During 2023 subsidiaries has been established in Spain, Corelsa ReoCo S.L., and in Greece, Hoist Consulting Single Member S.A. For a more detailed description of the Group's legal structure, please refer to the 2022 Annual Report.

Subsequent events

After the end of the quarter, the single largest risk exposure has been divested at book value, a credit in Italy from 2018 of more than SEK 300m.

Review

This interim report has not been reviewed by the Company's auditors.

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Quarterly Review

Condensed income statement

SEK m	Quarter 3 2023	Quarter 2 2023	Quarter 1 2023	Quarter 4 2022	Quarter 3 2022
Net interest income	732	695	670	586	560
Total operating income	916	903	766	652	595
Total operating expenses	–693	–743	–633	–676	–522
Net operating profit/loss	223	160	133	–24	73
Profit/loss before tax	282	178	144	5	116
Net profit/loss from discontinued operations	–	–	–	237	56
Net profit/loss	270	161	93	255	153

Key ratios1)

SEK m	Quarter 3 2023	Quarter 2 2023	Quarter 1 2023	Quarter 4 2022	Quarter 3 2022
Cash EBITDA	1,246	1,508	1,315	1,420	1,528
C/I ratio, %	71	81	81	99	82
Return on equity, %	19	10	6	20	12
Portfolio acquisitions	1,675	1,139	1,909	2,767	342
Basic and diluted earnings per share from continuing operations, SEK	2.34	1.45	0.66	0.19	0.7

SEK m	30 Sep 2023	30 Jun 2023	31 Mar 2023	31 Dec 2022	30 Sep 2022
Gross 180-month ERC	37,261	36,847	35,452	32,946	28,846
Portfolio book value	23,834	23,797	22,892	21,624	19,370
Total capital ratio, %	20.54	22.20	22.37	23.49	19.20
CET1 ratio, %	13.86	14.75	15.01	15.85	12.23
Number of employees (FTEs)	1,269	1,319	1,323	1,304	1,455

1) See Definitions

For details on items affecting comparability for previous quarters, please refer to the Financial Fact Book: hoistfinance.com/Investors/reports-and-presentations2/

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Financial statements

Consolidated income statement

SEK m	Note	Quarter 3 2023	Quarter 3 2022	Jan-Sep 2023	Jan-Sep 2022	Full-year 2022
Interest income acquired loan portfolios calculated using the effective interest rate method		900	675	2,528	1,957	2,678
Other interest income 1)		44	14	129	17	50
Interest expense		–212	–129	–560	–395	–562
Net interest income		732	560	2,097	1,579	2,166
Impairment gains and losses	4	44	42	232	118	53
Fee and commission income		22	15	81	49	66
Net result from financial transactions		83	–24	77	204	309
Derecognition gains and losses		1	–	46	–	–
Other operating income		34	2	52	11	20
Total operating income	3	916	595	2,585	1,961	2,613
Personnel expenses		–236	–191	–736	–545	–766
Collection costs		–243	–172	–739	–530	–764
Other administrative expenses		–189	–132	–519	–383	–575
Depreciation and amortisation of tangible and intangible assets		–25	–27	–75	–79	–109
Total operating expenses	3	–693	–522	–2,069	–1,537	–2,214
Net operating profit/loss		223	73	516	424	399
Share of profit from joint ventures	3	59	43	88	62	91
Profit/loss before tax	3	282	116	604	486	490
Income tax expense		–12	–19	–80	–91	–79
Net profit from discontinued operations		–	56	–	152	389
Net profit/loss		270	153	524	547	801
Profit/loss attributable to:
Owners of Hoist Finance AB (publ)		208	119	397	452	706
Additional Tier 1 capital holders		62	34	127	95	95
Basic and diluted earnings per share continuing operations, SEK		2.34	0.70	4.44	3.35	3.55
Basic and diluted earnings per share discontinued operations, SEK		0.00	0.63	0.00	1.72	4.36
Basic and diluted earnings per share total, SEK		2.34	1.33	4.44	5.07	7.91

1) Of which interest income calculated using the effective interest method amount to SEK 11.2m (4.6) during quarter 3, SEK 31.8m (8.0) during Jan-Sep and SEK 16m during full-year 2022.

Condensed consolidated statement of comprehensive income

SEK m	Quarter 3 2023	Quarter 3 2022	Jan-Sep 2023	Jan-Sep 2022	Full-year 2022
Net profit/loss for the period	270	153	524	547	801
Other comprehensive income
Items that will not be reclassified to profit or loss
Revaluation of defined benefit pension plan	–	–	–	–	13
Tax attributable to items that will not be reclassified to profit or loss	–	–	–	–	–
Total items that will not be reclassified to profit or loss	–	–	–	–	13
Items that may be reclassified subsequently to profit or loss
Translation difference, foreign operations	–405	–34	212	–4	247
Hedging of currency risk in foreign operations	234	–29	–385	–159	–475
Transferred to the income statement during the year 1)	12	1	17	3	210
Tax attributable to items that may be reclassified to profit or loss	–48	6	80	33	98
Total items that may be reclassified subsequently to profit or loss	–207	–56	–76	–126	80
Other comprehensive income for the period	–207	–56	–76	–126	93
Total comprehensive income for the period	63	97	448	421	894
Profit/loss attributable to:
Owners of Hoist Finance AB (publ)	1	63	321	326	799
Additional Tier 1 capital holders	62	34	127	95	95

1) Due to discontinued operations SEK –206m has been transferred to the income statement during full year 2022.

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Consolidated balance sheet

SEK m	Note	30 Sep 2023	30 Sep 2022	31 Dec 2022
ASSETS
Cash		0	0	0
Treasury bills and Treasury bonds	5	2,690	1,652	2,789
Lending to credit institutions	5	2,899	2,013	2,358
Lending to the public	5	1	2	1
Portfolio book value	3,4	23,834	19,370	21,624
Value change of interest-hedged items in portfolio hedging		38	–170	9
Bonds and other securities	5	1,752	3,327	4,094
Shares and participations in joint ventures		166	161	188
Intangible assets		245	333	297
Tangible assets		188	165	221
Other assets		1,658	532	694
Deferred tax assets		156	123	116
Prepayments and accrued income		165	104	108
Assets held for sale		–	4,181	–
TOTAL ASSETS		33,792	31,793	32,499
LIABILITIES AND EQUITY
Liabilities
Deposits from the public	5	19,835	18,198	18,581
Debt securities issued	5	4,468	5,476	5,545
Tax liabilities		100	158	107
Other liabilities		2,031	1,193	1,158
Deferred tax liabilities		67	100	85
Accrued expenses and deferred income		377	220	329
Provisions		63	59	47
Subordinated debts		917	871	903
Liabilities held for sale		–	250	–
Total liabilities		27,858	26,525	26,755
Equity
Additional Tier 1 capital holders		1,109	1,106	1,106
Share capital		30	30	30
Other contributed equity		2,275	2,275	2,275
Reserves		–390	–521	–314
Retained earnings including profit/loss for the period		2,910	2,378	2,647
Total equity		5,934	5,268	5,744
TOTAL LIABILITIES AND EQUITY		33,792	31,793	32,499

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Consolidated statement of changes in equity

Equity attributable to shareholders of Hoist Finance AB (publ)
			Reserves
SEK m	Share capital	Other contributed equity	Hedge reserve	Translation reserve	Retained earnings including profit/loss for the period	Total	Additional Tier 1 capital holders	Total equity
Opening balance 1 Jan 2023	30	2,275	–687	373	2,647	4,638	1,106	5,744
Comprehensive income for the period
Profit/loss for the period					397	397	127	524
Other comprehensive income			–288	212		–76		–76
Total comprehensive income for the period	0	0	–288	212	397	321	127	448
Transactions reported directly in equity
Issued Additional Tier 1 capital instrument 1)							700	700
Called Additional Tier 1 capital instrument 1)					–128	–128	–701	–829
Transaction cost Tier 1 capital instrument					–13	–13	5	–8
Interest paid on capital contribution							–127	–127
Acquisition agreement for treasury shares2)					8	8		8
Tax effect on items reported directly in equity					3	3	–1	2
Share based payments3)					–4	–4		–4
Total transactions reported directly in equity					–135	–135	–124	–259
Closing balance 30 Sep 2023	30	2,275	–975	585	2,910	4,825	1,109	5,934

1) Issued amount of SEK 700m, called amount of EUR 70m with a FX-effect of SEK 128m.

2) Called swap, issued 2020 to secure the delivery of treasury shares in the LTIP programme.

3) For more information on share-based payments, see Hoist Finance Annual report 2022.

Equity attributable to shareholders of Hoist Finance AB (publ)

	Reserves
SEK m	Share capital	Other contributed equity	Hedge reserve	Translation reserve	Retained earnings including profit/loss for the period	Total	Additional Tier 1 capital holders	Total equity
Opening balance 1 Jan 2022	30	2,275	–473	79	1,924	3,835	1,106	4,941
Comprehensive income for the period
Profit/loss for the period					452	452	95	547
Other comprehensive income			–123	–4		–127		–127
Total comprehensive income for the period			–123	–4	452	325	95	420
Transactions reported directly in equity
Interest paid on Additional Tier 1 capital							–95	–95
Share-based payments1)					2	2		2
Total transactions reported directly in equity					2	2	–95	–93
Closing balance 30 Sep 2022	30	2,275	–596	75	2,378	4,162	1,106	5,268

1) For more information on share-based payments, see Hoist Finance Annual report 2021.

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Quarterly

Consolidated statement of changes in equity

		Equity attributable to shareholders of Hoist Finance AB (publ)
	Reserves
SEK m	Share capital	Other contributed equity	Hedge reserve	Translation reserve	Retained earnings including profit/loss for the period	Total	Additional Tier 1 capital holders	Total equity
Opening balance 1 Jan 2022	30	2,275	–473	79	1,924	3,835	1,106	4,941
Comprehensive income for the period
Profit/loss for the period1)					706	706	95	801
Other comprehensive income			–214	294	13	93		93
Total comprehensive income for the period			–214	294	719	799	95	894
Transactions reported directly in equity
Interest paid on Additional Tier 1 capital							–95	–95
Share-based payments2)					4	4		4
Total transactions reported directly in equity					4	4	–95	–91
Closing balance 31 Dec 2022	30	2,275	–687	373	2,647	4,638	1,106	5,744

1) Net profit for the period includes reclassifications of hedging reserves and historical exchange rate effects that were realised in profit/loss upon the sale of the disposal group of operations in the UK, amounting to SEK –206m net after tax.

2) For more information on share-based payments, see Hoist Finance Annual report 2022.

Condensed consolidated cash flow statement

SEK m	Quarter 3 2023	Quarter 3 2022	Jan-Sep 2023	Jan-Sep 2022	Full-year 2022
Profit/loss before tax	282	169	604	628	490
of which, paid-in interest	947	821	2,660	2,383	2,727
of which, interest paid	–189	–96	–437	–316	–562
Adjustment for other items not included in cash flow	–434	117	–463	–89	30
Realised result from divestment of shares and participations in joint ventures	2	–	3	–	3
Net profit/loss for the period attributable to discontinued operations	–	–17	–	–55	164
Income tax paid/received	–21	–23	–62	–59	–113
Amortisations on acquired loan portfolios	869	1,098	2,949	3,564	4,588
Increase/decrease in other assets and liabilities	241	537	–264	666	–1,318
Cash flow from operating activities	939	1,881	2,767	4,655	3,844
Acquired loan portfolios	–1,675	–342	–4,724	–4,161	–6,928
Disposed loan portfolios	–	–	574	–	–
Investments in bonds and other securities	–	–722	–	–1,124	–1,878
Divestments of bonds and other securities	276	101	2,361	1,254	1,254
Divested subsidiaries	–	–	–	–	500
Other cash flows from investing activities	137	–21	164	–2	–77
Cash flow from investing activities	–1,262	–984	–1,625	–4,033	–7,129
Deposits from the public	1,256	–270	762	–612	–452
Net lending attributable to discontinued operations	–	–	–	–	4,965
Debt securities issued	601	0	1,596	864	880
Repurchase and repayment of Debt securities issued	–	–19	–2,581	–896	–918
Additional Tier 1 capital	–474	–	–137	–	–
Interest paid on Additional Tier 1 capital	–62	–34	–127	–95	–95
Amortisation of lease liabilities	–13	–13	–38	–38	–50
Cash flow from financing activities	1,308	–336	–525	–777	4,330
Cash flow for the period	985	561	617	–154	1,045
Cash at beginning of the period	4,405	2,992	4,809	3,625	3,625
Translation difference	–69	10	–105	92	139
Cash at end of the period3)	5,321	3,563	5,321	3,563	4,809

3) Cash and cash equivalents in cash flow statement

SEK m	30 Sep 2023	30 Sep 2022	31 Dec 2022
Cash	0	0	0
Treasury bills and Treasury bonds	2,690	1,652	2,789
Lending to credit institutions	2,899	2,251	2,358
Excl. lending to credit institutions in securitisation vehicles	–268	–340	–338
Total cash and cash equivalents in cash flow statement	5,321	3,563	4,809

the CEO

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Parent Company

Parent Company condensed income statement

SEK m	Quarter 3 2023	Quarter 3 2022	Jan-Sep 2023	Jan-Sep 2022	Full-year 2022
Interest income	474	448	1,411	1,248	1,661
Interest expense	–198	–119	–517	–359	–513
Net interest income	276	329	894	889	1,148
Dividends received	358	–	358	–	–
Net result from financial transactions	42	83	–74	207	42
Other operating income	71	37	187	134	260
Total operating income	747	449	1,365	1,230	1,450
General administrative expenses	–410	–320	–1,245	–901	–1,307
Depreciation and amortisation of tangible and intangible assets	–12	–14	–36	–41	–55
Total operating expenses	–422	–334	–1,281	–942	–1,362
Profit before credit losses	325	115	84	288	88
Impairment gains and losses on acquired loan portfolios	–54	27	45	70	54
Amortisation of other financial fixed assets	0	0	0	–35	–36
Share of profit from joint ventures	154	17	185	56	65
Profit/loss before tax	425	159	314	379	171
Appropriations	0	0	0	0	60
Taxes	–86	–43	–11	–92	14
Net profit/loss	339	116	303	287	245

Parent company condensed statement of comprehensive income

SEK m	Quarter 3 2023	Quarter 3 2022	Jan-Sep 2023	Jan-Sep 2022	Full-year 2022
Net profit/loss	339	116	303	287	245
Other comprehensive income
Items that may be reclassified subsequently to profit or loss	1	0	1	0	0
Translation difference, foreign operations	0	0	0	0	0
Tax attributable to items that may be reclassified to profit or loss	0	0	0	0	–
Total items that may be reclassified subsequently to profit or loss	1	0	1	0	0
Other comprehensive income for the period	1	0	1	0	0
Total comprehensive income for the period	340	116	305	287	245

Parent Company condensed balance sheet

SEK m	30 Sep 2023	30 Sep 2022	31 Dec 2022
ASSETS
Cash	4,198	2,902	4,236
Portfolio book value	10,093	8,783	9,107
Value change of interest-hedged items in portfolio hedging	–	–	–
Receivables, Group companies	7,256	11,726	7,456
Bonds and other securities	1,752	3,327	4,094
Shares in subsidiaries and joint ventures	6,394	3,812	4,840
Tangible and intangible fixed assets	87	188	145
Other assets	1,695	509	692
TOTAL ASSETS	31,476	31,247	30,570
LIABILITIES AND EQUITY
Liabilities
Deposits from the public	19,835	18,198	18,581
Debt securities issued	3,965	4,982	5,053
Other liabilities	1,693	2,095	1,030
Provisions	53	36	36
Subordinated debts	917	872	903
Total liabilities and provisions	26,463	26,183	25,603
Untaxed reserves	225	285	225
Equity
Restricted equity	48	114	52
Total restricted equity	48	114	52
Non-restricted equity
Additional Tier 1 capital holders	1,109	1,106	1,106
Non-restricted equity attributable to shareholders	3,631	3,559	3,584
Total unrestricted equity	4,740	4,665	4,690
Total equity	4,788	4,779	4,742
TOTAL LIABILITIES AND EQUITY	31,476	31,247	30,570

Notes

Note 1 Accounting principles

This interim report was prepared in accordance with IAS 34, Interim Financial Reporting. The consolidated accounts were prepared in accordance with the International Financial Reporting Standards (IFRS) and interpretations thereof as adopted by the European Union. The accounting follows the Swedish Annual Accounts Act for Credit Institutions and Securities Companies (1995:1559) and the regulatory code issued by the Swedish Financial Supervisory Authority on Annual Reports in Credit Institutions and Securities Companies (FFFS 2008:25), including applicable amendments. The Swedish Financial Reporting Board's RFR 1, Supplementary Accounting Rules for Groups, has also been applied.

The Parent Company Hoist Finance AB (publ) prepares its interim reports in accordance with the Swedish Annual Accounts Act for Credit Institutions and Securities Companies (1995:1559) and the regulatory code issued by the Swedish Financial Supervisory Authority on Annual Reports in Credit Institutions and Securities Companies (FFFS 2008:25), including applicable amendments. The Swedish Financial Board's RFR 2, Accounting for Legal Entities, is also applied.

Change in accounting principles 2023

No IFRS or IFRIC Interpretations that came into effect in 2023 had any significant impact on the Group's financial reports or capital adequacy.

During second quarter 2023 the Parent Company, like the Group, expanded its management of fair value hedging to include interest rate risk on unsecured loan portfolios.

In all material respects, the Group's and Parent Company's accounting principles, bases for calculation and presentation remain unchanged from those applied in the 2022 annual report.

Critical estimates and judgements

Hoist Finance continuously monitors the development of the Group's loan portfolios and markets and the ways in which these are impacted by macroeconomic factors.

As regards developments in Ukraine, Hoist Finance's assessment is that this does not currently affect our business, as no operations are conducted in Ukraine or Russia.

While other macroeconomic factors such as inflation and higher interest rates have not had any impact on Hoist Finance's estimates and assessments to date, developments are being closely monitored to evaluate whether such factors may result in a decrease of our customers' ability to amortise their debt in the future. This might then affects the valuation of our credit portfolios.

There have been no changes to the previous estimates, assumptions and assessments presented in the 2022 Annual Report.

For Subsequent events according to IAS 34.16A, please see page 11.

Note 2 Exchange rates

	Quarter 3 2023	Quarter 3 2022	Full-year 2022
1 EUR = SEK
Income statement (average)	11.4667	10.5232	10.6232
Balance sheet (at end of the period)	11.4923	10.9177	11.1283
1 GBP = SEK
Income statement (average)	13.1670	12.4285	12.4639
Balance sheet (at end of the period)	13.2748	12.4071	12.5811

	Quarter 3 2023	Quarter 3 2022	Full-year 2022
1 PLN = SEK
Income statement (average)	2.5022	2.2542	2.2684
Balance sheet (at end of the period)	2.4805	2.2489	2.3741
1 RON=SEK
Income statement (average)	2.3241	2.1323	2.1541
Balance sheet (at end of the period)	2.3299	2.2060	2.2484

Statement by the CEO

Developments 2023

Note 3 Segment reporting

Operating segments

Segment reporting has been prepared based on the manner in which executive management monitors operations.

Unsecured has full responsibility for unsecured non-performing loans. Unsecured leads the transition from analogue to digital debt management and works with national markets and other business areas to ensure Hoist Finance's digital industry leadership. Unsecured is also responsible for customer relations services provided for unsecured NPLs.

Secured has full responsibility for secured non-performing loans, including recovery activities, call centre and collateral management. Non-credit impaired loan portfolios are included in this segment, as these also have collateral attached to the receivable.

The business lines' income statements follow the statutory account preparation for the Group's income statement for Total operating income, with the exception of interest expense. Interest expense is included in Net interest income in Total operating income and is allocated to the business lines based on acquired loan portfolio assets in relation to a fixed internal monthly interest rate for each portfolio. The difference between the external interest expense and internal funding cost is reported in Central functions.

Total operating expenses also follow the statutory account preparation for the Group's income statement, but are distributed between direct and indirect expenses. Direct expenses are expenses directly attributable to, while indirect expenses are expenses from central and support functions that are related to the business lines.

Group items pertains to revenue and expenses for the Group's corporate financial transactions, expenses for deposits from the public, and other operating expenses.

With respect to the balance sheet, only portfolio book value are monitored. Other assets and liabilities are not monitored on a segmentby-segment basis.

Income statement, Quarter 3, 2023

SEK m	Unsecured	Secured	Group items	Total continuing operations
Total operating income	578	185	153	916
of which, interest expense	–140	–62	–10	–212
Operating expenses
Direct expenses1)	–323	–66		–389
Indirect expenses1)			–304	–304
Total operating expenses	–323	–66	–304	–693
Share of profit from joint ventures	–59			–59
Profit/loss before tax	314	119	–151	282
Key ratios2)
Portfolio book value	16,219	7,615		23,834
Gross Collections	1,357	348		1,705

1) Direct expenses are expenses directly attributable to the Business line. Indirect expenses are expenses related to support functions, including Loan- and Asset management. 2) See Definitions

the CEO

Noter Statement by review Assurance Financial

Note 3 Segment reporting, cont.

Income statement, Quarter 3, 2022

				Total continuing
SEK m	Unsecured	Secured	Group items	operations
Total operating income	490	73	32	595
of which, interest expense	–142	–28	41	–129
Operating expenses
Direct expenses1)	–249	–33		–282
Indirect expenses1)			–240	–240
Total operating expenses	–249	–33	–240	–522
Share of profit from joint ventures	43			43
Profit/loss before tax	284	40	–208	115
Key ratios2)
Portfolio book value	14,818	4,552		19,370
Gross Collections	1,259	323		1,582

1) Direct expenses are expenses directly attributable to the Business line. Indirect expenses are expenses related to support functions, including Loan- and Asset management. 2) See Definitions

Income statement, Jan-Sep, 2023

SEK m	Unsecured	Secured	Group items	Total continuing operations
Total operating income	1,909	428	248	2,585
of which, interest expense	–401	–148	–11	–560
Operating expenses
Direct expenses1)	–983	–174		–1,157
Indirect expenses1)			–912	–912
Total operating expenses	–983	–174	–912	–2,069
Share of profit from joint ventures	88			88
Profit/loss before tax	1,014	254	–684	604
Key ratios2)
Portfolio book value	16,219	7,615		23,834
Gross Collections	4,271	1,066		5,337

1) Direct expenses are expenses directly attributable to the Business line. Indirect expenses are expenses related to support functions, including Loan- and Asset management. 2) See Definitions

Developments 2023

Noter Statement by review Assurance Financial

Note 3 Segment reporting, cont.

Income statement, Jan-Sep, 2022

				Total continuing
SEK m	Unsecured	Secured	Group items	operations
Total operating income	1,369	260	332	1,961
of which, interest expense	–416	–79	99	–396
Operating expenses
Direct expenses1)	–769	–103		–872
Indirect expenses1)			–665	–665
Total operating expenses	–769	–103	–665	–1,537
Share of profit from joint ventures	62			62
Profit/loss before tax	663	155	–333	486
Key ratios2)
Portfolio book value	14,818	4,552		19,370
Gross Collections	3,656	1,239		4,895

1) Direct expenses are expenses directly attributable to the Business line. Indirect expenses are expenses related to support functions, including Loan- and Asset management. 2) See Definitions.

Income statement, full-year, 2022

SEK m	Unsecured	Secured	Group items	Total continuing operations
Total operating income	1,804	352	458	2,613
of which, interest expense	–528	–112	79	–562
Operating expenses
Direct expenses1)	–1,120	–151		–1,271
Indirect expenses1)			–943	–943
Total operating expenses	–1,120	–151	–943	–2,214
Share of profit from joint ventures	91			91
Profit/loss before tax	775	201	–486	490
Key ratios2)
Portfolio book value	15,286	6,338		21,624
Gross Collections	5,004	1,571		6,575

1) Direct expenses are expenses directly attributable to the Business line. Indirect expenses are expenses related to support functions, including Loan- and Asset management. 2) See Definitions.

Note 4 Portfolio book value

Portfolio book value, 30 Sep 2023

Acquired credit-impaired loan portfolios

				Loss allowance
SEK m	Gross carrying amount	Stage 1 12MECL	Stage 2 LECL	Stage 3 LECL	POCI	Loss Allowance	Net carrying amount
Opening balance 1 Jan 2023	20,989				1	1	20,990
Acquisitions	4,540						4,540
Interest income	2,474						2,474
Gross collections	–5,337						–5,337
Impairment gains and losses					233	233	233
of which, realised collections against active forecast					459	459	459
of which, portfolio revaluations					–226	–226	–226
Disposals	–529
Translation differences	698				7	7	705
Closing balance 30 Sep 2023	22,835				241	241	23,076
Acquired performing loan portfolios
Opening balance 1 Jan 2023	640	–1	–1	–4		–6	634
Acquisitions	184						184
Interest income	53						53
Amortisations and interest payments	–139						–139
Changes in loss allowance	–	0	0	–1		–1	–1
Derecognitions	0	0	0	–		0	0
Translation differences	28	0	0	–1		–1	27
Closing balance 30 Sep 2023	766	–1	–1	–6		–8	758
Total closing balance 30 Sep 2023	23,601	–1	–1	–6	241	233	23,834

The performing loan portfolios follow the ECL model in accordance with IFRS 9 for write-downs based on changes in credit risk following first recognition under the 3-step model.

The non-performing loan portfolios are acquired at a price significantly below the nominal receivable and are classified from day one as

an acquired credit-impaired receivable. Accordingly, on day one the receivables are recognised at acquisition price with no additional ECL. Expected cash flow is continuously monitored pursuant to our revaluation policy and any new adjustments to cash flow that affect the value are booked against the accumulated reserve.

Developments 2023

Noter Statement by review Assurance Financial

Note 4 Portfolio book value, cont.

Portfolio book value, 30 Sep 2022

Acquired credit-impaired loan portfolios

	Loss allowance
SEK m	Gross carrying amount	Portfolio book value related to the disposal group, Gross carrying amount	Stage 1 12MECL	Stage 2 LECL	Stage 3 LECL	POCI	Portfolio book value related to the disposal group, POCI	Loss Allowance, continuing operations	Net carrying amount, continuing operations
Opening balance 1 Jan 2022	21,111	–4,587				–470	423	–47	16,477
Acquisitions	4,161								4,161
Interest income	2,323	–413							1,910
Gross collections	–5,819	943							–4,876
Impairment gains and losses						103	16	119	119
of which, realised collections against active forecast						453	19	472	472
of which, portfolio revaluations						–350	–3	–353	–353
Disposals
Translation differences	1,061	–105				–25	8	–17	939
Closing balance 30 Sep 2022	22,837	–4,162				–392	447	55	18,730
Acquired performing loan portfolios
Opening balance 1 Jan 2022	702		–1	–1	–4			–6	696
Interest income	47		–	–	–			–	47
Amortisations and interest payments	–115		–	–	–			–	115
Changes in loss allowance	0		0	0	–1			–1	–1
Derecognitions	–1		–	–	–			–	–1
Translation differences	14		0	0	0			–	14
Closing balance 30 Sep 2022	647		–1	–1	–5			–7	640
Total closing balance 30 Sep 2022	23,484		–4,162	–1	–5	–392	447	48	19,370

Note 4 Portfolio book value, cont.

Portfolio book value, 31 Dec 2022

Acquired credit-impaired loan portfolios

	Loss allowance
SEK m	Gross carrying amount	Portfolio book value related to the disposal group, Gross carrying amount	Stage 1 12MECL	Stage 2 LECL	Stage 3 LECL	POCI	Portfolio book value related to the disposal group, POCI	Loss Allowance, continuing operations	Net carrying amount, continuing operations
Opening balance 1 Jan 2022	21,111	–4,587				–470	423	–46	16,477
Acquisitions	6,928								6,928
Interest income	3,028	–413							2,615
Gross collections	–7,520	945							–6,575
Impairment gains and losses						37	16	53	53
of which, realised collections against active forecast						524	19	543	543
of which, portfolio revaluations						–487	–3	–490	–490
Disposals1)	–4,163	4,163				447	–447	0	0
Translation differences	1,605	–108				–13	8	–5	1,492
Closing balance 31 Dec 2022	20,989	0				1	0	1	20,990
Acquired performing loan portfolios
Opening balance 1 Jan 2022	702		–1	–1	–4			–6	696
Interest income	63								63
Amortisations and interest payments	–159								–159
Changes in loss allowance	–		0	0	0			0	0
Derecognitions	–1		–	–	–			–	–1
Translation differences	35		0	0	0			0	35
Closing balance 31 Dec 2022	640		–1	–1	–4			–6	634
Total closing balance 31 Dec 2022	21,629	0	–1	–1	–4	1	0	–5	21,624

1) Disposal of Acquired credit-impaired loan portfolios refers to sold disposal group of operations in the UK.

the CEO

Developments 2023

Noter Statement by review Assurance Financial

Note 5 Financial instruments

Carrying amount and fair value of financial instruments, 30 Sep 20231)

SEK m	Assets/liabilities recognised at fair value through profit or loss	Hedging instruments	Amortised cost	Total carrying amount	Fair value
Cash	–	–	0	0	0
Treasury bills and treasury bonds	2,690	–	–	2,690	2,690
Lending to credit institutions	–	–	2,899	2,899	2,899
Lending to the public	–	–	1	1	1
Portfolio book value	–	–	23,834	23,834	23,884
Bonds and other securities	1,752	–	–	1,752	1,752
Derivatives	36	249	–	–	285
Other financial assets	–	–	1,341	1,341	1,341
Total	4,478	249	28,075	32,802	32,852
Deposits from the public	–	–	19,835	19,835	19 560
Derivatives	8	84	–	92	92
Debt securities issued	–	–	4,468	4,468	4,465
Subordinated debt	–	–	917	917	855
Other financial debts	–	–	2,290	2,290	2,290
Total	8	84	27,510	27,602	27,262

1) Derivatives recognised as hedging instruments is valued at fair value through income statement and other comprehensive income to the extent that the hedge is effective.

Carrying amount and fair value of financial instruments, 30 Sep 20221)

SEK m	Assets/liabilities recognised at fair value through profit or loss	Hedging instruments	Amortised cost	Total carrying amount	Fair value
Cash	–	–	0	0	0
Treasury bills and treasury bonds	1,652	–	–	1,652	1,652
Lending to credit institutions	–	–	2,013	2,013	2,013
Lending to the public	–	–	2	2	2
Portfolio book value	–	–	19,370	19,370	20,144
Bonds and other securities	3,327	–	–	3,327	3,327
Derivatives	304	34	–	338	338
Other financial assets	–	–	174	174	174
Total	5,283	34	21,559	26,876	27,650
Deposits from the public	–	–	18,198	18,198	18,223
Derivatives	19	134	–	153	153
Debt securities issued	–	–	5,476	5,476	5,419
Subordinated debt	–	–	871	871	781
Other financial debts	–	–	1,227	1,227	1,227
Total	19	134	25,772	25,925	25,803

1) Derivatives recognised as hedging instruments is valued at fair value through other comprehensive income to the extent that the hedge is effective.

the CEO

Developments 2023

Noter Statement by review Assurance Financial

Quarterly

Note 5 Financial instruments, cont.

Carrying amount and fair value of financial instruments, 31 Dec 20221)

SEK m	Assets/liabilities recognised at fair value through profit or loss	Hedging instruments	Amortised cost	Total carrying amount	Fair value
Cash	–	–	0	0	0
Treasury bills and treasury bonds	2,789	–	–	2,789	2,789
Lending to credit institutions	–	–	2,358	2,358	2,358
Lending to the public	–	–	1	1	1
Portfolio book value	–	–	21,624	21,624	24,261
Bonds and other securities	4,094	–	–	4,094	4,094
Derivatives	32	134	–	166	166
Other financial assets	–	–	504	504	504
Total	6,915	134	24,487	31,536	34,173
Deposits from the public	–	–	18,581	18,581	18,332
Derivatives	23	151	–	174	174
Debt securities issued	–	–	5,545	5,545	5,372
Subordinated debt	–	–	903	903	845
Other financial debts	–	–	1,253	1,253	1,253
Total	23	151	26,282	26,456	25,976

1) Derivatives recognised as hedging instruments is valued at fair value through other comprehensive income to the extent that the hedge is effective.

Fair value measurement

Group

The Group uses observable data to the greatest possible extent when determining the fair value of an asset or liability. Fair values are categorised in different levels based on the input data used in the measurement approach, as per the following

Level 1) Quoted prices (unadjusted) on active markets for identical instruments.

Level 2) Based on directly or indirectly observable market inputs not included in Level 1. This category includes instruments valued based on quoted prices on active markets for similar instruments, quoted prices for identical or similar instruments traded on markets that are not active, or other valuation techniques in which all important input data is directly or indirectly observable in the market.

Level 3) According to inputs that are not based on observable market data. This category includes all instruments for which the valuation technique is based on data that is not observable and has a substantial impact on the valuation.

Fair value measurements, 30 Sep 2023

SEK m	Level 1	Level 2	Level 3	Total
Treasury bills and Treasury bonds	2,690	–	–	2,690
Bonds and other securities	1,752	–	–	1,752
Derivatives	–	285		285
Total assets	4,442	285	–	4,727
Derivatives	–	92	–	92
Total liabilities	–	92	–	92

Fair value measurements, 31 Dec 2022

SEK m	Level 1	Level 2	Level 3	Total
Treasury bills and Treasury bonds	2,789	–	–	2,789
Bonds and other securities	4,094	–	–	4,094
Derivatives	–	166	–	166
Total assets	6,883	165	–	7,049
Derivatives	–	174	–	174
Total liabilities	–	174	–	174

Fair value measurements, 30 Sep 2022

SEK m	Level 1	Level 2	Level 3	Total
Treasury bills and Treasury bonds	1,652	–	–	1,652
Bonds and other securities	3,327	–	–	3,327
Derivatives	–	338	–	338
Total assets	4,979			5,317
Derivatives	–	153	–	153
Total liabilities	–	153	–	153

the CEO

Developments 2023

Noter Statement by review Assurance Financial statements Notes Definitions About

Quarterly

Note 6 Capital adequacy

The information in this Note includes information that is required to be disclosed pursuant to FFFS 2008:25, including applicable amendments, regarding annual reports for credit institutions and FFFS 2014:12, including applicable amendments, concerning supervisory requirements and capital buffers. The information refers to the Hoist Finance AB (publ) consolidated situation.

The Company's statutory capital requirements are determined primarily by Regulation (EU) No 575/2013 of the European Parliament and of the Council and the Capital Buffers Act (SFS 2014:966).

The difference between the consolidated accounts and the consolidated situation for capital adequacy purposes is as follows. Joint ventures are consolidated with the equity method in the consolidated accounts, whereas the proportional method is used for the consolidated situation. Securitised assets are recognised in the consolidated accounts but are removed from the accounting records for the consolidated situation.

Hoist Finance's participating interest in the securitised assets is always covered.

Internally assessed capital requirement

As per 30 September 2023 the internally assessed capital requirement was SEK 2,770m (SEK 2,569m per 31 December 2022), of which SEK 344m (464) was attributable to Pillar 2. For more information regarding Pillar 2 risks, see Hoist Finance's Pillar 3 report.

SEK m		Quarter 3 2023	Quarter 2 2023	Quarter 1 2023	Quarter 4 2022	Quarter 3 2022
	Available own funds (amounts)
1	Common Equity Tier 1 (CET1) capital	4,202	4,157	4,156	4,172	3,471
2	Tier 1 capital	5,311	5,267	5,263	5,278	4,578
3	Total capital	6,228	6,255	6,193	6,181	5,449
	Risk-weighted exposure amounts
4	Total risk exposure amount	30,326	28,178	27,686	26,313	28,376
	Capital ratios (as a percentage of risk-weighted exposure amount)
5	Common Equity Tier 1 ratio (%)	13.86	14.75	15.01	15.85	12.23
6	Tier 1 ratio (%)	17.51	18.69	19.01	20.06	16.13
7	Total capital ratio (%)	20.54	22.20	22.37	23.49	19.20
	Additional own funds requirements to address risks other than the risk of excessive leverage (as a percentage of risk-weighted exposure amount)
	EU 7a Additional own funds requirements to address risks other than the risk of excessive leverage (%)	–	–	–	–	–
	EU 7b of which: to be made up of CET1 capital (percentage points)	–	–	–	–	–
	EU 7c of which: to be made up of Tier 1 capital (percentage points)	–	–	–	–	–
	EU 7d Total SREP own funds requirements (%)	8	8	8	8	8
amount)	Combined buffer and overall capital requirement (as a percentage of risk-weighted exposure
8	Capital conservation buffer (%)	2.5	2.5	2.5	2.5	2.5
	EU 8a Conservation buffer due to macro-prudential or systemic risk identified at the level of a Member State (%)	0	0	0	0	0
9	Institution specific countercyclical capital buffer (%)	0.46	0.38	0.23	0.10	0.03
	EU 9a Systemic risk buffer (%)	0	0	0	0	0
10	Global Systemically Important Institution buffer (%)	0	0	0	0	0
	EU 10a Other Systemically Important Institution buffer (%)	0	0	0	0	0
11	Combined buffer requirement (%)	2.96	2.88	2.73	2.60	2.53
	EU 11a Overall capital requirements (%)	10.96	10.88	10.73	10.60	10.53
12	CET1 available after meeting the total SREP own funds requirements (%)	5.86	6.75	7.01	7.85	4.23

the CEO

Developments 2023

Quarterly

Noter Statement by review Assurance Financial statements Notes Definitions About

Note 6 Capital adequacy, cont

SEK m		Quarter 3 2023	Quarter 2 2023	Quarter 1 2023	Quarter 4 2022	Quarter 3 2022
	Leverage ratio
13	Total exposure measure	33,259	31,176	31,277	31,433	31,671
14	Leverage ratio (%)	15.97	16.90	16.83	16.79	14.45
Additional own funds requirements to address the risk of excessive leverage (as a percentage of total exposure measure)
EU 14a Additional own funds requirements to address the risk of excessive leverage (%)		0	0	0	0	0
EU 14bof which: to be made up of CET1 capital (percentage points)		0.00 pp	0.00 pp	0.00 pp	0.00 pp	0.00 pp
EU 14c Total SREP leverage ratio requirements (%)		3	3	3	3	3
	Leverage ratio buffer and overall leverage ratio requirement (as a percentage of total exposure measure)
EU 14dLeverage ratio buffer requirement (%)		0	0	0	0	0
EU 14e Overall leverage ratio requirement (%)		3	3	3	3	3
	Liquidity Coverage Ratio
15	Total high-quality liquid assets (HQLA) (Weighted value -average)	4,400	4,586	4,760	4,963	4,314
EU 16a Cash outflows – Total weighted value		2,355	2,210	2,241	2,252	2,216
EU 16b Cash inflows – Total weighted value		3,708	2,907	2,759	2,526	2,221
16	Total net cash outflows (adjusted value)	589	553	601	604	595
17	Liquidity coverage ratio (%)	772	844	844	879	767
	Net Stable Funding Ratio
18	Total available stable funding	30,352	29,607	27,585	27,094	27,588
19	Total required stable funding	26,929	26,161	25,046	23,356	24,770
20	NSFR ratio (%)	113	113	110	116	111

Note 7 Liquidity risk

This note provides information required to be disclosed under the provisions of FFFS 2010:7, including applicable amendments, regarding the management of liquidity risks in credit institutions and investment firms.

Liquidity risk is the risk of difficulties in obtaining funding, and thus not being able to meet payment obligations at maturity without a significant increase in the cost of obtaining means of payment.

Because the Group's revenues and expenses are relatively stable, liquidity risk is primarily associated with the Group's funding which is based on deposits from the public. By definition this way of funding has a risk of major outflows of deposits at short notice. The overall objective of the Group's liquidity management is to ensure that the Group maintains control over its liquidity risk situation, with sufficient funds in liquid assets or immediately saleable assets to ensure timely discharge of its payment obligations without incurring high additional costs.

Funding is mainly raised in the form of deposits from the public and through the capital markets through the issuance of senior unsecured debts, own funds instruments and equity. 40% (42) of deposits from

the public are payable on demand (current account – "flex"), while 60% (58) of the Group's deposits from the public are locked into longer maturities (fixed-term deposits) ranging from one to five years. About 99% of deposits are fully covered by the Swedish state deposit guarantee.

Funding

	consolidated situation	Hoist Finance	Hoist Finance AB (publ)
SEK m	30 Sep 2023	31 Dec 2022	30 Sep 2023	31 Dec 2022
Current account deposits	7,971	7,810	7,971	7,810
Fixed-term deposits	11,864	10,772	11,864	10,772
Debt securities issued	4,468	5,545	3,964	5,053
Convertible debt instruments	1,109	1,106	1,109	1,106
Subordinated debts	917	903	917	903
Equity	4,824	4,639	3,680	3,637
Other	2,639	1,724	1,971	1,289
Balance sheet total	33,792	32,499	31,476	30,570

Developments 2023

Note 7 Liquidity risk, cont.

The Group's Treasury Policy specifies a limit and a target level for the amount of available liquidity and its nature. Available liquidity totalled SEK 7,064m (8,897) as per 30 September 2023, exceeding the limit and the target level by a significant margin.

Hoist Finance's liquidity reserve, presented below pursuant to the Swedish Banker's Association's template, primarily comprises bonds issued by the Swedish government and Swedish municipalities, as well as covered bonds.

Liquidity reserve, Hoist Finance consolidated situation

SEK m	30 Sep 2023	31 Dec 2022
Cash and holdings in central banks	0	0
Deposits in other banks available overnight	2,623	2,014
Securities issued or guaranteed by sovereigns, central banks or multilateral development banks	2,073	1,644
Securities issued or guaranteed by municipalities or other public sector entities	616	1,145
Covered bonds	1,752	4,094
Securities issued by non-financial corporates	–	–
Securities issued by financial corporates	–	–
Other	–	–
Total	7,064	8,897

Hoist Finance has a liquidity contingency plan for managing liquidity risk. This identifies specific events that may trigger the contingency plan and require actions to be taken.

Note 8 Pledges, contingent liabilities and commitments

Group			Parent Company
SEK m	30 Sep 2023	31 Dec 2022	30 Sep 2023	31 Dec 2022
Restricted bank balances	2	2	–	–
Acquired portfolios in the securitisation structures	2,940	949	–	–
Pledged assets	2,942	952	–	–
Contingent liabilities	105	105	105	105
Forward flow contracts	510	79	510	79
Signed but not settled acquisitions	437	–	437	–
Commitments	947	79	947	79

Pledged assets in the Group pertain to restricted bank balances and the value of portfolios pledged as collateral for issued bonds in securitisation structures Marathon SPV S.r.l. and Giove SPV S.r.l. As from third quarter 2023, the entire portfolio value is recognised as a pledged asset.

The Group's commitments consist of forward flow contracts and portfolio acquisitions that are signed but not yet settled. In forward flow contracts, a pre-determined volume (fixed or range) of NPLs is acquired at a pre-defined price during a certain time period.

The Group's contingent liability originates from two separate VAT cases. The Swedish Tax Agency has issued its decision in one case, and Hoist Finance expects it may take up to 2–3 years before the issue is finally settled in court. We have received a first instance judgment in the other case, and Hoist Finance expects it may take approximately 2–3 years before the issue is finally resolved. For both cases, Hoist Finance considers it more likely that Hoist Finance will prevail in court and, accordingly, no provision has been made.

Developments 2023

review Assurance Financial

Quarterly

Assurance

The Board of Directors and the CEO hereby give their assurance that the interim report provide a true and fair view of the business activities, financial position and results of operations of the Group and the Parent Company, and describes the significant risks and uncertainties to which the Parent Company and Group companies are exposed.

Stockholm October 26 2023

Lars Wollung Chairman of the Board

Bengt Edholm Board member Camilla Philipson Watz Board member

Christopher Rees Board member

Rickard Westlund Board member

Peter Zonabend Board member

Harry Vranjes Chief Executive Officer

Developments 2023

review Assurance Financial

Quarterly

Notes

Definitions – including Alternative Performance Measures

Alternative performance measures

Alternative performance measures (APMs) are financial measures of past or future earnings trends, financial position or cash flow that are not defined in the applicable accounting regulatory framework (IFRS), in the Capital Requirements Directive (CRD IV), or in the EU's Capital Requirement Regulation number 575/2013 (CRR). APMs are used by Hoist Finance, along with other financial measures, when relevant for monitoring and describing the financial situation and for providing additional useful information to users of the financial statements. These measures

Performance measures according to IFRS and other legislation

Average number of employees

Average number of employees during the year converted to full-time posts (FTEs). The calculation is based on the total average number of FTEs per month divided by the year's twelve months.

Basic earnings per share

Net profit for the year, adjusted for interest on capital instruments recorded in equity, divided by the weighted average number of outstanding shares.

Diluted earnings per share

Net profit for the year, adjusted for interest on capital instruments recorded in equity, divided by the weighted average number of outstanding shares after full dilution.

Return on assets (only presented yearly in accordance with FFFS 2008:25) Net result for the year as a percentage of total assets at the end of the year.

Weighted average number of shares outstanding

Weighted number of shares outstanding plus potential dilutive effect of warrants outstanding.

Alternative Performance Measures

Adjusted profit before tax

Profit before tax adjusted for rejuvenation costs / IACs and normalised capitalisation levels.

Cash EBITDA

EBIT (operating earnings), less depreciation and amortisation ("EBITDA") adjusted for net of collections and interest income from acquired loan portfolios.

C/I ratio

Total operating expenses in relation to Total operating income and Share of profit from joint ventures.

are not directly comparable with similar performance measures that are presented by other companies. C/I ratio, Return on equity, and Cash EBITDA are alternative performance measures that provide information on Hoist Finance's profitability. "Estimated Remaining Collections" is Hoist Finance's estimate of the gross amount that can be collected on portfolio book value. Definitions of alternative performance measures and other key figures are presented below. The financial fact book, available on hoistfinance.com/Investors/reports-and-presentations2/, provides details on the calculation of key figures.

Direct contribution

Direct contribution is the sum of total operating income minus direct costs directly attributable to each business line.

Fee and commission income

Fees for providing debt management services to third parties.

Gross 180-months ERC

"Estimated Remaining Collections" – the company's estimate of the gross amount that can be collected on the loan portfolios currently owned by the company. The assessment is based on estimates for each loan portfolio and extends from the following month through the coming 180 months. The estimate for each loan portfolio is based on the company's extensive experience in processing and collecting over the portfolio's entire economic life.

Internal funding

The internal funding cost is determined per portfolio applying the following monthly interest rate: (1+annual interest)^(1/12)–1.

Items affecting comparability

Items that interfere with comparison due to the irregularity of their occurrence and/or size as compared with other items.

Legal collection

Legal collections relate to the cash received following the initiation of Hoist Finance's litigation process. This process assesses customers' solvency and follows regulatory and legal requirements.

Normalised return on equity

Return on equity adjusted for rejuvenation costs / IACs and normalised capitalisation levels.

Portfolio acquisitions

Portfolio book value during the period that consists of defaulted and non-defaulted consumer loans and SME loans.

Portfolio book value

An acquired loan portfolio consists of a number of defaulted consumer loans or debts and SME loans that arise from the same originator.

Statement by the CEO

Developments 2023

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Quarterly

Notes

Portfolio revaluation

Changes in the portfolio value based on revised estimated remaining collections for the portfolio.

Return on equity

Net profit for the period adjusted for accrued unpaid interest on AT1 capital calculated on annualised basis, divided by equity adjusted for AT1 capital reported in equity, calculated as an average for the year based on a quarterly basis.

Definitions – According to the EU Capital Requirements Regulation no 575/2013 (CRR)

Additional Tier 1 capital

Capital instruments and associated share premium reserves that fulfil the requirements of Regulation (EU) 575/2013 of the European Parliament and the Council and that may accordingly be included in the Tier 1 capital.

Capital requirements – Pillar 1

Minimum capital requirements for credit risk, market risk and operational risk.

Capital requirements – Pillar 2

Capital requirements beyond those stipulated in Pillar 1.

Common Equity Tier 1

Capital instruments and associated share premium reserves that fulfil the requirements of Regulation (EU) 575/2013 of the European Parliament and the Council, and other equity items that may be included in CET1 capital, less regulatory dividend deduction and deductions for items such as goodwill and deferred tax assets.

Common Equity Tier 1 ratio

Common Equity Tier 1 in relation to total risk exposure amount.

Leverage ratio

An institution's total exposure measure in relation to Tier 1 capital.

Liquidity coverage ratio (LCR)

A mandatory requirement for banks within the EU, whereby an institution must hold a sufficiently large buffer of liquid assets to be able to withstand actual and simulated cash outflows for a period of 30 days while experiencing heavy liquidity stress.

Liquidity reserve

Hoist Finance's liquidity reserve is a reserve of high-quality liquid assets which is used to carry out planned acquisitions of loan portfolios and to secure the Company's short term capacity to meet payment obligations in the event of lost or impaired access to regularly available funding sources.

Net stable funding ratio (NSFR)

Measures an institution's amount of available stable funding to cover its required stable funding under normal and stressed conditions in a oneyear perspective.

Own funds

Sum of Tier 1 capital and Tier 2 capital.

Risk-weighted exposure amount

The risk weight of each exposure multiplied by the exposure amount.

Tier 1 capital

The sum of CET1 capital and AT1 capital.

Tier 1 capital ratio

Tier 1 capital as a percentage of the total risk exposure amount.

Tier 2 capital

Capital instruments and associated share premium reserves that the requirements of Regulation (EU) 575/2013 of the European Parliament and the Council and that may accordingly be included in the funds.

Total capital ratio

Own funds as a percentage of the total risk exposure amount.

Non-Financial Definitions

Non-performing loans (NPLs)

A loan that is deemed to cause probable credit losses including individually assessed impaired loans, portfolio assessed loans past due more than 60 days and restructured portfolio assessed loans. Hoist Finance primarily purchases loans that are credit-impaired on initial recognition.

Number of employees (FTEs)

Number of employees at the end of the period converted to full-time posts (FTEs).

SME

A company that employs fewer than 250 people and has either annual turnover of EUR 50m or less or a balance sheet total of EUR 43m or less.

Timing effect

A revaluation driven by changing the cash forecast to reflect cash already received and/or changes to when assets still expected to be collected are amortised.

Developments 2023

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About Hoist Finance

Hoist Finance is an asset manager specialised in non-performing loans. For more than 25 years, we have focused on investing in and managing debt portfolios. We are a partner to international banks and financial institutions across Europe, acquiring non-performing loan portfolios. We are also a partner to consumers and SMEs in a debt situation, creating longterm sustainable repayment plans enabling them to convert non-performing debt to performing debt. We are present in 13 markets across Europe and our shares are listed on Nasdaq Stockholm. For more information, please visit hoistfinance.com.

Financial calendar

Year-end report 2023	February 7, 2024
Annual Report 2023	March 22, 2024
Interim report Q1 2024	May 3, 2024
Annual General Meeting 2024	May 7, 2024
Interim report Q2 2024	July 26, 2024
Interim report Q3 2024	October 25, 2024
Year-end report 2024	February 7, 2025

Contact

Christian Wallentin, CFO & deputy CEO Email: ir@hoistfinance.com Ph: +46 8 55 51 77 90

The interim report and investor presentation are available at www.hoistfinance.com

Presentation

A combined presentation and teleconference will be held on 27 October at 09:30 AM (CEST). If you wish to participate via webcast please use the link below. https://ir.financialhearings.com/hoist-finance-q3-2023

If you wish to participate via teleconference, please register on the link below. After registration you will be provided a phone number and a conference ID to access the conference. You can ask questions verbally via the teleconference. https://conference.financialhearings.com/teleconference/?id=5005817

Additional financial information and pillar 3 disclosures are available in Hoist Finance Fact Book which is published quarterly on https://www.hoistfinance.com/investors/

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 and the Securities Market Act. This information was submitted for publication through the agency of the contact person set out above, on 27 October 2023, 07.30 AM (CEST).

Every care has been taken in the translation of this report. In the event of any discrepancy, the Swedish original will supersede the English translation. Every care has been taken in the translation of this report. In the event of any discrepancy, the Swedish original will supersede the English translation.

CEO Developments Quarterly Financial comments 2023 Review		Assurance
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