Quarterly Report • Oct 25, 2018
Quarterly Report
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Figures in brackets refer to the third quarter of 2017 for profit comparisons and to 31 December 2017 closing balance for balance sheet items.
Hoist Finance entered into an agreement to acquire the operations in the Italian credit management companies of Maran Group, thereby broadening its offer to the Italian banking sector.
Hoist Finance AB (publ) (the "Company" or the "Parent") is the parent company of the Hoist Finance group of companies ("Hoist Finance"). The company is a regulated credit market company. Hence, Hoist Finance produces financial statements in accordance with the Swedish Annual Accounts Act for Credit Institutions and Securities Companies.
The information in this interim report has been published by Hoist Finance AB (publ) pursuant to the EU Market Abuse Regulation. This information was submitted by Michel Fischier for publication on 25 October 2018 at 8:00 AM CET.
Hoist Finance continues to enjoy a positive market outlook. The European banking sector is still working to reduce their Non Performing Exposures (NPE). In 2017, distressed debt amounted to EUR 900 billion or about five per cent of all outstanding loans. The level of Non-Performing Loans (NPL) is still more than two times higher than what was the level before the financial crises 10 years ago. Even though both European regulators and changes in accounting principles have required banks to recognize non-performing loans earlier and to reduce their exposures, in reality the NPL-reduction has progressed at a slow pace. Hence, looking ahead we see strong underlying dynamics in favour of the services that Hoist Finance provide.
Hoist Finance offers value added services to banks in Europe by reducing tied-up capital and enabling them to focus on their core banking business. Through our amicable approach to collections we offer our customers support and a way forward to settle their debt and to re-enter the financial ecosystem. In many ways, the latter is even more important than the former. Our customers remain with Hoist Finance, typically for up to 10 years. Our "licence to operate" is to ensure that collection practices always have the customers best interest in mind. Recovering NPLs through payment plans and negotiations requires a longterm perspective, analytics, highly qualified agents and a values-based approach. We are proud to progress towards our vision; "helping people keep their commitments". By always striving to do our work slightly better, we also increase our relevance and importance of being a trusted partner to other banks in our markets.
In the quarter we have seen continued strong growth with SEK 2,606 million in portfolio acquisitions. Equally important is that we are making headway with our expansion into new asset classes, with acquisitions of secured non-performing loan portfolios in France and Italy and performing loans in Germany and the UK during the quarter. The expansion into new asset classes follows a period of building up capacity, both in terms of competence and systems, which now allows us to enter other asset classes in a disciplined way. This ongoing broadening of our product offering provides significant intangible benefits as it increases our reliability as a one-stop partner to banks and financial institutions. We expect that portfolios in the performing, mortgage, and secured space will be an increasingly important ingredient in our business mix going forward.
On October 11 we announced that we entered into an agreement to acquire Maran, a reputable servicer in Italy with longstanding relationships with important institutions in the Italian market. We are pleased to expand both our capacity and offering in one of the most important markets in Europe.
Looking ahead we also see acquisition and consolidation opportunities in other countries, for example in the Polish market where we intend to place a firm bid for assets held by the company GetBack.
After 6 months of intense efforts to increase operational efficiency we are now beginning to see some positive signs. Two important contributors to this development have been the site consolidations in Germany and the UK, where the accelerated shut-down of our site in Bremen and consolidation to Duisburg, enabled expected cost savings to materialise in Q3, as opposed to Q4 as initially expected. The consolidation of all our UK operations to Manchester is another major step in the right direction. Our self-service platform in the UK is delivering above our expectations, and now approximately 25 percentage of monthly collections comes through this digital channel. The roll-out of our Hoist Finance standardized solution to other markets continues.
The strong portfolio growth over the last 12 months combined with our initial steps towards an increased operational efficiency is now starting to show in bottom-line profitability.
Excluding the item affecting comparability, profit before tax amounted to SEK 201 million, an increase of 10 percentage compared to the same quarter last year. Looking ahead we will continue on our growth journey as well as improve our efficiency and improve our cost/income ratio.
The strong market outlook offering portfolio investment opportunities at attractive returns has also prompted us to strengthen our financial position to finance larger portfolio investments. To finance future larger portfolio investments or acquisitions of companies we made a directed share issue of SEK 568 million during the quarter. We also issued EUR 250 million of 4.5-year senior unsecured notes at attractive terms, following the tender of our senior unsecured. The transaction improves our maturity profile as well as our preparedness to capture further growth in our markets.
Furthermore we entered into a revolving credit facility amounting to 150 MEUR. With a solid and diversified funding structure, with a stable base of retail deposits at its core, we are now better equipped than ever to pursue our growth agenda.
I am very pleased that the whole Executive Management Team now is in place in advance of our Capital Markets Day on the 15th of November. Since I joined on the 15th of March, it has been a very high priority to build a very competent and professional management team in Hoist Finance, and I am very pleased that Björn Hoffmeyer joined us as our new COO during the third quarter and that Viktoria Aastrup started as our Head of Business Development and Communication in October.
I am convinced that we now have the right team in place to deliver on our goals, and we are all looking forward to welcoming investors, financial analysts and media to our Capital Markets Day in Stockholm. Here we will have the opportunity to go into further detail on our view of the market, our strategy, operations and financial targets, as well as provide a chance to getting to know the members of our management team.
While we already see some positive effects of cost saving in the third quarter numbers, the management team and I remain committed to a continued high activity on all fronts to bring down costs, capture growth and increase efficiency on all levels going forward.
Klaus-Anders Nysteen
CEO Hoist Finance AB (publ)
| SEK million | Quarter 3 2018 |
Quarter 3 2017 |
Change, % |
Jan–Sep 2018 |
Jan–Sep 2017 |
Change, % |
Full year 2017 |
|---|---|---|---|---|---|---|---|
| Total operating income | 731 | 589 | 24 | 2,063 | 1,723 | 20 | 2,365 |
| Profit before tax | 243 | 182 | 33 | 569 | 472 | 21 | 581 |
| Net profit | 182 | 145 | 25 | 425 | 368 | 16 | 453 |
| Basic earnings per share, SEK | 1.87 | 1.68 | 11 | 4.33 | 4.18 | 4 | 5.10 |
| Diluted earnings per share, SEK1) | 1.87 | 1.68 | 11 | 4.33 | 4.17 | 4 | 5.09 |
| Net interest income margin, %2) | 14 | 14 | |||||
| C/I ratio, %3) | 67 | 70 | –3 pp | 73 | 73 | 0 | 76 |
| EBIT margin, % | 37 | 37 | 0 pp | 34 | 37 | –3 pp | 34 |
| Return on equity, %4) | 20 | 20 | 0 pp | 16 | 17 | –1 pp | 15 |
| Portfolio acquisitions | 2,5465) | 781 | >100 pp | 5,791 | 2 178 | >100 pp | 4,253 |
| SEK million | 30 Sep 2018 |
31 Dec 2017 |
Change, % |
|---|---|---|---|
| Carrying value of acquired loans | 19,189 | 14,766 | 30 |
| Gross 180-month ERC6),7) | 30,676 | ||
| Gross 120-month ERC6) | 28,178 | 23,991 | 17 |
| Total capital ratio, % | 17.19 | 17.71 | –0.5 pp |
| CET1 ratio, % | 10.79 | 11.70 | –0.9 pp |
| Liquidity reserve | 7,334 | 6,800 | 8 |
| Number of employees (FTEs) | 1,366 | 1,335 | 2 |
1) Comparative period includes effect of outstanding warrants. Following the 1:3 share split conducted in 2015, each warrant entitles the holder to subscribe for three new shares.
2) New key ratio as of 2018; see Definitions for calculation of Net interest income margin. As the calculation of Net interest income differs between IFRS 9 and IAS 39, comparative figures for Net interest income margin have not been calculated. 3) New key ratio as of 2018; see Definitions for calculation of C/I ratio.
4) The definition of Return on equity has changed from 1 January 2018; see Definitions. Comparative figures have been adjusted for all periods in 2017.
5) The acquisition price of a performing loan portfolio in Poland, acquired during Q2, was adjusted downward by SEK 60 million.
6) Excluding run-off consumer loan portfolio, performing loan portfolios, and portfolios held in the Polish joint venture. 7) From 1 January 2018, Hoist Finance has elected to extend the future cash flow forecast horizon for acquired loan portfolios to 180 months, as compared with the previous horizon of 120 months. Comparative figures have not been restated.
8) Excluding issue of new share capital in September 2018.
Unless otherwise indicated, all comparative market, financial and operational information refers to third quarter 2017.
Interest income from acquired loan portfolios for the second quarter totalled SEK 718 million. As previously reported, net revenues from acquired loan portfolios were calculated as gross collections from acquired loan portfolios less portfolio amortisation and revaluation. These revenues totalled SEK 634 million for the comparative quarter; this figure includes the effects of actual collections exceeding projected collections and of portfolio revaluations. As of 1 January 2018, portfolio revaluations are recognised in income statement item Impairment gains and losses, after Net interest income.
Other interest income amounted to SEK –3 million (–3). Interest expense for the quarter increased to SEK –93 million (–68), with the continued strong portfolio growth enabled in large part through debt financing. Deposits from the public volumes remain relatively unchanged, with continued inflows from the German market offset by outflows from the Swedish market.
Impairment gains and losses totalled SEK 51 million. SEK –21 million of this amount is attributable to portfolio revaluations resulting from adjusted collection projections for future periods. These revaluations are primarily attributable to Italy, where collections received earlier than fore-
Profit before tax
Return on equity
cast resulted in a negative adjustment of future collections, and to Spain, where lower-than-expected collections during the year resulted in an adjustment of future expectations. The negative portfolio revaluation effects are somewhat offset by collections in Poland, which were significantly better than forecast and resulted in a positive revaluation of future expectations. The remaining amount is attributable to loss allowance for acquisition of non-performing loans, totalling SEK –1 million, and realised collections in excess of projections for the same period. The strong collection level corresponds to 105 per cent of the projected level for the quarter.
Net financial income totalled SEK 40 million (7). The result of the change in value of interest rate hedging instruments and change in market value of bonds in the liquidity portfolio was limited. Earnings from currency risk hedging amounted to SEK –6 million (7). Net financial income also includes an item affecting comparability, a modification gain of SEK 42 million, attributable to the repurchase and issue of senior bonds. The modification gain is an accounting effect arising due to the fact that the repurchased bond does not need to be derecognised, as the newly issued bond meets certain predefined criteria. In this situation, IFRS stipulates that the modified bond's present value, discounted by the original bond's effective interest rate, shall be set against the present value of the repurchased bond. The difference comprises a modification gain or loss which, due to the new bond's lower level of interest, produces a gain for the Group.
Total operating income increased 24 per cent to SEK 731 million (589), mainly due to continued growth in Italy, Poland and the UK, and to the above-referenced modification gain of SEK 42 million.
Personnel expenses increased 12 per cent during the quarter to SEK –192 million (–171), mainly due to the aforementioned portfolio growth. Personnel expenses continued to increase in the Polish market, which can be attributed to the shift in focus from legal collection activities to voluntary repayment plans, which over time should be viewed in relation to a projected fall in the proportion of legal collection expenses. Portfolio growth also led to continued efforts to expand competence within the new asset classes, resulting in increased personnel expenses. These were offset somewhat by lower personnel expenses in the UK, where a greater proportion of collections is now managed through the digital platform.
Collection costs increased 17 per cent during the quarter to SEK –180 million (–143). This increase is primarily related to Italy, where portfolio growth has remained strong, and to Germany, where successful collections on a number of portfolios resulted in an extra third-party collection cost.
Administrative expenses increased to SEK –112 million (–90). This increase was largely attributable to Central function-related costs concerning digital transformation and strategic initiatives which, as previously mentioned, are starting to produce results through cost savings in certain areas.
Depreciation and amortisation of tangible and intangible assets increased somewhat and totalled SEK –15 million (–14). This, however, does not reflect the increased rate of investment that includes investments in new collection systems scheduled to be put into operation during the fourth quarter.
Total operating expenses increased 19 per cent to SEK –499 million (–418).
Profit from participations in joint ventures was unchanged year-on-year, with profit from the joint venture in Poland and performance-based remuneration for the joint venture in Greece in line with expectations.
Income tax expense totalled SEK –61 million (–37). Net profit for the period totalled SEK 182 million (145).
Total assets increased SEK 5,113 million compared with 31 December 2017 and amounted to SEK 27,650 million (22,537). The change is primarily due to acquired loan portfolios, which increased SEK 4,423 million. The increase is due to acquisitions, mainly in Italy, the UK and Poland, of performing and non-performing loan portfolios.
| SEK million | 30 Sep 2018 | 31 Dec 2017 | Change, % |
|---|---|---|---|
| Cash and interest-bearing | |||
| securities | 7,417 | 6,861 | 8 |
| Acquired loan portfolios | 19,189 | 14,766 | 30 |
| Other assets1) | 1,045 | 910 | 14 |
| Total assets | 27,650 | 22,537 | 23 |
| Deposits from the public | 15,511 | 13,227 | 17 |
| Unsecured debt | 6,039 | 4,355 | 39 |
| Subordinated liabilities | 832 | 803 | 4 |
| Total interest-bearing liabilities | 22,382 | 18,385 | 22 |
| Other liabilities1) | 967 | 924 | 5 |
| Equity | 4,301 | 3,228 | 33 |
| Total liabilities and equity | 27,650 | 22,537 | 23 |
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 liabilities amounted to SEK 22,382 million (18,385). This change was mainly attributable to deposits from the public, which increased SEK 2,284 million, and to unsecured debt, which increased SEK 1,684 million. Hoist Finance funds its operations through deposits in Sweden and Germany as well as through the international bond markets. In Sweden, deposits from the public, which are carried out under the HoistSpar brand, totalled SEK 11,352 million (12,243), of which SEK 4,591 million (4,569) is attributable to fixed term deposits of 12-, 24-, and 36-month durations. In Germany, deposits for retail customers have been offered since September 2017 under the Hoist Finance name. At 30 September 2018, deposits from the public in Germany totalled SEK 4,160 million (985), of which SEK 311 million is attributable to fixed term deposits of 12- and 24-month durations. At 30 September 2018, the outstanding bond debt totalled SEK 6,871 million (5,158), of which SEK 6,039 million (4,355) was unsecured debt. During the third quarter, Hoist Finance issued a senior unsecured bond loan of EUR 250 million with a 4.5-year duration under the Company's EMTN programme. In conjunction with the issue, EUR 186 million of previously issued bonds falling due in December 2019 were repurchased through a public offering. All repurchased bonds have been cancelled. A total of EUR 90 million (corresponding to SEK 926 million) had been
issued under the Company's commercial paper programme as at 30 September.
Group equity totalled SEK 4,301 million (3,228). The increase is mainly attributable to net profit for the period and the fact that Hoist Finance conducted a directed new share issue of 8,118,454 shares during the third quarter at an issue price of SEK 70 per share, resulting in a gross settlement for the Company of SEK 568 million. The issue produced a dilution effect of approximately 10 per cent to the number of shares and votes in the Company. The number of shares and votes in Hoist Finance increased to 89,303,000 (81,184,546) through the issue, and the share capital increased SEK 3 million, from SEK 27 million to SEK 30 million.
Comparative figures refer to third quarter 2017. Hoist Finance has elected not to restate comparative figures following the effective date of IFRS 9 (1 January 2018). Presentation of cash flows within operating activities are therefore not entirely comparable.
| SEK million | Quarter 3 2018 |
Quarter 3 2017 |
Full year 2017 |
|---|---|---|---|
| Cash flow from operating activities | 976 | 584 | 2,495 |
| Cash flow from investing activities | –2,713 | –1,202 | –5,439 |
| Cash flow from financing activities | 1 543 | 321 | 2,751 |
| Cash flow for the period | –194 | –297 | –193 |
Cash flow from operating activities totalled SEK 976 million (584). Amortisation of acquired loan portfolios is a new item as of 1 January 2018 and is presented in operating activities. This amortisation totalled SEK 742 million during the third quarter. Increase/decrease in other assets and liabilities amounted to SEK 88 million (–148).
Cash flow from investing activities totalled SEK –2,713 million (–1,202). Portfolio acquisitions increased during the quarter as compared with Q3 2017, totalling SEK –2,606 million (–781). A net total of SEK –92 million (–415) in bonds and other securities was invested during the quarter.
Cash flow from financing activities totalled SEK 1,543 million (321). Deposits from the public amounted to SEK 494 million (321). Deposits in Germany accounted for SEK 855 million of the inflow, which was counteracted by a new outflow from deposits in Sweden of SEK –416 million. The majority of cash flow from deposits from the public related to deposits with variable interest rates. Net cash flow from the bond issue and buy-back conducted during the quarter totalled SEK 489 million, and cash flow from the issue of new shares totalled SEK 558 million. Other cash flow from financing activities refers to paid interest on AT1 capital totalling SEK –8 million.
Total cash flow for the quarter amounted to SEK –194 million, as compared with SEK –297 million for third quarter 2017.
Hoist Finance is exposed to a number of uncertainties through its business operations and due to its broad geographic presence. New and amended bank and credit market company regulations may affect Hoist Finance directly (e.g. via Basel IV capital and liquidity regulations) and
indirectly through the impact of similar regulations on the market's supply of loan portfolios. Hoist Finance's crossborder operations entail consolidated tax issues relating to subsidiaries in several jurisdictions. The Group is, therefore, exposed to potential tax risks arising from varying interpretations and applications of existing laws, treaties, regulations, and guidance.
Credit risk for Hoist Finance's loan portfolios is deemed to have remained virtually unchanged during the quarter. Credit risk in the liquidity portfolio remains low, as investments are made in government, municipal and covered bonds of high credit quality.
During the third quarter Hoist conducted its first acquisition of a portfolio of non-performing secured loans in France. From a risk perspective, the portfolio of performing loans diversifies the existing stock of assets in a positive way.
The Group works continuously to improve the quality of its internal procedures to minimise operational risks.
Market risks remain low, as Hoist Finance continuously hedges interest rate and FX risks in the short- and mediumterm.
Hoist Finance strengthened its equity in September 2018 through a directed new share issue of SEK 568 million. Inclusion of the capital contribution as CET1 capital requires the approval of the Swedish Financial Supervisory Authority. The Company expects to receive this approval in November 2018. Hoist Finance's CET1 ratio was 10.79 per cent at 30 September. The CET1 ratio would have been 13.13 per cent if the new share issue were included in the calculation, representing an increase of 2.3 percentage points. Capitalisation for Hoist Finance remains strong and the capital ratios exceed regulatory requirements by a healthy margin. Hoist Finance is, therefore, better able to absorb unanticipated events without jeopardising its solvency.
Liquidity risk was low during the quarter. Hoist Finance's liquidity reserve exceeds the Group's target by a good margin. Due to its strong liquidity position, Hoist Finance is well equipped for future acquisitions and growth.
Hoist Finance's financing risk was reduced during the quarter due to a successful issue and repurchase of senior unsecured bonds and the signing of an agreement for a syndicated revolving credit facility with a framework amount of EUR 150 million.
Regulatory risk is deemed to have increased during the period due to the EU Commission's proposal to adjust the Supervisory Ordinance. The proposal is currently under consideration by the European Parliament and Council of Ministers, and there is still uncertainty as to what its final wording will include. Briefly put, the proposal's original wording includes a requirement for credit institutions to make a deduction from own funds for NPL exposures over a 2–8 year time horizon depending on asset class. The Company is participating in discussions with the responsible authorities, institutions and other stakeholders in Sweden and on the EU level. Hoist Finance hopes that the wording of the final legislative text will not have any negative consequences for the Company, given that it not the objective of the proposal to treat actors on secondary markets unfairly.
The subsidiary Hoist Kredit AB (publ) ("Hoist Kredit") was merged into the Parent Company Hoist Finance AB (publ) on 2 January 2018. Accordingly, from 2 January and forward the Parent Company's financial position includes operations that were previously part of Hoist Kredit.
Net interest income for the Parent Company totalled SEK 260 million (6) during the third quarter. This increase is attributable to former operations within Hoist Kredit and comprises interest income from acquired loan portfolios and internal loans, as well as interest expense from deposits and issued bonds. During the third quarter, interest income related to acquired performing loan portfolios amounted to SEK 6 million. Three performing loan portfolios were purchased during the year. Interest income from credit-impaired acquired loan portfolios totalled SEK 167 million (–). Other interest income totalled SEK 181 million (7), with the increase due to higher revenues generated by internal loans to subsidiaries. Interest expense totalled SEK –94 million (–1). Compared with third quarter 2017 at Hoist Kredit, interest expense decreased SEK –19 million, which is mainly related to expenses for issued bonds. Interest expense for deposits was in line with third quarter 2017, where an increase in deposits in euros was counteracted by a reduction in deposits in Swedish kronor.
Total operating income amounted to SEK 341 million (78). Net financial income totalled SEK 13 million and is attributable to changes in interest derivatives, exchange rate fluctuations in assets and liabilities and a modification gain of SEK 42 million, attributable to the repurchase and issue of senior bonds. Other income refers primarily to management fees invoiced to subsidiaries totalling SEK 65 million.
Operating expenses totalled SEK –230 million (–69). In conjunction with the merger, Hoist Kredit staff moved to Hoist Finance AB (publ). This had an impact on operating expenses, as Hoist Finance had no staff prior to the merger. Personnel expenses increased SEK 7 million in comparison with third quarter 2017 at Hoist Kredit. Other administrative expenses increased SEK 28 million as compared with Q3 administrative expenses for the two merged companies. This increase is attributable to an SEK 22 million increase in collection expenses resulting from greater portfolio volumes. Expenses were also increased by internal business process improvements and management of new asset types.
Operating profit totalled SEK 111 million (9). Impairment gains of SEK 19 million mainly pertain to differences between actual and expected collections. Profit from participations in joint ventures totalled SEK 17 million.
Net profit for the period totalled SEK 88 million (7), with tax expenses amounting to SEK –59 million (2). The tax expense includes income from CFC subsidiaries that are taxed in Sweden.
Assets and liabilities were transferred from Hoist Kredit in the merger, which increased balance sheet items in the Hoist Finance AB (publ) balance sheet. On the asset side, these items primarily comprise the liquidity portfolio, acquired loan portfolios, and loans to subsidaries. On the liability side, the major items taken over by the Parent Company are deposits from the public and issued bonds.
A directed share issue was conducted in September, which increased the share capital SEK 3 million and nonrestricted equity SEK 556 million. The liability side was also affected by a issue and repurchase of bonds.
The nature and scope of related-party transactions are described in the Annual Report.
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) and Hoist Kredit AB (publ) were merged on 2 January 2018. All of Hoist Kredit's assets and liabilities were transferred to Hoist Finance through the merger, and Hoist Kredit was dissolved. The previously announced simplification of the corporate structure has thus been completed and Hoist Finance has transitioned from a holding company into the operational Parent Company of the Group. The merger has no material financial effects on Hoist Finance. Hoist Finance 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 provision-based administration services to third parties.
For a more detailed description of the Group's legal structure, please refer to the 2017 Annual Report.
The number of shares increased as a result of the directed new share issue conducted in September and totalled 89,303,000 at 30 September 2018, an increase of 8,118,454 in the number of shares as compared with 81,184,546 at 31 December 2017.
The share price closed at SEK 74.60 on 28 September 2018. A breakdown of the ownership structure is presented in the table below. As at 30 September 2018 the Company had 3,776 shareholders, compared with 3,248 at 31 December 2017.
| Ten largest shareholders, 30 September 2018 |
Share of capital and votes, |
|---|---|
| Swedbank Robur Fonder | 9.4 |
| EQT | 8.6 |
| Carve Capital AB | 7.8 |
| Handelsbanken Funds | 7.2 |
| Didner & Gerge Funds | 6.5 |
| Odin Funds | 3.9 |
| Jörgen Olsson privately and through companies | 3.7 |
| SEB Funds | 3.0 |
| Danske Invest Funds | 2.8 |
| Confederation of Swedish Enterprise | 2.7 |
| Ten largest shareholders | 55.6 |
| Other shareholders | 44.4 |
| Total | 100 |
Source: Modular Finance AB, 30 September 2018; ownership statistics from Holdings, Euroclear Sweden AB; and changes confirmed and/or registered by the Company.
In accordance with adopted instructions, the Nomination Committee shall be comprised of the three largest shareholders and the Chairman of the Board of Directors. The Nomination Committee is currently comprised of the Chair of the Board and members appointed by Swedbank Robur Funds, Carve Capital AB, and EQT. The Committee's mandate period extends until a new Nomination Committee is appointed. For the period preceding the 2019 Annual General Meeting, the composition of the Nomination Committee has been based on shareholder statistics as at the final business day of August 2018 as well as taking into account changes thereafter in the ownership structure in connection with the directed new share issue that was conducted in September 2018.
This interim report has not been reviewed by the Company's auditors.
Hoist Finance has entered into an agreement to lease and subsequently acquire the business going concern of the Italian debt collection companies Maran S.p.A. and R&S S.r.l. ("Maran Group") in a multistep process, in the context of their compostion with creditors pursuant to Italian insolvency law. The agreement also includes a non-controlling interest in a Romanian platform that supports Maran Group. The transaction will not have any significant impact on Hoist Finance's financial position.
| SEK million | Quarter 3 2018 |
Quarter 2 2018 |
Quarter 1 2018 |
Quarter 4 2017 |
Quarter 3 2017 |
|---|---|---|---|---|---|
| Net revenues from acquired loan portfolios | 700 | 634 | |||
| Interest income acquired loan portfolios | 718 | 672 | 645 | ||
| Other interest income | –3 | –1 | –4 | –3 | –3 |
| Interest expense | –93 | –79 | –75 | –75 | –68 |
| Net interest income | 622 | 592 | 566 | 622 | 563 |
| Impairment gains and losses | 51 | 46 | 103 | ||
| Fee and commission income | 15 | 17 | 17 | 17 | 17 |
| Net financial income | 40 | –8 | –5 | 0 | 7 |
| Derecognition gains and losses | – | –2 | – | – | – |
| Other operating income | 3 | 3 | 3 | 5 | 2 |
| Total operating income | 731 | 648 | 684 | 644 | 589 |
| General and administrative expenses | |||||
| Personnel expenses | –192 | –212 | –194 | –219 | –171 |
| Collection costs | –180 | –167 | –194 | –203 | –143 |
| Administrative expenses | –112 | –135 | –112 | –118 | –90 |
| Depreciation and amortisation of tangible and intangible assets |
–15 | –15 | –14 | –14 | –14 |
| Total operating expenses | –499 | –529 | –514 | –554 | –418 |
| Net operating profit | 232 | 119 | 170 | 90 | 171 |
| Profit from participations in joint ventures | 11 | 22 | 15 | 21 | 11 |
| Profit before tax | 243 | 141 | 185 | 111 | 182 |
| Income tax expense | –61 | –38 | –45 | –25 | –37 |
| Net profit for the period | 182 | 103 | 140 | 86 | 145 |
| SEK million | Quarter 3 2018 |
Quarter 2 2018 |
Quarter 1 2018 |
Quarter 4 2017 |
Quarter 3 2017 |
|---|---|---|---|---|---|
| Net interest income margin, %1) | 14 | 14 | 15 | ||
| C/I ratio, %2) | 67 | 79 | 74 | 83 | 70 |
| C/I ratio adjusted for items affecting comparability, %2) 3) | 71 | 75 | – | 75 | – |
| EBIT margin, % | 37 | 30 | 34 | 25 | 37 |
| EBIT margin adjusted for items affecting comparability, %3) | – | 33 | – | 33 | – |
| Return on equity, %4) | 20 | 12 | 18 | 11 | 20 |
| Return on equity adjusted for items affecting comparability, %3) 4) | 16 | 15 | – | 19 | – |
| Portfolio acquisitions | 2 ,5465) | 2,341 | 904 | 2,075 | 781 |
| SEK million | 30 Sep 2018 |
30 Jun 2018 |
31 Mar 2018 |
31 Dec 2017 |
30 Sep 2017 |
| Carrying value on acquired loan portfolios | 19,431 | 17,763 | 16,112 | 15,024 | 13,170 |
| Gross 180-month ERC6) 7) | 30,676 | 28,009 | 26,932 | ||
| Gross 120-month ERC6) | 28,178 | 25,652 | 24,700 | 23,991 | 21,421 |
| Total capital ratio, % | 17.19 | 17.96 | 17.15 | 17.71 | 19.43 |
| CET1 ratio, %8) | 10.79 | 11.13 | 11.35 | 11.70 | 12.72 |
| Liquidity reserve | 7,334 | 7,440 | 7,003 | 6,800 | 5,702 |
| Number of employees (FTEs) | 1,366 | 1,402 | 1,384 | 1,335 | 1,308 |
1) New key ratio as of 2018; see Definitions for calculation of Net interest income margin. As the calculations of Net interest income differ between IFRS 9 and IAS 39, comparative figures for Net interest income margin have not been calculated.
2) New key ratio as of 2018; see Definitions for calculation of C/I ratio.
3) Key figures have been adjusted for items affecting comparability, for third quarter attributable to a modification gain taken up as income in conjunction with the repurchase and issue of senior bonds.
4) The definition of Return on equity has changed from 1 January 2018; see Definitions. Comparative figures have been adjusted for all periods in 2017.
5) During the third quarter, the acquisition price of a performing loan portfolio in Poland, acquired during Q2, was adjusted downward by SEK 60 million. 6) Excluding run-off consumer loan portfolio, performing loan portfolios, and portfolios held in the Polish joint venture.
7) From 1 January 2018, Hoist Finance has elected to extend the future cash flow forecast horizon for acquired loan portfolios to 180 months, as compared with the previous horizon of 120 months. Comparative figures have not been restated.
8) Excluding issue of new share capital in September 2018.
| SEK million | Quarter 3 2018 |
Quarter 3 2017 |
Jan–Sep 2018 |
Jan–Sep 2017 |
Full-year 2017 |
|---|---|---|---|---|---|
| Net revenues from acquired loan portfolios | 634 | 1,944 | 2,644 | ||
| Interest income acquired loan portfolios | 718 | 2,035 | |||
| Other interest income | –3 | –3 | –8 | –6 | –10 |
| Interest expense | –93 | –68 | –247 | –230 | –305 |
| Net interest income | 622 | 563 | 1,780 | 1,708 | 2,329 |
| Impairment gains and losses | 51 | 200 | |||
| Fee and commission income | 15 | 17 | 49 | 57 | 73 |
| Net result from financial transactions | 40 | 7 | 27 | –50 | –50 |
| Derecognition gains and losses | – | –2 | – | ||
| Other operating income | 3 | 2 | 9 | 8 | 13 |
| Total operating income | 731 | 589 | 2,063 | 1,723 | 2,365 |
| General and administrative expenses | |||||
| Personnel expenses | –192 | –171 | –598 | –511 | –730 |
| Collection costs | –180 | –143 | –541 | –469 | –672 |
| Administrative expenses | –112 | –90 | –359 | –284 | –402 |
| Depreciation and amortisation of tangible and intangible assets |
–15 | –14 | –44 | –42 | –56 |
| Total operating expenses | –499 | –418 | –1,542 | –1,306 | –1,860 |
| Net operating profit | 232 | 171 | 521 | 417 | 505 |
| Profit from participations in joint ventures | 11 | 11 | 48 | 55 | 76 |
| Profit before tax | 243 | 182 | 569 | 472 | 581 |
| Income tax expense | –61 | –37 | –144 | –104 | –128 |
| Net profit | 182 | 145 | 425 | 368 | 453 |
| Profit attributable to: | |||||
| Owners of Hoist Finance AB (publ) | 182 | 145 | 425 | 368 | 453 |
| Basic earnings per share SEK | 1.87 | 1.68 | 4.33 | 4.18 | 5.10 |
| Diluted earnings per share SEK | 1.87 | 1.68 | 4.33 | 4.17 | 5.09 |
| SEK million | Quarter 3 2018 |
Quarter 3 2017 |
Jan–Sep 2018 |
Jan–Sep 2017 |
Full–year 2017 |
|---|---|---|---|---|---|
| Net profit for the period | 182 | 145 | 425 | 368 | 453 |
| Other comprehensive income | |||||
| Items that will not be reclassified to profit or loss |
|||||
| Revaluation of defined benefit pension plan | – | – | – | – | 1 |
| Revaluation of remuneration after terminated employment |
– | – | – | – | –1 |
| Tax attributable to items that will not be reclassified to profit or loss |
– | – | – | – | 0 |
| Total items that will not be reclassified to profit or loss |
– | – | – | – | 0 |
| Items that may be reclassified subsequently to profit or loss |
|||||
| Translation difference, foreign operations | –23 | –6 | 102 | 13 | 90 |
| Translation difference, joint ventures | 0 | –8 | 0 | 4 | 18 |
| Hedging of currency risk in foreign operations | –11 | –26 | –175 | –82 | –180 |
| Hedging of currency risk in joint ventures | –3 | 5 | –9 | –11 | –26 |
| Transferred to the income statement during the year |
4 | 2 | 7 | 5 | 7 |
| Tax attributable to items that may be reclassified to profit or loss |
2 | 4 | 40 | 20 | 45 |
| Total items that may be reclassified subsequently to profit or loss |
–31 | –29 | –35 | –51 | –46 |
| Other comprehensive income for the period | –31 | –29 | –35 | –51 | –46 |
| Total comprehensive income for the period | 151 | 116 | 390 | 317 | 407 |
| Profit attributable to: | |||||
| Owners of Hoist Finance AB (publ) | 151 | 116 | 390 | 317 | 407 |
| SEK million | 30 Sep 2018 |
31 Dec 2017 |
30 Sep 2017 |
|---|---|---|---|
| ASSETS | |||
| Cash | 0 | 0 | 3 |
| Treasury bills and Treasury bonds | 2,730 | 1,490 | 1,490 |
| Lending to credit institutions | 1,692 | 1,681 | 1,135 |
| Lending to the public | 17 | 37 | 32 |
| Acquired loan portfolios | 19,189 | 14,766 | 12,917 |
| Bonds and other securities | 2,994 | 3,689 | 3,132 |
| Shares and participations in joint ventures | 226 | 238 | 230 |
| Intangible assets | 333 | 287 | 262 |
| Tangible assets | 53 | 42 | 41 |
| Other assets | 349 | 200 | 507 |
| Deferred tax assets | 24 | 21 | 33 |
| Prepayments and accrued income | 43 | 86 | 56 |
| Total assets | 27,650 | 22,537 | 19,838 |
| LIABILITIES AND EQUITY | |||
| Liabilities | |||
| Deposits from the public | 15,511 | 13,227 | 12,301 |
| Tax liabilities | 121 | 84 | 85 |
| Other liabilities | 439 | 394 | 213 |
| Deferred tax liabilities | 146 | 148 | 164 |
| Accrued expenses and deferred income | 193 | 211 | 202 |
| Provisions | 68 | 87 | 53 |
| Senior debt | 6,039 | 4,355 | 2,930 |
| Subordinated debts | 832 | 803 | 773 |
| Total liabilities | 23,349 | 19,309 | 16,721 |
| Equity | |||
| Share capital | 30 | 27 | 27 |
| Other contributed equity | 2,966 | 2,102 | 2,073 |
| Reserves | –148 | –113 | –118 |
| Retained earnings including profit for the period | 1,453 | 1,212 | 1,135 |
| Total equity | 4,301 | 3,228 | 3,117 |
| Total liabilities and equity | 27,650 | 22,537 | 19,838 |
| SEK million | Share capital | Other contributed capital |
Translation reserve |
Retained earnings including profit for the year |
Total equity |
|---|---|---|---|---|---|
| Opening balance 1 Jan 2018 | 27 | 2,102 | –113 | 1,212 | 3,228 |
| Transition effects IFRS 9 | 17 | 17 | |||
| Adjusted opening balance 1 Jan 2018 | 27 | 2,102 | –113 | 1,229 | 3,245 |
| Comprehensive income for the period | |||||
| Profit for the period | 424 | 424 | |||
| Other comprehensive income | –35 | –35 | |||
| Total comprehensive income for the period | –35 | 424 | 389 | ||
| Transactions reported directly in equity | |||||
| Dividend | –154 | –154 | |||
| New share issue | 3 | 5531) | 556 | ||
| Reclassification | –3 | 3 | 0 | ||
| Additional Tier 1 capital instrument | 3112) | –7 | 304 | ||
| Interest paid on capital contribution | –42 | –42 | |||
| Tax effect on items reported directly in equity | 3 | 3 | |||
| Total transactions reported directly in equity | 3 | 864 | –200 | 667 | |
| Closing balance 30 Sep 2018 | 30 | 2,966 | -148 | 1,453 | 4,301 |
1) Nominal amount of SEK 566m was reduced by transaction costs of SEK 13m.
2) Nominal amount of SEK 410m was reduced by transaction costs of SEK 6m and repurchased nominal amount of SEK 100m was reduced by transaction costs of SEK 7m.
| SEK million | Share capital | Other contributed capital |
Translation reserve |
Retained earnings including profit for the year |
Total equity |
|---|---|---|---|---|---|
| Opening balance 1 Jan 2017 | 27 | 2,073 | –67 | 892 | 2,925 |
| Comprehensive income for the period | |||||
| Profit for the period | 453 | 453 | |||
| Other comprehensive income | –46 | –46 | |||
| Total comprehensive income for the period | –46 | 453 | 407 | ||
| Transactions reported directly in equity | |||||
| Dividend | –105 | –105 | |||
| New share issue | 0 | 29 | 29 | ||
| Warrants, repurchased and cancelled | 0 | 0 | |||
| Interest paid on capital contribution | –28 | –28 | |||
| Total transactions reported directly in equity | 0 | 29 | –133 | –104 | |
| Closing balance 31 Dec 2017 | 27 | 2,102 | –113 | 1,212 | 3,228 |
| SEK million | Share capital | Other contributed capital |
Translation reserve |
Retained earnings including profit for the year |
Total equity |
| Opening balance 1 Jan 2017 | 27 | 2,073 | –67 | 892 | 2,925 |
| Comprehensive income for the period | |||||
| Profit for the period | 368 | 368 | |||
| Other comprehensive income | –51 | –51 | |||
| Total comprehensive income for the period | –51 | 368 | 317 | ||
| Transactions reported directly in equity | |||||
| Dividend | –105 | –105 | |||
| Warrants, repurchased and cancelled | 0 | 0 | |||
| Interest paid on capital contribution | –20 | –20 | |||
| Total transactions reported directly in equity | 0 | –125 | –125 |
Closing balance 30 Sep 2017 27 2,073 –118 1,135 3,117
| SEK million | Quarter 3 2018 |
Quarter 3 2017 |
Jan–Sep 2018 |
Jan–Sep 2017 |
Full-year 2017 |
|---|---|---|---|---|---|
| Profit before tax | 243 | 182 | 569 | 472 | 581 |
| – of which, paid-in interest | 704 | 1 | 2,030 | 3 | 5 |
| – of which, interest paid | –77 | –51 | –201 | –172 | –356 |
| Portfolio amortisation and revaluation | 499 | 1,574 | 2,233 | ||
| Adjustment for other items not included in cash flow |
–69 | 57 | –96 | 178 | 122 |
| Realised result from divestment of loan portfolios |
– | – | 1 | – | – |
| Realised result from divestment of shares and participations in joint ventures |
–16 | –13 | –48 | –48 | –62 |
| Income tax paid | –12 | 7 | –72 | –38 | –52 |
| Total | 146 | 732 | 354 | 2,138 | 2,822 |
| Amortisations on acquired loan portfolios | 742 | 2,132 | |||
| Increase/decrease in other assets and liabilities | 88 | –148 | –483 | –462 | –327 |
| Cash flow from operating activities | 976 | 584 | 2,003 | 1,676 | 2,495 |
| Acquired loan portfolios | –2,606 | –781 | –5,791 | –2,178 | –4,253 |
| Disposed loan portfolios | – | – | 66 | – | – |
| Investments in/divestments of bonds and other securities |
–92 | –415 | 694 | –600 | –1,150 |
| Other cash flows from investing activities | –15 | –6 | –75 | –24 | –36 |
| Cash flow from investing activities | –2,713 | –1,202 | –5,106 | –2,802 | –5,439 |
| Deposits from the public | 494 | 321 | 2,207 | 446 | 1,407 |
| Issued debts | 2,760 | – | 3,702 | 781 | 2,131 |
| Repurchase of issued debts | –2,271 | – | –2,271 | –676 | –676 |
| Additional Tier 1 capital | – | – | 310 | – | – |
| New share issue | 568 | – | 568 | – | – |
| Other cash flows from financing activities | –8 | – | –196 | –133 | –111 |
| Cash flow from financing activities | 1,543 | 321 | 4,320 | 418 | 2,751 |
| Cash flow for the period | –194 | –297 | 1,217 | –708 | –193 |
| Cash at beginning of the period | 4,625 | 2,934 | 3,172 | 3,338 | 3,338 |
| Translation difference | –9 | –9 | 33 | –2 | 27 |
| Cash at end of the period1) | 4,422 | 2,628 | 4,422 | 2,628 | 3,172 |
1) Comprised of Cash, Treasury bills and Treasury bonds and Lending to credit institutions.
| SEK million | Quarter 3 2018 |
Quarter 3 2017 |
Jan–Sep 2018 |
Jan–Sep 2017 |
Full-year 2017 |
|---|---|---|---|---|---|
| Interest income | 354 | 7 | 935 | 23 | 30 |
| Interest expense | –94 | –1 | –250 | –3 | –5 |
| Net interest income | 260 | 6 | 685 | 20 | 25 |
| Dividends received | – | – | 562 | 180 | |
| Fee and commission income | 1 | – | 4 | – | – |
| Net result from financial transactions | 13 | – | –164 | – | 2 |
| Derecognition gains and losses | – | – | –1 | 1 | – |
| Other operating income | 67 | 72 | 224 | 202 | 243 |
| Total operating income | 341 | 78 | 1 310 | 223 | 450 |
| General administrative expenses | |||||
| Personnel expenses | –81 | –2 | –262 | –4 | –5 |
| Other administrative expenses | –141 | –66 | –408 | –208 | –331 |
| Depreciation and amortisation of tangible and intangible assets |
–8 | –1 | –24 | –4 | –6 |
| Total operating expenses | –230 | –69 | –694 | –216 | –342 |
| Profit before credit losses | 111 | 9 | 616 | 7 | 108 |
| Impairment gains and losses | 19 | 60 | |||
| Profit from participations in joint ventures | 17 | – | 54 | – | – |
| Net operating profit | 147 | 9 | 730 | 7 | 108 |
| Appropriations | – | – | – | – | –24 |
| Taxes | –59 | –2 | –100 | –2 | –19 |
| Net profit | 88 | 7 | 630 | 5 | 65 |
| SEK million | Quarter 3 2018 |
Quarter 3 2017 |
Jan–Sep 2018 |
Jan–Sep 2017 |
Full-year 2017 |
|---|---|---|---|---|---|
| Net profit | 88 | 7 | 630 | 5 | 65 |
| Other comprehensive income | |||||
| Items that may be reclassified subsequently to profit or loss |
|||||
| Translation difference, foreign operations | 0 | – | 3 | – | – |
| Total items that may be reclassified subse quently to profit or loss |
0 | – | 3 | – | – |
| Other comprehensive income for the period | 0 | – | 3 | – | – |
| Total comprehensive income for the period | 88 | 7 | 633 | 5 | 65 |
| Profit attributable to: | |||||
| Owners of Hoist Finance AB (publ) | 88 | 7 | 633 | 5 | 65 |
| SEK million | 30 Sep 2018 |
31 Dec 2017 |
30 Sep 2017 |
|---|---|---|---|
| ASSETS | |||
| Cash | 0 | – | – |
| Treasury bills and Treasury bonds | 2,730 | – | – |
| Lending to credit institutions | 939 | 275 | 409 |
| Lending to the public | 20 | – | – |
| Acquired loan portfolios | 4,406 | – | – |
| Receivables, Group companies | 13,851 | 193 | 42 |
| Bonds and other securities | 2,994 | – | – |
| Shares and participations in subsidiaries | 2,143 | 1,688 | 1,688 |
| Shares and participations in joint ventures | 24 | – | – |
| Intangible assets | 151 | 64 | 49 |
| Tangible assets | 26 | 1 | 2 |
| Other assets | 257 | 24 | – |
| Deferred tax assets | 1 | – | – |
| Prepayments and accrued income | 26 | 9 | 7 |
| TOTAL ASSETS | 27,568 | 2,254 | 2,197 |
| LIABILITIES AND EQUITY | |||
| Liabilities | |||
| Deposits from the public | 15,511 | – | – |
| Tax liabilities | 98 | 35 | 19 |
| Other liabilities | 878 | 301 | 372 |
| Deferred tax liabilities | 2 | – | – |
| Accrued expenses and deferred income | 77 | 4 | 5 |
| Provisions | 34 | 0 | – |
| Senior debt | 6,039 | – | – |
| Subordinated debts | 832 | – | – |
| Total liabilities and provisions | 23,471 | 340 | 396 |
| Untaxed reserves | 165 | 84 | 60 |
| Equity | |||
| Restricted equity | |||
| Share capital | 30 | 27 | 27 |
| Statutory reserve | 13 | 3 | 3 |
| Revaluation reserve | 64 | – | – |
| Development expenditure fund | 5 | 6 | 5 |
| Total restricted equity | 112 | 36 | 35 |
| Non-restricted equity | |||
| Other contributed equity | 2,966 | 1,722 | 1,694 |
| Reserves | 3 | – | – |
| Retained earnings | 221 | 7 | 7 |
| Profit for the period | 630 | 65 | 5 |
| Total non-restricted equity | 3,820 | 1,794 | 1,706 |
| Total equity | 3,932 | 1,830 | 1,741 |
| TOTAL LIABILITIES AND EQUITY | 27,568 | 2,254 | 2,197 |
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.
As from 2 January 2018 – the merger date of Parent Company Hoist Finance AB (publ) and its subsidiary Hoist Kredit AB (publ) – 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. As a result of the merger, the Parent Company transitioned from a holding and purchasing company into an operating company, and all assets and liabilities of Hoist Kredit AB (publ) were transferred to Hoist Finance AB (publ). Comparative figures in the Parent Company's accounts have been restated to align presentation with FFFS 2008:25 for the income statement and with 1995:1559 for the balance sheet. The Swedish Financial Board's RFR 2, Accounting for Legal Entities, was also applied.
Hoist Finance began to apply a number of new or amended IFRSs in 2018. The effects of the implementation of IFRS 9 were first reported in the 2017 year-end report, and subsequently in the 2017 annual report and a press release of 23 April 2018. The following is a general description of changes to income statement and balance sheet items under IFRS 9, as compared with previous years' reporting under IAS 39, as well as other IFRS amendments.
The new standard covers classification and measurement, impairment, and general hedge accounting, and replaces the previous requirements in these areas imposed by IAS 39. Hoist Finance began to apply IFRS 9 requirements for classification, measurement and impairment as from 1 January 2018. Hoist Finance continues to follow IAS 39 for hedge accounting.
The aggregate effect on the Group's opening retained earnings as at 1 January 2018 was SEK 16 million. For additional details, see Note 9.
This item is deleted from the income statement as from 2018.
From 2018, interest income pertaining to "Acquired loan portfolios" is recognised under "Interest income." Interest income is calculated using the effective interest method and is capitalised under "Acquired loan portfolios." Cash flows from customers are recognised as capital repayments on receivables. Realised cash flows that deviate from projected cash flows are recognised under "Impairment gains/losses." Changes in the present value of projected future cash flows are also recognised in "Impairment gains/losses."
Interest income on "Acquired loan portfolios" is based on the credit-adjusted effective interest rate established on initial recognition of the portfolios comprised of credit-impaired assets. For acquired performing loans the effective interest income is based on the gross value of the asset. The effective interest rate is established based on 15-year projected cash flows excluding collection costs. Previously, projected cash flows
excluding collection costs applied a 10-year horizon. The credit-adjusted effective interest rate was recalculated for all portfolios on the transition to IFRS 9.
From 2018, changes in the loss allowance for "Acquired loan portfolios" and recognised expected credit losses pertaining to other financial assets classified at amortised cost are also recognised under this item.
For acquired loan portfolios, IFRS 9 outlines a three-stage model for impairment based on changes in credit quality since initial recognition, as summarised below:
Hoist Finance has not restated any comparative figures for 2017. Comparative items, that have not been restated, are marked in grey in the tables, financial statements and notes to the interim report.
The new standard took effect on 1 January 2018 and introduces a five-step model for determining how and when revenue is to be recognised. The purpose of the standard is to have one single principle-based standard for all sectors. The standard does not apply to financial instruments, insurance contracts or lease contracts.
The transition to IFRS 15 has not had any significant impact on Hoist Finance's financial reports, capital adequacy or large exposures.
Revaluations were previously presented in "Net revenue from acquired loan portfolios". As from 1 January 2018, revaluations are presented in "Impairment gains/losses".
The run-off consumer loan portfolio that was reported as Lending to the public at year-end has not been reclassified.
For additional details, see the Accounting Principles section of the 2017 annual report.
Hoist Finance introduced a new segment reporting model as a result of the new organisation that took effect 27 March 2018. Operations are no longer classified into three regions; rather, segment reporting is presented by country and central functions, in accordance with IFRS 8, Operating segments. Comparative figures for 2017 have been restated.
As of 1 April 2018, Parent Company Hoist Finance AB (publ) has chosen to apply hedge accounting of the carrying value of participations in foreign subsidiaries as well as participations in foreign joint ventures. In hedge accounting, exchange rates influence the carrying value of participations in subsidiaries and participations in joint ventures. This change in value is reported in "Net financial income", as is the change in value of hedging instruments. Hedge accounting thus shows a net effect in "Net financial income" compared to previous reports, when reported changes in value of hedging instruments did not correspond to any reported changes in value of participations in subsidiaries or joint ventures.
No other IFRS or IFRIC Interpretations that came into effect in 2018 had any significant impact on the Group's financial reports or capital adequacy.
In all other material respects, the Group's and Parent Company's accounting principles, bases for calculation and presentation remain unchanged from those applied in the 2017 annual report.
IASB has published a new standard, IFRS 16 "Leases", which was endorsed by the EU Commission in 2017. All lease contracts will initially be reported as an asset with right of use and a liability (i.e. future lease payments) in the lessee's balance sheet. Asset depreciation is reported in the income statement, with lease payments allocated as interest expense in the income statement and as amortisation in the balance sheet. However, the standard includes two recognition exemptions for reporting the lease as an asset and a liability respectively – short-term leases (i.e. leases with a lease terms of 12 months or less) and leases of low-value assets. Reporting requirements for lessors remain mostly unchanged. The new standard includes increased disclosure requirements, which will expand the content of note disclosures.
The new standard is effective as from annual periods beginning on or after 1 January 2019. Earlier application is permitted. Hoist Finance does not intend to apply IFRS 16 in advance. The standard is to be applied using either the full retrospective approach, which requires entities to retrospectively apply the new standard to each prior reporting period, or the modified retrospective approach, recognising the cumulative effect as an adjustment to the opening balance of equity.
The Group intends to apply the modified retrospective approach, i.e. recognising the cumulative effect of IFRS 16 in retained earnings in the opening balance of equity as at 1 January 2019. There will be no restatement of comparative figures. Hoist Finance is in the process of analysing the financial effects of the new standard. Calculations
of the monetary effect of IFRS 16 have not been conducted. The final transition effect of IFRS 16 in the financial reports will be affected by future economic conditions, including the funding rate in the Group as at 1 January 2019, the composition of the lease portfolio at that date and the Group's latest assessment of whether options prolonging a lease contract will be used. Hoist Finance's assessment is that the new standard will entail changes to accounting and that the Group will need to account for new assets and liabilities for leases.
The Swedish Accounting Standards Board (BFN) responded to the Financial Supervisory Authority in June on the question of revaluation rules contained in the Swedish Annual Accounts Act (1995:1554) regarding financial assets classified as purchased or issued creditimpaired loans. The response of the BFN specifies that in cases where the Parent Company makes a new assessment that leads to an upward revision of future cash flow compared with the cash flow that formed the basis of the calculation of the effective interest rate at the time of acquisition, it must report these revaluations in a revaluation reserve for restricted equity. The transfer between free and restricted equity will have an effect on distributable funds, but as Hoist Finance has not yet been able to evaluate these effects, the Parent Company has chosen not to amend its reporting principles governing revaluation. Hoist Finance intends to correct any effects on equity in the Parent Company when its reporting principles for revaluation have been defined.
| 30 Sep 2018 |
30 Sep 2017 |
Full-year 2017 |
|
|---|---|---|---|
| 1 EUR = SEK | |||
| Income statement (average) | 10.2303 | 9.5803 | 9.6331 |
| Balance sheet (at end of the period) | 10.2945 | 9.5668 | 9.8497 |
| 1 GBP = SEK | |||
| Income statement (average) | 11.5721 | 10.9844 | 10.9991 |
| Balance sheet (at end of the period) | 11.5746 | 10.8669 | 11.1045 |
| 1 PLN = SEK | |||
| Income statement (average) | 2.4091 | 2.2460 | 2.2629 |
| Balance sheet (at end of the period) | 2.4110 | 2.2189 | 2.3606 |
Segment reporting has been prepared based on the manner in which executive management monitors operations. This follows statutory account preparation, with the exception of internal funding cost. The internal funding cost is included in total operating income and allocated to the segments based on acquired loan portfolio assets in relation to a fixed internal monthly interest rate for each portfolio. The difference between the external financing cost and the internal funding cost is reported in Central Functions under total operating income.
This Central Functions item pertains to the net income for intra-group financial transactions.
Group costs for central and supporting functions are not allocated to the operating segments but are reported as Central Functions and Eliminations.
With respect to the balance sheet, only acquired loan portfolios are monitored. Other assets and liabilities are not monitored on a segment-by-segment basis.
| SEK million | Great Britain | Italy | Germany | Poland | Other countries |
Central Functions |
Eliminations | Group |
|---|---|---|---|---|---|---|---|---|
| Total operating income | 140 | 195 | 80 | 124 | 91 | 89 | 12 | 731 |
| of which, internal funding costs | –51 | –37 | –16 | –33 | –20 | 157 | 0 | 0 |
| Total operating expenses | –88 | –98 | –83 | –43 | –82 | –108 | 3 | –499 |
| Profit from participations in joint ventures |
– | – | – | – | 1 | 10 | – | 11 |
| Profit before tax | 52 | 97 | –3 | 81 | 10 | –9 | 15 | 243 |
| Quarter 3, 2017 | ||||||||
|---|---|---|---|---|---|---|---|---|
| SEK million | Great Britain | Italy | Germany | Poland | Other countries |
Central Functions |
Eliminations | Group |
| Total operating income | 125 | 147 | 87 | 64 | 71 | 91 | 4 | 589 |
| of which, internal funding costs | –54 | –36 | –24 | –19 | –27 | 160 | 0 | 0 |
| Total operating expenses | –80 | –69 | –63 | –34 | –82 | –90 | 0 | –418 |
| Profit from participations in joint ventures |
– | – | – | – | 0 | 11 | – | 11 |
| Profit before tax | 45 | 78 | 24 | 30 | –11 | 12 | 4 | 182 |
| Jan–Sep, 2018 | ||||||||
|---|---|---|---|---|---|---|---|---|
| SEK million | Great Britain | Italy | Germany | Poland | Other countries |
Central Functions |
Eliminations | Group |
| Total operating income | 450 | 547 | 263 | 299 | 307 | 7731) | –576 | 2,063 |
| of which, internal funding costs | –148 | –99 | –47 | –82 | –56 | 432 | 0 | 0 |
| Total operating expenses | –272 | –289 | –220 | –162 | –245 | –358 | 4 | –1,542 |
| Profit from participations in joint ventures |
– | – | – | – | 7 | 41 | – | 48 |
| Profit before tax | 178 | 258 | 43 | 137 | 69 | 456 | –572 | 569 |
1) Dividend from subsidiaries SEK 562m.
| Jan–Sep, 2017 | ||||||||
|---|---|---|---|---|---|---|---|---|
| SEK million | Great Britain | Italy | Germany | Poland | Other countries |
Central Functions |
Eliminations | Group |
| Total operating income | 400 | 388 | 280 | 219 | 252 | 186 | –2 | 1,723 |
| of which, internal funding costs | –149 | –112 | –74 | –57 | –83 | 475 | 0 | 0 |
| Total operating expenses | –268 | –223 | –182 | –105 | –241 | –289 | 2 | –1,306 |
| Profit from participations in joint ventures |
– | – | – | – | 13 | 42 | – | 55 |
| Profit before tax | 132 | 165 | 98 | 114 | 24 | –61 | 0 | 472 |
| Full-year 2017 | |||
|---|---|---|---|
| -- | ---------------- | -- | -- |
| SEK million | Great Britain | Italy | Germany | Poland | Other countries |
Central Functions |
Eliminations | Group |
|---|---|---|---|---|---|---|---|---|
| Total operating income | 551 | 518 | 369 | 294 | 360 | 4601) | –187 | 2,365 |
| of which, internal funding costs | –205 | –153 | –99 | –78 | –111 | 646 | – | 0 |
| Total operating expenses | –361 | –333 | –287 | –144 | –335 | –402 | 2 | –1,860 |
| Profit from participations in joint ventures |
– | – | – | – | 25 | 51 | – | 76 |
| Profit before tax | 190 | 185 | 82 | 150 | 50 | 109 | –185 | 581 |
1) Dividend from subsidiaries SEK 180m.
| 30 Sep 2018 | |||||||
|---|---|---|---|---|---|---|---|
| SEK million | Great Britain | Italy | Germany | Poland | Other countries |
Central Functions |
Group |
| Run-off consumer loan portfolio | 17 | 17 | |||||
| Acquired loan portfolios | 5,546 | 5,659 | 2,267 | 2,811 | 2,906 | 19,189 | |
| Shares and participations in joint ventures1) |
225 | 225 | |||||
| Acquired loans | 5,546 | 5,659 | 2,284 | 2,811 | 2,906 | 225 | 19,431 |
| 31 Dec 2017 | |||
|---|---|---|---|
| SEK million | Great Britain | Italy | Germany | Poland | Other countries |
Central Functions |
Group |
|---|---|---|---|---|---|---|---|
| Run-off consumer loan portfolio | 21 | 21 | |||||
| Acquired loan portfolios | 4,499 | 4,028 | 1,937 | 1,879 | 2,423 | 14,766 | |
| Shares and participations in joint ventures1) |
237 | 237 | |||||
| Acquired loans | 4,499 | 4,028 | 1,958 | 1,879 | 2,423 | 237 | 15,024 |
| 30 Sep 2017 | |||||||
|---|---|---|---|---|---|---|---|
| SEK million | Great Britain | Italy | Germany | Poland | Other countries |
Central Functions |
Group |
| Run-off consumer loan portfolio | 27 | 27 | |||||
| Acquired loan portfolios | 4,056 | 3,032 | 1,890 | 1,519 | 2,314 | 12,811 | |
| Shares and participations in joint ventures1) |
242 | 242 | |||||
| Acquired loans | 4,056 | 3,032 | 1,917 | 1,519 | 2,314 | 242 | 13,080 |
1) Refers to the value of shares and participations in joint ventures in Poland with acquired loan portfolios and is therefore not equivalent to corresponding item in the balance sheet.
| GROUP | PARENT COMPANY | ||||||
|---|---|---|---|---|---|---|---|
| SEK million | 30 Sep 2018 |
31 Dec 2017 |
30 Sep 2017 |
30 Sep 2018 |
31 Dec 2017 |
30 Sep 2017 |
|
| Gross carrying amount | 18,988 | 14 766 | 12,917 | 4,351 | – | – | |
| Loss allowance | 201 | n.a | n.a | 55 | n.a | n.a | |
| Net carrying amount | 19,189 | 14 766 | 12,917 | 4,406 | – | – |
| loan portfolios | GROUP | ||||
|---|---|---|---|---|---|
| SEK million | Gross carrying amount |
Loss allowance |
Net carrying amount |
||
| Opening balance 1 Jan 2018 | 14,766 | – | 14,766 | ||
| IFRS 9 transition effects | 11 | 11 | |||
| Acquisitions | 4,668 | 4,668 | |||
| Interest income | 2,011 | 2,011 | |||
| Gross collections | –4,093 | –4,093 | |||
| Impairment losses and gains | – | 204 | 204 | ||
| Disposal | –67 | 0 | –67 | ||
| Translation differences | 625 | 0 | 625 | ||
| Closing balance 30 Sep 2018 | 17,921 | 204 | 18,125 |
| portfolios | PARENT COMPANY | ||||
|---|---|---|---|---|---|
| SEK million | Gross carrying amount |
Loss allowance |
Net carrying amount |
||
| Openning balance 1 Jan 2018 | – | – | – | ||
| Merger | 2,464 | – | 2,464 | ||
| IFRS 9 transition effects | 7 | – | 7 | ||
| Acquisitions | 1,963 | – | 1,963 | ||
| Interest income | 442 | – | 442 | ||
| Gross collections | –1,058 | – | –1,058 | ||
| Impairment losses and gains | – | 57 | 57 | ||
| Translation differences | 100 | 0 | 100 | ||
| Closing balance 30 Sep 2018 | 3,918 | 57 | 3,975 |
As at 30 September 2018, the undiscounted acquired loss allowances at initial recognition totaled SEK 12,801 million for credit-impaired loan portfolios acquired by the Group during January to September, of which SEK 3,594 million is attributable to Parent Company acquisitions.
| loan portfolios | GROUP | |||||
|---|---|---|---|---|---|---|
| SEK million | Gross carrying amount |
Stage 1 12M ECL |
Stage 2 LECL |
Stage 3 LECL |
Loss allowance |
Net carrying amount |
| Opening balance 1 Jan 2018 | – | – | – | – | – | – |
| Acquisitions1) | 1,123 | – | – | – | – | 1,123 |
| Interest income | 24 | – | – | – | – | 24 |
| Amortisations and interest payments | –75 | – | – | – | – | –75 |
| Changes in risk parameters | – | –3 | 0 | 0 | –3 | –3 |
| Translation differences | –5 | 0 | 0 | – | 0 | –5 |
| Closing balance 30 Sep 2018 | 1,067 | –3 | 0 | 0 | –3 | 1,064 |
1) ) During the third quarter, the acquisition price of a performing loan portfolio in Poland, acquired during the second quarter, was adjusted downward by SEK 60 million.
| loan portfolios | PARENT COMPANY | |||||
|---|---|---|---|---|---|---|
| SEK million | Gross carrying amount |
Stage 1 12M ECL |
Stage 2 LECL |
Stage 3 LECL |
Loss allowance |
Net carrying amount |
| Opening balance 1 Jan 2018 | – | – | – | – | – | – |
| Acquisitions | 460 | – | – | – | – | 460 |
| Interest income | 12 | – | – | – | – | 12 |
| Amortisations and interest payments | –35 | – | – | – | – | –35 |
| Changes in risk parameters | – | –2 | 0 | 0 | –2 | –2 |
| Translation differences | –4 | 0 | 0 | – | 0 | –4 |
| Closing balance 30 Sep 2018 | 433 | –2 | 0 | 0 | –2 | 431 |
| Acquired loan portfolios | GROUP | |
|---|---|---|
| SEK million | 31 Dec 2017 |
30 Sep 2017 |
| Opening balance | 12,386 | 12,386 |
| Acquisitions | 4,253 | 2,178 |
| Translation differences | 361 | –73 |
| Changes in carrying value reported in the income statement |
–2,233 | –1,574 |
|---|---|---|
| Carrying value | 14,766 | 12,917 |
| Based on revised estimates (revaluation) |
10 | 14 |
| Based on opening balance forecast (amortisation) |
–2,2441) | –1,588 |
1) Including SEK –108 million related to a partial disposal of a Polish loan portfolio.
| Of which, designated at fair value2) | GROUP | |
|---|---|---|
| SEK million | 31 Dec 2017 |
30 Sep 2017 |
| Opening balance | 1,045 | 1,045 |
| Translation differences | 28 | 0 |
| Changes in value | ||
| Based on opening balance forecast (amortisation) |
–120 | –91 |
| Based on revised estimates (revaluation) |
–13 | –7 |
| Carrying value | 940 | 947 |
| Changes in carrying value reported in the | ||
| income statement | –133 | –97 |
2) The carrying value of acquired loan portfolios is calculated by discounting cash flow forecasts at the average effective interest rate for purchased loan portfolios from the past 24 months in each jurisdiction.
| GROUP, 30 SEP 2018 | ||||||
|---|---|---|---|---|---|---|
| Assets/liabilities recognised at fair value through profit or loss |
Total | |||||
| SEK million | Held for trading |
Mandatorily | Hedging instrument |
Amortised cost |
carrying amount |
Fair value |
| Treasury bills and treasury bonds | 2,730 | 2,730 | 2,730 | |||
| Lending to credit institutions | 1,692 | 1,692 | 1,692 | |||
| Lending to the public | 17 | 17 | 17 | |||
| Acquired loan portfolios | 19,189 | 19,189 | 20,762 | |||
| Bonds and other securities | 2,994 | 2,994 | 2,994 | |||
| Derivatives | 6 | 33 | 39 | 39 | ||
| Other financial assets | 254 | 254 | 254 | |||
| Total | 6 | 5,724 | 33 | 21,152 | 26,915 | 28,488 |
| Deposits from the public | 15,511 | 15,511 | 15,511 | |||
| Derivatives | 3 | 3 | 3 | |||
| Senior debt | 6,039 | 6,039 | 6,044 | |||
| Subordinated debt | 832 | 832 | 830 | |||
| Other financial debts | 603 | 603 | 603 | |||
| Total | 3 | 22,985 | 22,988 | 22,991 |
| GROUP, 31 DEC 2017 | |||||||
|---|---|---|---|---|---|---|---|
| Assets/liabilities recognised at fair value through profit or loss |
Total | ||||||
| SEK million | Held for trading |
Designated | Loans and receivables |
Hedging instruments |
Other liabilities |
carrying | amount Fair value |
| Treasury bills and treasury bonds | 1,490 | 1,490 | 1,490 | ||||
| Lending to credit institutions | 1,681 | 1,681 | 1,681 | ||||
| Lending to the public | 37 | 37 | 37 | ||||
| Acquired loan portfolios | |||||||
| of which, at fair value | 940 | 940 | 940 | ||||
| of which, at amortised cost | 13,826 | 13,826 | 13,426 | ||||
| Bonds and other securities | 3,689 | 3,689 | 3,689 | ||||
| Derivatives | 4 | 7 | 11 | 11 | |||
| Other financial assets | 189 | 189 | 189 | ||||
| Total | 4 | 6,119 | 15,733 | 7 | 21,863 | 21,463 | |
| Deposits from the public | 13,227 | 13,227 | 13,227 | ||||
| Derivatives | 4 | 6 | 10 | 10 | |||
| Senior debt | 4,355 | 4,355 | 4,532 | ||||
| Subordinated debt | 803 | 803 | 811 | ||||
| Other financial debts | 536 | 536 | 536 | ||||
| Total | 4 | 6 | 18,921 | 18,931 | 19,116 |
| GROUP, 30 SEP 2017 | |||||||
|---|---|---|---|---|---|---|---|
| Assets/liabilities recognised at fair value through profit or loss |
Total | ||||||
| SEK million | Held for trading |
Designated | Loans and receivables |
Hedging instruments |
Other liabilities |
carrying amount |
Fair value |
| Cash | 3 | 3 | 3 | ||||
| Treasury bills and treasury bonds | 1,490 | 1,490 | 1,490 | ||||
| Lending to credit institutions | 1,135 | 1,135 | 1,135 | ||||
| Lending to the public | 32 | 32 | 32 | ||||
| Acquired loan portfolios | |||||||
| of which, at fair value | 947 | 947 | 947 | ||||
| of which, at amortised cost | 11,969 | 11,969 | 11,882 | ||||
| Bonds and other securities | 3,132 | 3,132 | 3,132 | ||||
| Derivatives | 5 | 37 | 42 | 42 | |||
| Other financial assets | 442 | 442 | 442 | ||||
| Total | 5 | 5,569 | 13,581 | 37 | 19,192 | 19,106 | |
| Deposits from the public | 12,301 | 12,301 | 12,301 | ||||
| Derivatives | 3 | 0 | 3 | 3 | |||
| Senior debt | 2,930 | 2,930 | 3,098 | ||||
| Subordinated debt | 773 | 773 | 780 | ||||
| Other financial debts | 380 | 380 | 380 | ||||
| Total | 3 | 16,384 | 16,387 | 16,562 |
| PARENT COMPANY, 30 SEP 2018 | ||||||
|---|---|---|---|---|---|---|
| Assets/liabilities recognised at fair value through profit or loss |
Total | |||||
| SEK million | Held for trading |
Mandatorily | Hedging instruments |
Amortised cost | carrying amount |
Fair value |
| Treasury bills and treasury bonds | 2,730 | 2,730 | 2,730 | |||
| Lending to credit institutions | 939 | 939 | 939 | |||
| Lending to the public | 20 | 20 | 20 | |||
| Acquired loan portfolios | 4,406 | 4,406 | 4,799 | |||
| Receivables, Group companies | 13,851 | 13,851 | 13,851 | |||
| Bonds and other securities | 2,994 | 2,994 | 2,994 | |||
| Derivatives | 6 | 33 | 39 | 39 | ||
| Other financial assets | 178 | 178 | 178 | |||
| Total | 6 | 5,724 | 33 | 19,394 | 25,157 | 25,550 |
| Deposits from the public | 15,511 | 15,511 | 15,511 | |||
| Derivatives | 3 | 3 | 3 | |||
| Senior debt | 6,039 | 6,039 | 6,044 | |||
| Subordinated debt | 832 | 832 | 830 | |||
| Other financial debts | 933 | 933 | 933 |
Total 3 23,315 23,318 23,321
The Group uses observable data to the greatest possible extent when assessing the fair value of an asset or liability. Fair values are categorised in different levels based on the input data used in the valuation approach, as per the following:
GROUP, 30 SEP 2018
| SEK million | Level 1 | Level 2 | Level 3 | Total |
|---|---|---|---|---|
| Treasury bills and Treasury bonds | 2,730 | 2,730 | ||
| Bonds and other securities | 2,994 | 2,994 | ||
| Derivatives | 39 | 39 | ||
| Total assets | 5,724 | 39 | 5,763 | |
| Derivatives | 3 | 3 | ||
| Senior debts | 6,044 | 6,044 | ||
| Subordinated debts | 830 | 830 | ||
| Total liabilities | 6,877 | 6,877 |
| GROUP, 31 DEC 2017 | ||||
|---|---|---|---|---|
| SEK million | Level 1 | Level 2 | Level 3 | Total |
| Treasury bills and Treasury bonds | 1,490 | 1,490 | ||
| Bonds and other securities | 3,689 | 3,689 | ||
| Derivatives | 11 | 11 | ||
| Total assets | 5,179 | 11 | 5,190 | |
| Derivatives | 10 | 10 | ||
| Senior debts | 4,532 | 4,532 | ||
| Subordinated debts | 811 | 811 | ||
| Total liabilities | 5,353 | 5,353 |
| GROUP, 30 SEP 2017 | ||||
|---|---|---|---|---|
| SEK million | Level 1 | Level 2 | Level 3 | Total |
| Treasury bills and Treasury bonds | 1,490 | 1,490 | ||
| Bonds and other securities | 3,132 | 3,132 | ||
| Derivatives | 42 | 42 | ||
| Total assets | 4,622 | 42 | 4,664 | |
| Derivatives | 3 | 3 | ||
| Senior debts | 3,098 | 3,098 | ||
| Subordinated debts | 780 | 780 | ||
| Total liabilities | 3,881 | 3,881 |
This note provides information required to be disclosed under the provisions of FFFS 2008:25, including applicable amendments, regarding annual accounts for credit institutions and FFFS 2014:12, including applicable amendments, regarding prudential requirements and capital buffers. The information relates to Hoist Finance on a consolidated basis ("Hoist Finance") and Hoist Finance AB (publ) ("Hoist Finance"), the regulated entity. The difference in the basis for consolidation between the consolidated accounts and the consolidated situation is that joint ventures are consolidated using the equity method in the consolidated accounts, whereas proportional consolidation is used for the consolidated situation. When establishing the company's statutory capital requirements, EU regulation No 575/2013 and the Swedish law (2014:966) on capital buffers primarily apply.
Comparative figures for Hoist Finance AB (publ) refer to the merged company Hoist Kredit AB (publ), which was the regulated entity within the Hoist Finance Group up until the merger on 2 January 2018. As a result of the merger, all assets and liabilities of Hoist Kredit AB (publ) were transferred to Hoist Finance AB (publ) and Hoist Kredit was dissolved.
The table below shows own funds used to cover the capital requirements for Hoist Finance consolidated situation and the regulated entity Hoist Finance.
| Hoist Finance consolidated situation |
Hoist Finance AB (publ) | ||||||
|---|---|---|---|---|---|---|---|
| SEK million | 30 Sep 2018 |
31 Dec 2017 |
30 Sep 2017 |
30 Sep 2018 |
31 Dec 2017 |
30 Sep 2017 |
|
| Capital instruments and related share premium accounts | 1,355 | 1,287 | 1,287 | 1,355 | 483 | 483 | |
| Retained earnings | 1,018 | 745 | 755 | 212 | 402 | 553 | |
| Accumulated comprehensive income and other reserves | 244 | 282 | 280 | 604 | 1,081 | 1,081 | |
| Independently reviewed interim profits net of any foreseeable charge or dividend1) |
297 | 299 | 156 | 503 | 183 | 0 | |
| Intangible assets (net of related tax liability) | –333 | –287 | –262 | –151 | –44 | –43 | |
| Deferred tax assets that rely on future profitability | –20 | –21 | –33 | –1 | –3 | –4 | |
| Other transitional arrangements | 3 | – | – | 1 | – | – | |
| Common Equity Tier 1 | 2,564 | 2,305 | 2,183 | 2,523 | 2,102 | 2,070 | |
| Capital instruments and the related share premium accounts | 690 | 380 | 380 | 690 | 380 | 380 | |
| Additional Tier 1 capital | 690 | 380 | 380 | 690 | 380 | 380 | |
| Tier 1 capital | 3,254 | 2,685 | 2,563 | 3,213 | 2,482 | 2,450 | |
| Capital instruments and the related share premium accounts | 832 | 803 | 773 | 832 | 803 | 773 | |
| Tier 2 capital | 832 | 803 | 773 | 832 | 803 | 773 | |
| Total own funds | 4,086 | 3,488 | 3,336 | 4,045 | 3,285 | 3,223 |
1) Regulatory dividend deduction is calculated at 30 per cent of net profit for the year, the maximum dividend allowed under the Group's internal Dividend Policy.
The tables below shows the risk-weighted exposure amounts and minimum capital requirements per risk category for Hoist Finance consolidated situation and the regulated entity Hoist Finance.
| Risk-weighted exposure amounts | Hoist Finance consolidated situation |
Hoist Finance AB (publ) | |||||
|---|---|---|---|---|---|---|---|
| SEK million | 30 Sep 2018 |
31 Dec 2017 |
30 Sep 2017 |
30 Sep 2018 |
31 Dec 2017 |
30 Sep 2017 |
|
| Exposures to central governments or central banks | 0 | 0 | 0 | 0 | 0 | 0 | |
| Exposures to regional governments or local authorities | 0 | 0 | 0 | 0 | 0 | 0 | |
| Exposures to institutions | 399 | 381 | 335 | 222 | 150 | 137 | |
| of which, counterparty credit risk | 34 | 54 | 57 | 34 | 54 | 57 | |
| Exposures to corporates | 254 | 136 | 154 | 14,056 | 10,935 | 9,260 | |
| Retail exposures | 92 | 16 | 17 | 87 | 16 | 17 | |
| Exposures secured by mortgages on immovable property | 421 | – | – | 120 | – | – | |
| Exposures in default | 18,970 | 15,349 | 13,557 | 4,155 | 2,496 | 2,473 | |
| Exposures in the form of covered bonds | 299 | 369 | 313 | 299 | 369 | 313 | |
| Equity exposures | – | – | – | 2,143 | 2,143 | 1,924 | |
| Other items | 95 | 145 | 104 | 52 | 44 | 26 | |
| Credit risk (standardised approach) | 2,530 | 16,396 | 14,480 | 21,134 | 16,153 | 14,150 | |
| Market risk (foreign exchange risk – standardised approach) | 60 | 113 | 22 | 60 | 113 | 22 | |
| Operational risk (standardised approach) | 3,158 | 3,158 | 2,623 | 1,128 | 1,128 | 893 | |
| Credit valuation adjustment (standardised approach) | 33 | 27 | 36 | 33 | 27 | 36 | |
| Total risk-weighted exposure amount | 23,781 | 19,694 | 17,161 | 22,355 | 17,421 | 15,101 |
| Capital requirements | Hoist Finance consolidated situation |
Hoist Finance AB (publ) | |||||
|---|---|---|---|---|---|---|---|
| SEK million | 30 Sep 2018 |
31 Dec 2017 |
30 Sep 2017 |
30 Sep 2018 |
31 Dec 2017 |
30 Sep 2017 |
|
| Pillar 1 | |||||||
| Exposures to central governments or central banks | 0 | 0 | 0 | 0 | 0 | 0 | |
| Exposures to regional governments or local authorities | 0 | 0 | 0 | 0 | 0 | 0 | |
| Exposures to institutions | 32 | 30 | 27 | 18 | 12 | 11 | |
| of which, counterparty credit risk | 3 | 4 | 5 | 3 | 4 | 5 | |
| Exposures to corporates | 20 | 11 | 12 | 1,125 | 875 | 741 | |
| Retail exposures | 7 | 1 | 1 | 7 | 1 | 1 | |
| Exposures secured by mortgages on immovable property | 34 | – | – | 10 | – | – | |
| Exposures in default | 1,518 | 1,228 | 1,085 | 332 | 200 | 198 | |
| Exposures in the form of covered bonds | 24 | 30 | 25 | 24 | 30 | 25 | |
| Equity exposures | – | – | – | 171 | 171 | 154 | |
| Other items | 8 | 12 | 8 | 4 | 4 | 2 | |
| Credit risk (standardised approach) | 1,643 | 1,312 | 1,158 | 1,691 | 1,293 | 1,132 | |
| Market risk (foreign exchange risk – standardised approach) | 5 | 9 | 2 | 5 | 9 | 2 | |
| Operational risk (standardised approach) | 253 | 253 | 210 | 90 | 90 | 71 | |
| Credit valuation adjustment (standardised approach) | 3 | 2 | 3 | 3 | 2 | 3 | |
| Total own funds requirement – Pillar 1 | 1,904 | 1,576 | 1,373 | 1,789 | 1,394 | 1,208 | |
| Pillar 2 | |||||||
| Concentration risk | 153 | 131 | 132 | 153 | 131 | 132 | |
| Interest rate risk in the banking book | 41 | 36 | 37 | 41 | 36 | 37 | |
| Pension risk | 3 | 3 | 3 | 3 | 3 | 3 | |
| Other Pillar 2 risks | 34 | 26 | 23 | 34 | 26 | 23 | |
| Total own funds requirement – Pillar 2 | 231 | 196 | 195 | 231 | 196 | 195 | |
| Capital buffers | |||||||
| Capital conservation buffer | 595 | 492 | 429 | 559 | 436 | 378 | |
| Countercyclical buffer | 43 | 11 | 8 | 35 | 8 | 11 | |
| Total own funds requirement – Capital buffers | 638 | 503 | 437 | 594 | 444 | 389 | |
| Total own funds requirements | 2,773 | 2,275 | 2,005 | 2,614 | 2,034 | 1,792 |
Regulation (EU) No 575/2013 of the European Parliament and the Council requires credit institutions to maintain Common Equity Tier 1 capital of at least 4.5 per cent, Tier 1 capital of at least 6 per cent and a total capital ratio (capital in relation to risk-weighted exposure amount) of 8 per cent. Credit institutions are also required to maintain specific capital buffers. Hoist Finance is currently required to maintain a capital conservation buffer of 2.5 per cent of the total risk-weighted exposure amount and an institutional specific countercyclical buffer of 0.18 per cent of the total risk-weighted exposure amount.
The table below shows CET1 capital, Tier 1 capital and the total capital ratio in relation to the total risk-weighted exposure amount for Hoist Finance and for the regulated entity Hoist Finance. It also shows the total regulatory requirements under each pillar and the institution-specific CET1 capital requirements.
All capital ratios exceed the minimum requirements and capital buffer requirements by a healthy margin.
| Hoist Finance consolidated situation |
Hoist Finance AB (publ) | |||||
|---|---|---|---|---|---|---|
| Capital ratios and capital buffers, % | 30 Sep 2018 |
31 Dec 2017 |
30 Sep 2017 |
30 Sep 2018 |
31 Dec 2017 |
30 Sep 2017 |
| Common Equity Tier 1 capital ratio | 10.79 | 11.70 | 12.72 | 11.28 | 12.07 | 13.70 |
| Tier 1 capital ratio | 13.69 | 13.63 | 14.93 | 14.36 | 14.25 | 16.22 |
| Total capital ratio | 17.19 | 17.71 | 19.43 | 18.09 | 18.86 | 21.33 |
| Institution-specific buffer requirements for CET1 capital | 7.18 | 7.05 | 7.05 | 7.15 | 7.05 | 7.07 |
| of which, capital conservation buffer requirement | 2.50 | 2.50 | 2.50 | 2.50 | 2.50 | 2.50 |
| of which, countercyclical capital buffer requirement | 0.18 | 0.05 | 0.05 | 0.15 | 0.05 | 0.07 |
| Common Equity Tier 1 capital available to meet buffers1) | 6.29 | 7.20 | 8.22 | 6.78 | 7.57 | 9.20 |
1) CET1 ratio as reported, less minimum requirement of 4.5 per cent (excluding buffer requirements) and less any CET1 items used to meet the Tier 1 and total capital requirements.
As per 30 September 2018, the internally assessed capital requirement for Hoist Finance was SEK 2,135 million (1,771), of which SEK 231 million (196) was attributable to Pillar 2.
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 being unable to meet payment obligations, without a significant increase in the cost of obtaining means of payment.
Because the Group's revenues and costs are relatively stable, liquidity risk is primarily associated with the Group's funding which is based on deposits from the public and the risk of major outflows of deposits on 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 amounts of liquid assets or immediately divestible assets to ensure timely satisfaction of its payment obligations without incurring significantly higher costs.
Funding primarily takes the form of deposits from the public and the issuance of senior unsecured debt and own funds instruments, as well as equity. The majority of deposits from the public are payable on demand (variable deposits – "floating"), while about 32 per cent (35) of the Group's deposits from the public are tied to longer maturities ("fixed deposits") ranging from 12 to 36 months. About 99 per cent of deposits are backed by the deposit guarantee scheme.
Comparative figures for Hoist Finance AB (publ) refer to the merged company Hoist Kredit AB (publ), which was the regulated entity within the Hoist Finance Group up until the merger on 2 January 2018. As a result of the merger, all assets and liabilities of Hoist Kredit AB (publ) were transferred to Hoist Finance AB (publ) and Hoist Kredit was dissolved.
| Funding | Hoist Finance consolidated situation |
Hoist Finance AB (publ) | |||||
|---|---|---|---|---|---|---|---|
| SEK million | 30 Sep 2018 |
31 Dec 2017 |
30 Sep 2017 |
30 Sep 2018 |
31 Dec 2017 |
30 Sep 2017 |
|
| Current account deposits | 10,609 | 8,580 | 7,915 | 10,609 | 8,580 | 7,915 | |
| Fixed-term deposits | 4,902 | 4,647 | 4,386 | 4,902 | 4,647 | 4,386 | |
| Senior debts | 6,039 | 4,355 | 2,930 | 6,039 | 4,355 | 2,930 | |
| Convertible debt instruments | 690 | 380 | 380 | 690 | 380 | 380 | |
| Subordinated debts | 832 | 803 | 773 | 832 | 803 | 773 | |
| Equity | 3,611 | 2,849 | 2,736 | 3,242 | 2,100 | 2,136 | |
| Other | 967 | 923 | 718 | 1,254 | 613 | 388 | |
| Balance sheet total | 27,650 | 22,537 | 19,838 | 27,568 | 21,478 | 18,908 |
The Group's Treasury Policy specifies a limit and a target level for the amount of available liquidity. Available liquidity totalled SEK 7,334 million (6,800) as per 30 September, 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.
| SEK million | 30 Sep 2018 |
31 Dec 2017 |
30 Sep 2017 |
|---|---|---|---|
| Cash and holdings in central banks | 0 | 0 | 0 |
| Deposits in other banks available overnight | 1,610 | 1,621 | 1,077 |
| Securities issued or guaranteed by sovereigns, central banks or multilateral development banks | 1,570 | 1,061 | 1,361 |
| Securities issued or guaranteed by municipalities or other public sector entities | 1,160 | 429 | 129 |
| Covered bonds | 2,994 | 3,689 | 3,132 |
| Securities issued by non-financial corporates | – | – | – |
| Securities issued by financial corporates | – | – | – |
| Other | – | – | – |
| Total | 7,334 | 6,800 | 5,702 |
Hoist Finance has a contingency funding plan for managing liquidity crises. This identifies specific events that may trigger the contingency plan and actions to be taken.
| Group | Parent Company | |||||
|---|---|---|---|---|---|---|
| SEK million | 30 Sep 2018 |
31 Dec 2017 |
30 Sep 2017 |
30 Sep 2018 |
31 Dec 2017 |
30 Sep 2017 |
| Pledges and comparable collateral for own liabilities and for reported commitments for provisions |
69 | 49 | 46 | 13 | – | – |
| Group | Parent Company | |||||
|---|---|---|---|---|---|---|
| SEK million | 30 Sep 2018 |
31 Dec 2017 |
30 Sep 2017 |
30 Jun 2018 |
31 Dec 2017 |
30 Sep 2017 |
| Commitments | 2,065 | 698 | 1,042 | 360 | – | – |
| EBIT margin SEK million |
Quarter 3 2018 |
Quarter 3 2017 |
Jan–Sep 2018 |
Jan–Sep 2017 |
Full year 2017 |
|---|---|---|---|---|---|
| Profit before tax | 243 | 182 | 568 | 472 | 581 |
| Net income financial transactions | –40 | –7 | –27 | 50 | 50 |
| Interest expense | 93 | 68 | 247 | 230 | 305 |
| Interest income excl. run-off consumer loan portfolio | 3 | 4 | 12 | 10 | 15 |
| EBIT | 299 | 247 | 800 | 762 | 951 |
| Net revenues from acquired loan portfolios | 634 | 1,944 | 2,644 | ||
| Interest income acquired loan portfolios | 718 | 2,036 | |||
| Interest income from run-off consumer loan portfolio | 0 | 1 | 3 | 2 | 5 |
| Impairment gains and losses | 51 | 200 | |||
| Fee and commission income | 16 | 17 | 49 | 57 | 73 |
| Profit from shares and participations in joint ventures | 11 | 11 | 49 | 55 | 76 |
| Derecognition gains and losses | – | –2 | |||
| Other operating income | 3 | 2 | 9 | 9 | 13 |
| Total revenue | 799 | 665 | 2,344 | 2,067 | 2,811 |
| EBIT margin | 37 | 37 | 34 | 37 | 34 |
| SEK million | Quarter 3 2018 |
Quarter 3 2017 |
Full year 2017 |
|---|---|---|---|
| Profit for the period | 182 | 145 | 453 |
| + Income tax expense |
61 | 37 | 128 |
| +/– Net result from financial transactions | –40 | –7 | 50 |
| + Interest expense |
93 | 68 | 305 |
| – Interest income (excl. interest from run-off performing portfolio) |
3 | 4 | 14 |
| + Portfolio revaluations |
–8 | –11 | |
| –/+ Impairment gains and losses | –51 | – | – |
| + Depreciation and amortisation of tangible and intangible assets | 15 | 14 | 56 |
| EBITDA | 263 | 253 | 995 |
| + Amortisation on run-off portfolio |
4 | 11 | |
| + Amortisation on acquired loan portfolios |
508 | 2,244 | |
| + Gross cash collections on acquired loan portfolios |
1,404 | – | – |
| – Interest income on acquired loan portfolios |
–718 | – | – |
| EBITDA, adjusted | 949 | 765 | 3,250 |
| SEK thousand | Quarter 3 2018 |
Quarter 3 2017 |
Full year 2017 |
|---|---|---|---|
| Equity | 4,301 | 3,116 | 3,228 |
| Additional Tier 1 capital | –690 | –380 | –380 |
| Reversal of interest expense paid for AT1 capital | 42 | 20 | 28 |
| Reversal of items affecting comparability1) 2) | –10 | – | 102 |
| Total equity | 3,643 | 2,756 | 2,978 |
| Total equity (quarterly average) | 3,305 | 2,730 | 2,752 |
| Profit for the period | 182 | 145 | 453 |
| Reversal of items affecting comparability1) 2) | –33 | – | 102 |
| Estimated annual profit | 596 | 580 | 555 |
| Adjustment of interest on AT1 capital | –60 | –40 | –40 |
| Adjusted annual profit | 534 | 540 | 515 |
| Return on equity, % | 16 | 20 | 19 |
1) Items affecting comparability 2018 refer to a cost linked to the take-over of a previously externally managed loan portfolio and restructuring costs, including tax. 2) Items affecting comparability 2017 refer to costs which arose in connection with the repurchase of subordinated debts and outstanding bonds during second
quarter 2017 and with restructuring costs and adjustment of previous cost accruals during fourth quarter 2017, including tax.
| SEK million | Original measurement category under IAS 39 |
Original carrying value under IAS 39 |
New measurement category under IFRS 9 |
Reclassification | Remeasure ment |
Net carrying value under IFRS 9 |
|---|---|---|---|---|---|---|
| Cash | Loans and receivables | 0 | Amortised cost | – | – | 0 |
| Treasury bills and treasury bonds | FVPL identified | 1,490 | FVPL mandatorily | – | – | 1,490 |
| Lending to credit institutions | Loans and receivables | 1,681 | Amortised cost | – | – | 1,681 |
| Lending to the public | Loans and receivables | 37 | Amortised cost | – | – | 37 |
| Acquired loan portfolios | FVPL identified | 940 | Amortised cost | –940 | – | – |
| Acquired loan portfolios | Loans and receivables | 13,826 | Amortised cost | 940 | 11 | 14,777 |
| Bonds and other securities | FVPL identified | 3,689 | FVPL mandatorily | – | – | 3,689 |
| Derivatives | FVPL Held for trading | 4 | FVPL Held for Trading | – | – | 4 |
| Derivatives | Hedging instruments | 7 | Hedging instruments | – | – | 7 |
| Other financial assets | Loans and receivables | 189 | Amortised cost | – | – | 189 |
| Deposits from the public | Other liabilities | 13,227 | Amortised cost | – | – | 13,227 |
| Derivatives | FVPL Held for trading | 4 | FVPL Held for Trading | – | – | 4 |
| Derivatives | Hedging | 6 | Hedging instruments | – | – | 6 |
| Senior unsecured liabilities | Other liabilities | 4,355 | Amortised cost | – | 8 | 4,363 |
| Subordinated liabilities | Other liabilities | 803 | Amortised cost | – | – | 803 |
| Other financial liabilities | Other liabilities | 536 | Amortised cost | – | – | 536 |
Acquired loan portfolios – prior to the introduction of IFRS 9, the portfolios' carrying value was based on expected cash flows and revaluation effects were reported under income statement item Net revenue from acquired loan portfolios. This method corresponds in large part
with the calculation of loss allowance under IFRS 9; consequently, the transition impact in the opening balance is immaterial.
Other financial assets valued at amortised cost – the expected credit loss at transition to IFRS 9 was not material, and therefore, was not reported.
| SEK million | |
|---|---|
| Fair value of the reclassified acquired loan portfolios as of 31 Dec 2017 | 940 |
| Fair value as at reporting date, if the acquired loan portfolio would not have been reclassified | 922 |
| Fair value gain/loss during the period, if the acquired loan portfolio would not have been reclassified | –18 |
| Effective interest rate of reclassified acquired loans on date of initial application, % | 21 |
| Interest revenue recorded during the period Jan–Jun 2018 | 88 |
The Board of Directors and the CEO hereby give their assurance that the interim financial statements 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 24 October 2018
Ingrid Bonde Chair of the Board
Cecilia Daun Wennborg Malin Eriksson Board member Board member
Liselotte Hjorth Marcial Portela Board member Board member
Board member Board member
Joakim Rubin Gunilla Öhman
Jörgen Olsson Board member
Klaus-Anders Nysteen CEO
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 are not directly comparable with similar performance measures that are presented by other companies. Estimated remaining collections, Return on book and Adjusted EBITDA are three APMs that are used by Hoist Finance. Moreover, during the period, Hoist Finance has chosen to present as APMs: Return on equity and Diluted earnings per share, both of which are presented excluding nonrecurring items. Alternative performance measures are described below.
Number of employees at the end of the period converted to full-time posts (FTEs).
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.
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 financial year based on a quarterly basis.
Net result for the year as a percentage of total assets at the end of the year.
"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 120/180 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.
Earnings before Interest and Tax. Operating profit before financial items and tax.
EBIT (operating earnings) divided by total revenue.
EBIT (operating earnings), less depreciation/ impairments and amortisation ("EBITDA"), adjusted for depreciation of acquired loan portfolios.
An originator's loan is non-performing as at the balance-sheet date if it is past due or will be due shortly.
Total of acquired loan portfolios, run-off consumer loan portfolios and participations in joint ventures.
An acquired loan portfolio consists of a number of defaulted consumer loans and SME loans that arise from the same originator.
Total operating expenses in relation to Total operating income and Profit from shares and participations in joint ventures.
Fees for providing debt management services to third parties.
Gross cash flow on acquired loan portfolios comprises payments from the Group's customers on loans included in Group's acquired loan portfolios.
Nonrecurring items are defined as items that disturb comparison in the sense that their occurrence and/or scale has an irregularity that does not apply to other items.
Sum of Tier 1 capital and Tier 2 capital.
market risk and operational risk. Capital requirements – Pillar 2 Capital requirements beyond those stipulated
Minimum capital requirements for credit risk,
in Pillar 1.
Capital instruments and the related share premium accounts 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.
CET1 capital in relation to the total risk exposure amount.
Legal collections relate to gross collections following the initiation of Hoist Finance's litigation process. This process assesses customers' solvency and follows regulatory and legal requirements.
Net interest income for the period, calculated on a full-year basis, in relation to the period's average Acquired loan portfolios, calculated as the period average based on quarterly values during the period.
The sum of collections from acquired loan portfolios and income from the run-off consumer loan portfolio, less portfolio amortization and revaluation.
EBIT (operating profit) on a full-year basis, exclusive of Central Functions operating expenses, divided by average the carrying amount of acquired loan portfolios. In the financial statements, calculation of the average carrying amount is based on the opening balance at the beginning of the year and the closing balance at the end of the year. For the full year, the average value is based on the quarterly values during the financial year.
The share of gross collections that will be used for amortising the carrying amount of acquired loan portfolios.
Changes in the portfolio value based on revised estimated remaining collections for the portfolio.
Changes in the carrying amount of acquired loan portfolios over the last 12 months (LTM).
The sum of CET1 capital and additional Tier 1 capital.
Tier 1 capital as a percentage of the total risk exposure amount.
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.
Net profit for the period, adjusted for interest on capital instruments recorded in equity, divided by the weighted average number of outstanding shares after full dilution.
Net profit for the period, adjusted for interest on capital instruments recorded in equity, divided by the weighted average number of outstanding shares.
The risk weight of each exposure multiplied by the exposure amount.
A company that employs fewer than 250 people and has either annual sales of EUR 50 million or less or a balance sheet total of EUR 43 million or less.
Capital instruments and the related share premium accounts that meet the requirements of Regulation (EU) 575/2013 of the European Parliament and the Council and that may accordingly be included in own funds.
Total of net revenue from acquired loan, fee and commission income, profit from joint ventures and other income.
Own funds as a percentage of the total risk exposure amount.
shares outstanding
Weighted number of shares outstanding plus potential dilutive effect of warrants outstanding.
The internal funding cost is determined per portfolio applying the following monthly interest rate: (1+annual interest)^(1/12)-1.
Our Mission – Your Trust
Helping people keep their commitments.
Achieve an operating margin of over 40 per cent in the medium term horizon by leveraging our operational scale advantages.
By ensuring the right balance between growth, profitability and capital efficiency, we aim to achieve a 20 per cent return on equity in the medium-term horizon.
Under normal conditions, the CET1 ratio should be 2.5–4.5 percentage points above the overall CET1 requirements specified by the Swedish Financial Supervisory Authority.
Pursuant to our dividend policy, we will initially pay a dividend of 25–30 per cent of the Group's net profit in the medium-term horizon. In light of the strong cash flow that our business has generated historically, our long-term goal is to pay a dividend of 50 per cent of our annual net profit.
| Capital Markets Day 2018 | 15 November 2018 |
|---|---|
| Year-end report 2018 | 12 February 2019 |
| Interim report Q1 2019 | 14 May 2019 |
| Interim report Q2 2019 | 30 July 2019 |
| Interim report Q3 2019 | 5 November 2019 |
Investor Relations Michel Fischier Group Head of Investor Relations
Ph: +46 (0) 8-555 177 45 E-post: [email protected] Hoist Finance AB (publ) Corp. ID no. 556012-8489 Box 7848, 103 99 Stockholm Ph: +46 (0) 8-555 177 90 www.hoistfinance.com
The interim report and investor presentation are available at www.hoistfinance.com
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.
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