Quarterly Report • May 15, 2018
Quarterly Report
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A strong start to the year, with growth and expansion into new asset classes
Figures in brackets refer to first quarter 2017 for profit/loss comparisons and to the closing balance at 31 December 2017 for balance sheet items.
Christer Johansson appointed as new CFO.
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.
This information is information that Hoist Finance AB (publ) is obliged to make public pursuant to the EU Market Abuse Regulation and the Securities Markets Act. The information was submitted for publication by Michel Fischier at 08:00 AM CET on 15 May 2018.
Hoist Finance Interim report January – March 2018
It is truly a great pleasure for me to present my first quarterly report as CEO of Hoist Finance. Since I took office on 15 March 2018, I've had the opportunity to meet all parts of our organisation and many of our clients, the leading financial institutions in Europe. I am both proud and enthused by the dedication of our highly skilled staff that demonstrates a strong loyalty for both our customers, our clients and our company.
I am also impressed by the strong reputation our organisation has built with all relevant stakeholders. We add value by reducing tied-up capital for our clients and enable them to focus fully on their core competence. We also play an important role when we help people keep their commitments and enable our customers to re-enter the financial ecosystem.
Our industry is currently shaped by three trends; growth, consolidation and market maturation.
Firstly, we estimate that the market will continue to develop favourably, with a growth exceeding 10 per cent per annum up until 2020. This is driven by regulatory changes and changes in accounting principles, but also by the fact that financial institutions see that our industry is becoming more professional. We add value by delivering a service that is both professional, and knowledge based. We prioritise investments in building skills and collection practices that support our target to capture and outpace the market growth that lies ahead of us.
Secondly, the market is consolidating. We have seen several small and large transactions over the last couple of years, and my belief is that this is a process that will continue. Increasing regulation and the need to become more effective and efficient are strong drivers for the industry consolidation. Hoist Finance has the ambition to play an active role in this process.
Finally, the market is maturing at a steady pace. We have seen that prices are up, but also that risks are down. The future winners are those organizations that have the best operations and deliver the value proposition that addresses the clients' needs. We believe that specialisation is of great importance both for operational excellence and differentiation. Consequently, Hoist Finance will focus on some prioritized European markets with an undivided focus on financial institutions.
Helping people keep their commitments
Since taking the helm of Hoist Finance, we have reorganized the company, giving it a setup that is more efficient than before. We will increase the level of integration and collaboration and work as One Hoist Finance. The new Executive Management Team is committed to deliver on our growth ambitions, but also to take Hoist Finance to the next level in terms of harmonised best-practices, digitalised processes and organizational design.
The new and more efficient organisational structure also means that there are some changes to how we report. We will now report our segments based on countries instead of regions. As for our financial reporting it will now be based on IFRS 9. This increases both clarity and transparency, and is also natural since we grow in loans which are not defaulted, meaning that we increase in resemblance to the banking sector in general.
During the quarter we acquired portfolios amounting to SEK 904 million which translates into the best first quarter in our history when it comes to acquisitions. We have also entered into a forward-flow agreement with an Italian financial institution. The agreement is one of the first large forward flow contracts entered in Italy and reaffirms our strong position in the Italian market.
Furthermore we entered into an agreement to acquire a UK mortgage portfolio. The portfolio consists of performing and non-performing secured loans on residential and commercial properties. This acquisition underpins our capability to expand into other asset classes and also our ability to do so in the prudent and disciplined manner, which has become the hallmark of Hoist Finance.
The quarter's profit before tax amounted to SEK 185 million and return on equity was 18 per cent which is broadly in line with our performance same period last year and also in line with our full year plan.
Let me use this opportunity to thank Jörgen Olsson for his contribution to developing Hoist Finance into one of the leading institutions of our industry. I am both honoured and excited to take the helm at such an interesting point in the history of our company and our industry.
Looking into the coming year we can see that a solid pipeline of possible NPL portfolio acquisitions and partnerships bodes well for a strong financial performance. While we have an intense roadmap for developing our company and the way we operate further, focus remains fixed on growth and increased efficiency on all levels to reach our financial targets.
Klaus-Anders Nysteen CEO Hoist Finance AB (publ)
| SEK million | Quarter 1 2018 |
Quarter 1 2017 |
Change, % |
Full year 2017 |
|---|---|---|---|---|
| Net operating income | 684 | 603 | 13 | 2,365 |
| Profit before tax | 185 | 185 | 0 | 581 |
| Net profit | 140 | 145 | –3 | 453 |
| Basic earnings per share, SEK | 1.59 | 1.66 | –4 | 5.10 |
| Diluted earnings per share, SEK1) | 1.59 | 1.66 | –4 | 5.09 |
| Net interest income margin, %2) | 15 | |||
| C/I ratio, %3) | 74 | 71 | 3 pp | 76 |
| EBIT margin, % | 34 | 38 | –4 pp | 34 |
| Return on equity, %4) | 18 | 21 | –3 pp | 15 |
| Portfolio acquisitions | 904 | 611 | 48 | 4,253 |
| SEK million | 31 Mar 2018 |
31 Dec 2017 |
Change, % |
|---|---|---|---|
| Carrying value on acquired loan portfolios5) | 16,112 | 15,024 | 7 |
| Gross 180-month ERC6),7) | 26,932 | ||
| Gross 120-month ERC6) | 24,700 | 23,991 | 3 |
| Total capital ratio, % | 17.15 | 17.71 | –0.6 pe |
| CET1 ratio, % | 11.35 | 11.70 | –0.4 pe |
| Liquidity reserve | 7,003 | 6,800 | 3 |
| Number of employees (FTEs) | 1,384 | 1,335 | 4 |
1) 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. Where calculation of net interest income under IFRS 9 is not comparable with IAS 39, Hoist Finance has elected not to present comparative figures. 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) Including run-off consumer loan portfolio and portfolios held in the Polish joint venture.
6) Excluding run-off consumer loan portfolio and portfolios held in the Polish joint venture.
7) From 1 January 2018, Hoist Finance has decided 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.
Unless otherwise indicated, all comparative market, financial and operational information refers to first quarter 2017.
Interest income acquired loan portfolios is a new income statement item as from 1 January 2018 and follows the introduction of IFRS 9 "Financial instruments", which took effect at the turn of the year. In this item, interest income from acquired loan portfolios is calculated as the effective interest rate multiplied by the opening carrying amount of acquired loan portfolios for the period. This interest income totalled SEK 645 million for the first quarter. Net revenues from acquired loan portfolios as previously reported, was calculated as gross collections from acquired loan portfolios less portfolio amortisation and revaluation. These revenues totalled SEK 664
million for the comparative quarter; this figure includes the effects of actual collections exceeding projected collections and of portfolio revaluations. As from 1 January 2018, deviations between actual and projected collections, as well as portfolio revaluations, are recognised in income statement item Impairment gains and losses, after Net interest income.
Other interest income decreased somewhat to SEK –4 million (–1) in line with expectations, as the interest rate on liquidity portfolio assets remains negative. Interest expense for the period decreased to SEK –75 million (–77) despite the strong increase in issued debt during 2017. This is a consequence of Hoist Finance's long-
Profit before tax
term financing strategy, with a strong credit rating and a favourable market enabling the Company to issue new debt at attractive levels. Interest expense from Deposits from the public was marginally lower quarter-on-quarter, with a lower interest rate preventing a rise in interest expense despite a large increase in volume.
Impairment gains and losses totalled SEK 103 million. SEK 4 million of this amount is attributable to portfolio revaluations resulting from adjusted collection projections for future periods. The remaining SEK 99 million represents collections realised during the period in excess of projections for the period. The collection level, which is somewhat better than the comparative figure for full-year 2017, corresponds to 108 per cent of the projected level for the quarter.
Fee and commission income for the quarter decreased somewhat, from SEK 21 million to SEK 17 million, in line with the previously communicated strategy of focusing on the acquisition and management of loan portfolios.
Net result from financial transactions totalled SEK –5 million (–9). The result for the three main components – changes in value for interest rate hedging instruments, changes in market value for bonds in the liquidity portfolio, and profit/ loss from FX hedging – was limited.
Total operating income increased 13 per cent to SEK 684 million (603), mainly due to portfolio growth in Italy and Spain. Portfolio growth includes an increase in secured loans and SME loans, as well as continued efforts to expand the Company's presence in the relatively new Spanish market.
Personnel expenses increased 15 per cent during the quarter to SEK –194 million (–169). A shift in focus in the Polish market away from legal collection activities towards long-term voluntary repayment plans resulted in increased personnel expenses, which should be viewed in relation to an expected reduction in the share of legal collection costs over time. In addition to the foregoing, a significant portion of the cost increase during the period was attributable to continued strong portfolio growth, which is largely connected to an increased focus on SME and collaterals. There has been a need for expanded expertise in these asset classes, mainly in the Italian and French markets. Strategic and digital initiatives were also reflected in the increase in personal expenses within Central Functions as compared with previous periods.
Collection costs increased 15 per cent during the quarter to SEK –194 million (–169). A large part of this increase pertains to increased costs on the Polish market, where regulatory changes led to the acceleration of certain legal collection activities during the quarter. The rest of the increase is fully in line with expectations, as portfolio growth has remained good.
Administrative expenses increased to SEK –112 million (–94). The increase was largely attributable to advisory services regarding potential portfolio acquisitions, for which the market was uncommonly strong during the quarter. External advisory services related to the above-referenced strategic and digital initiatives also contributed to the cost increase.
Depreciation and amortisation of tangible and intangible assets was unchanged at SEK –14 million (–14). However, this does not reflect the increased pace of investment, which
includes investments in new collection systems that have not yet been put into operation.
Total operating expenses increased to SEK –514 million (–446).
Profit from participations in joint ventures decreased 44 per cent to SEK 15 million (28). The decrease was due entirely to the fact that the comparative quarter included performance-based remuneration of SEK 13 million for work performed in 2016.
Income tax expense totalled SEK –45 million (–40), representing an effective tax rate of 24 per cent (22).
Net profit totalled SEK 140 million (145).
Total assets increased SEK 1,491 million quarter-on-quarter and totalled SEK 24,028 million (22,537). The change is primarily due to acquired loan portfolios, which increased to SEK 1 089 million, with the growth attributable to acquisitions in the UK, Italy and Poland and to the weakening of the Swedish krona during the quarter against all of Hoist Finance's relevant currencies.
| SEK million | 31 Mar 2018 | 31 Dec 2017 | Change, % |
|---|---|---|---|
| Cash and interest-bearing securities |
7,071 | 6,861 | 3 |
| Acquired loan portfolios | 15,855 | 14,766 | 7 |
| Other assets1) | 1,102 | 910 | 21 |
| Total assets | 24,028 | 22,537 | 7 |
| Deposits from the public | 14,345 | 13,227 | 8 |
| Unsecured debt | 4,571 | 4,355 | 5 |
| Subordinated liabilities | 848 | 803 | 6 |
| Total interest-bearing liabilities | 19,764 | 18,385 | 7 |
| Other liabilities1) | 862 | 924 | –7 |
| Equity | 3,402 | 3,228 | 5 |
| Total liabilities and equity | 24,028 | 22,537 | 7 |
1) This item does not correspond to an item of the same designation in the balance sheet, but instead includes additional items.
Total liabilities amounted to SEK 24,028 million (22,537). The increase was mainly attributable to deposits from the public, which increased SEK 1,117 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 12,048 million (12,242), of which SEK 4,583 million (4,569) is attributable to fixed term deposits of 12, 24, and 36 months duration. In Germany, deposits for retail customers have been offered since September 2017 under the Hoist Finance name. At 31 March 2018, deposits from the public in Germany were SEK 2,297 million (985), of which SEK 207 million is attributable to fixed term deposits of 12 and 24 months duration.
At 31 March 2018, the outstanding bond debt totalled SEK 5,419 million (5,158), of which SEK 4,571 million (4,355) was unsecured debt. Equity totalled SEK 3,402 million (3,228). The increase was mainly attributable to net profit for the year.
Comparative figures refer to first 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 1 2018 |
Quarter 1 2017 |
Full year 2017 |
|---|---|---|---|
| Cash flow from operating activities | 49 | 445 | 2,495 |
| Cash flow from investing activities | –670 | –1,116 | –5,439 |
| Cash flow from financing activities | 1,042 | –9 | 2,751 |
| Cash flow for the period | 421 | –681 | –193 |
Cash flow from operating activities totalled SEK 49 million (445). Amortisation of acquired loan portfolios is presented as a separate cash flow item as from 1 January 2018, and totalled SEK 649 million. This amount is included in the cash flow item "Increase/decrease in other assets and liabilities" as presented in the financial statements. Other effects pertain to realised cash flows from other assets and liabilities, which totalled SEK –670 million (–265).
Cash flow from investing activities totalled SEK –670 million (–1,116). Portfolio acquisitions increased during the quarter as compared with Q1 2017, totalling SEK –904 million (–611). A net total of SEK 248 million in bonds and other securities was sold during the quarter.
Cash flow from financing activities totalled SEK 1,042 million (–9) and is attributable to the inflow from deposits from the public. Deposits in Germany accounted for SEK 1,228 million of the inflow, with most of that amount related to variable interest rate deposits. This effect was somewhat offset by a reduction in variable interest rate deposits in the Swedish HoistSpar deposit operation.
Total cash flow for the quarter amounted to SEK 421 million, as compared to SEK –681 million for first 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. through Basel IV capital and liquidity regulations), and indirectly through the impact of these regulations on the market supply of loan portfolios. Hoist Finance's crossborder operations involve consolidated tax issues relating to subsidiaries in several jurisdictions. The Group is therefore exposed to potential tax risks arising from varying interpretations and application 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.
Operational risk is deemed to have increased somewhat during the quarter as a natural consequence of operational reorganisation following the new CEO taking up his post in mid-March. This increase is expected to be temporary and to return to previous levels following completion of the reorganisation. The Group works continuously to improve the quality of its internal processes in order to limit operational risks.
Market risks remain low, as Hoist Finance continuously hedges both interest rate and FX risks in the short and medium term.
Capitalisation for Hoist Finance remains strong. The capital ratios exceed regulatory requirements by a healthy margin. Hoist Finance is therefore better able to absorb unanticipated events without jeopardising its solvency, and the Company is well capitalised for continued growth.
Liquidity risk was low during the quarter. Hoist Finance's liquidity reserve well exceeds the limits set by the Group. Due to its strong liquidity position, Hoist Finance is well equipped for future acquisitions and growth.
The subsidiary Hoist Kredit AB (publ) ("Hoist Kredit") was merged into the Parent Company Hoist Finance AB (publ) on 2 January 2018. Accordingly, as of Q1 2018 the Parent Company's financial position includes operations that were previously part of Hoist Kredit.
Net interest income for the Parent Company totalled SEK 191 million (6) during the first quarter. This increase is attributable to former operations within Hoist Kredit and comprises interest income from loan portfolios and internal loans, as well as interest expense from deposits and issued bonds. Other interest income decreased SEK 7 million yearon-year due to the renegotiation of internal loans in mid-2017 and lower market-based interest rates. Interest expense decreased SEK –5 million during the first quarter.
Total operating income was SEK 113 million (85), with change in market value of FX derivatives accounting for SEK –144 million (1) of that amount. This was offset by other operating income of SEK 65 million (78) attributable to management fees invoiced to subsidiaries.
Operating expenses totalled SEK –223 million (–71). In conjunction with the merger, Hoist Kredit staff moved to Hoist Finance. This had an impact on operating expenses, as Hoist Finance had no staff prior to the merger. Other administrative expenses increased SEK 16 million. The increase is attributable to expenses related to internal business process improvements and initiatives to prepare new types of assets.
Operating profit totalled SEK –110 million (15). Impairment gains and losses, totalling SEK 28 million, mainly pertain to differences between actual and expected cash flows from acquired loan portfolios. Shares in participating interests totalled SEK 19 million.
Net profit for the period totalled SEK –70 million (11), with tax expenses representing SEK –7 million (–4) of that amount. 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 loans, and loans to associated companies. On the liability side, the major items taken over by the Parent Company are deposits from the public and issued 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 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 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 for Hoist Finance. Like Hoist Kredit, 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.
See the 2017 Annual Report for details on the Group's legal structure.
The number of shares totalled 81,184,546 at 31 March 2018, unchanged from 31 December 2017.
The share price closed at SEK 76.70 on 29 March 2018. A breakdown of the ownership structure is presented in the table below. As at 31 March 2018 the Company had 3,445 shareholders, compared with 3,298 at 31 December 2017.
| Ten largest shareholders, 31 March 2018 |
Share of capital and votes, % |
|---|---|
| Carve Capital AB | 9.7 |
| Swedbank Robur Funds | 8.8 |
| Zeres Capital | 8.6 |
| Handelsbanken Funds | 8.4 |
| Didner & Gerge Funds | 4.6 |
| Jörgen Olsson privately and through companies | 4.1 |
| Danske Invest Funds | 3.9 |
| AFA Insurance | 3.2 |
| Costas Thoupos | 3.0 |
| Carnegie Funds | 2.8 |
| Ten largest shareholders | 57.1 |
| Other shareholders | 42.9 |
| Total | 100.0 |
Sources: Modular Finance AB, 31 March 2018; ownership statistics from Holdings, Euroclear Sweden AB; and changes confirmed and registered by the Company.
This interim report has not been reviewed by the Company's auditors.
Christer Johansson appointed as new CFO.
| SEK million | Quarter 1 2018 |
Quarter 4 2017 |
Quarter 3 2017 |
Quarter 2 2017 |
Quarter 1 2017 |
|---|---|---|---|---|---|
| Net revenues from aquired loan portfolios | 700 | 634 | 646 | 664 | |
| Interest income acquired loan portfolios | 645 | ||||
| Other interest income | –4 | –3 | –3 | –2 | –1 |
| Interest expense | –75 | –75 | –68 | –85 | –77 |
| Net interest income | 566 | 622 | 563 | 559 | 586 |
| Impairment gains and losses | 103 | ||||
| Fee and commission income | 17 | 17 | 17 | 18 | 21 |
| Net result from financial transactions | –5 | 0 | 7 | –49 | –9 |
| Other operating income | 3 | 5 | 2 | 2 | 5 |
| Net operating income | 684 | 644 | 589 | 530 | 603 |
| General and administrative expenses | |||||
| Personnel expenses | –194 | –219 | –171 | –171 | –169 |
| Collection costs | –194 | –203 | –143 | –157 | –169 |
| Administrative expenses | –112 | –118 | –90 | –100 | –94 |
| Depreciation and amortisation of tangible and intangible assets |
–14 | –14 | –14 | –14 | –14 |
| Total operating expenses | –514 | –554 | –418 | –442 | –446 |
| Net operating profit | 170 | 90 | 171 | 88 | 157 |
| Profit from participations in joint ventures | 15 | 21 | 11 | 16 | 28 |
| Profit before tax | 185 | 111 | 182 | 104 | 185 |
| Income tax expense | –45 | –25 | –37 | –27 | –40 |
| Net profit | 140 | 86 | 145 | 77 | 145 |
| SEK million | Quarter 1 2018 |
Quarter 4 2017 |
Quarter 3 2017 |
Quarter 2 2017 |
Quarter 1 2017 |
|---|---|---|---|---|---|
| Net interest income margin, %1) | 15 | – | – | – | – |
| C/I ratio, %2) | 74 | 83 | 70 | 81 | 71 |
| EBIT margin, % | 34 | 25 | 37 | 35 | 38 |
| EBIT margin, adjusted for items affecting comparability, %3) | – | 33 | – | – | – |
| Return on equity, %4) | 18 | 11 | 20 | 10 | 21 |
| Return on equity, adjusted for items affecting comparability, %3),4) |
– | 19 | – | 19 | – |
| Portfolio acquisitions | 904 | 2,075 | 781 | 786 | 611 |
| SEK million | 31 Mar 2018 |
31 Dec 2017 |
30 Sep 2017 |
30 Jun 2017 |
31 Mar 2017 |
| Carrying value on acquired loan portfolios5) | 16,112 | 15,024 | 13,170 | 13,079 | 12,783 |
| Gross 180-month ERC6),7) | 26,932 | ||||
| Gross 120-month ERC6) | 24,700 | 23,991 | 21,421 | 21,417 | 21,297 |
| Total capital ratio, % | 17.15 | 17.71 | 19.43 | 19.73 | 16.79 |
| CET1 ratio, % | 11.35 | 11.70 | 12.72 | 12.99 | 12.51 |
| Liquidity reserve | 7,003 | 6,800 | 5,702 | 5,605 | 5,671 |
| Number of employees (FTEs) | 1,384 | 1,335 | 1,308 | 1,267 | 1,268 |
1) New key ratio as of 2018; see Definitions for calculation of Net interest income margin. Where calculation of net interest income under IFRS 9 is not comparable with IAS 39,
Hoist Finance has elected not to present comparative figures.
2) New key ratio as of 2018; see Definitions for calculation of C/I ratio.
3) Key figures have been adjusted due to restructuring costs and an adjustment of previous cost accruals during the fourth quarter 2017.
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) Including run-off consumer loan portfolio and portfolios held in the Polish joint venture.
6) Excluding run-off consumer loan portfolio 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.
| SEK million | Quarter 1 2018 |
Quarter 1 2017 |
Full-year 2017 |
|---|---|---|---|
| Net revenues from aquired loan portfolios | 664 | 2,644 | |
| Interest income acquired loan portfolios | 645 | ||
| Other interest income | –4 | –1 | –10 |
| Interest expense | –75 | –77 | –305 |
| Net interest income | 566 | 586 | 2,329 |
| Impairment gains and losses | 103 | ||
| Fee and commission income | 17 | 21 | 73 |
| Net result from financial transactions | –5 | –9 | –50 |
| Other operating income | 3 | 5 | 13 |
| Total operating income | 684 | 603 | 2,365 |
| General and administrative expenses | |||
| Personnel expenses | –194 | –169 | –730 |
| Collection costs | –194 | –169 | –672 |
| Administrative expenses | –112 | –94 | –402 |
| Depreciation and amortisation of tangible and intangible assets | –14 | –14 | –56 |
| Total operating expenses | –514 | –446 | –1,860 |
| Net operating profit | 170 | 157 | 505 |
| Profit from participations in joint ventures | 15 | 28 | 76 |
| Profit before tax | 185 | 185 | 581 |
| Income tax expense | –45 | –40 | –128 |
| Net profit | 140 | 145 | 453 |
| Profit attributable to: | |||
| Owners of Hoist Finance AB (publ) | 140 | 145 | 453 |
| Basic earnings per share SEK 1) | 1.59 | 1.66 | 5.10 |
| Diluted earnings per share SEK 1) | 1.59 | 1.66 | 5.09 |
1) Following the 1:3 share split, each warrant entitles the holder to subscribe for three new shares.
| SEK million | Quarter 1 2018 |
Quarter 1 2017 |
Full–year 2017 |
|---|---|---|---|
| Net profit for the period | 140 | 145 | 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 | 118 | 30 | 90 |
| Translation difference, joint ventures | 7 | 10 | 18 |
| Hedging of currency risk in foreign operations | –132 | –40 | –180 |
| Hedging of currency risk in joint ventures | –10 | –12 | –26 |
| Transferred to the income statement during the year | 3 | 2 | 7 |
| Tax attributable to items that may be reclassified to profit or loss | 31 | 14 | 45 |
| Total items that may be reclassified subsequently to profit or loss | 17 | 4 | –46 |
| Other comprehensive income for the period | 17 | 4 | –46 |
| Total comprehensive income for the period | 157 | 149 | 407 |
| Profit attributable to: | |||
| Owners of Hoist Finance AB (publ) | 157 | 149 | 407 |
| SEK million | 31 Mar 2018 |
31 Dec 2017 |
31 Mar 2017 |
|---|---|---|---|
| ASSETS | |||
| Cash | 0 | 0 | 3 |
| Treasury bills and Treasury bonds | 2,137 | 1,490 | 1,595 |
| Lending to credit institutions | 1,493 | 1,681 | 1,064 |
| Lending to the public | 20 | 37 | 33 |
| Acquired loan portfolios | 15,855 | 14,766 | 12,508 |
| Bonds and other securities | 3,441 | 3,689 | 3,052 |
| Shares and participations in joint ventures | 239 | 238 | 245 |
| Intangible assets | 303 | 287 | 243 |
| Tangible assets | 51 | 42 | 41 |
| Other assets | 403 | 200 | 221 |
| Deferred tax assets | 30 | 21 | 42 |
| Prepayments and accrued income | 56 | 86 | 92 |
| Total assets | 24,028 | 22,537 | 19,139 |
| LIABILITIES AND EQUITY | |||
| Liabilities | |||
| Deposits from the public | 14,345 | 13,227 | 11,838 |
| Tax liabilities | 62 | 84 | 71 |
| Other liabilities | 354 | 394 | 267 |
| Deferred tax liabilities | 158 | 148 | 158 |
| Accrued expenses and deferred income | 201 | 211 | 190 |
| Provisions | 87 | 87 | 54 |
| Senior debt | 4,571 | 4,355 | 3,144 |
| Subordinated debts | 848 | 803 | 343 |
| Total liabilities | 20,626 | 19,309 | 16,065 |
| Equity | |||
| Share capital | 27 | 27 | 27 |
| Other contributed equity | 2,099 | 2,102 | 2,073 |
| Reserves | –96 | –113 | –63 |
| Retained earnings including profit for the period | 1,372 | 1,212 | 1,037 |
| Total equity | 3,402 | 3,228 | 3,074 |
| Total liabilities and equity | 24,028 | 22,537 | 19,139 |
| 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 | 140 | 140 | |||
| Other comprehensive income | 17 | 17 | |||
| Total comprehensive income for the period | 17 | 140 | 157 | ||
| Transactions reported directly in equity | |||||
| Reclassification | –3 | 3 | 0 | ||
| Total transactions reported directly in equity | –3 | 3 | 0 | ||
| Closing balance 31 Mar 2018 | 27 | 2,099 | –96 | 1,372 | 3,402 |
| 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 | 0 | –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 | 145 | 145 | |||
| Other comprehensive income | 4 | 4 | |||
| Total comprehensive income for the period | 4 | 145 | 149 | ||
| Closing balance 31 Mar 2017 | 27 | 2,073 | –63 | 1,037 | 3,074 |
| SEK million | Quarter 1 2018 |
Quarter 1 2017 |
Full-year 2017 |
|---|---|---|---|
| Profit before tax | 185 | 185 | 581 |
| – of which, paid-in interest | 644 | 2 | 5 |
| – of which, interest paid | –52 | –76 | –356 |
| Portfolio amortisation and revaluation | 523 | 2,233 | |
| Adjustment for other items not included in cash flow | –37 | 34 | 122 |
| Realised profit from divestment of shares and participations in joint ventures | –16 | –17 | –62 |
| Income tax paid | –30 | –11 | –52 |
| Total | 102 | 713 | 2,822 |
| Amortisations on acquired loan portfolios | 649 | ||
| Increase/decrease in other assets and liabilities | –702 | –269 | –327 |
| Cash flow from operating activities | 49 | 445 | 2,495 |
| Acquired loan portfolios | –904 | –611 | –4,253 |
| Investments in/divestments of bonds and other securities | 248 | –516 | –1,150 |
| Other cash flows from investing activities | –14 | 11 | –36 |
| Cash flow from investing activities | –670 | –1,116 | –5,439 |
| Deposits from the public | 1,042 | –1 | 1,407 |
| Other cash flows from financing activities | – | –8 | 1,344 |
| Cash flow from financing activities | 1,042 | –9 | 2,751 |
| Cash flow for the period | 421 | –681 | –193 |
| Cash at beginning of the period | 3,172 | 3,338 | 3,338 |
| Translation difference | 38 | 4 | 27 |
| Cash at end of the period1) | 3,631 | 2,661 | 3,172 |
1) Comprised of Cash, Treasury bills and Treasury bonds and Lending to credit institutions.
| SEK million | Quarter 1 2018 |
Quarter 1 2017 |
Full-year 2017 |
|---|---|---|---|
| Interest income | 266 | 7 | 30 |
| Interest expense | –75 | –1 | –5 |
| Net interest income | 191 | 6 | 25 |
| Fee and commission income | 1 | – | – |
| Net result from financial transactions | –144 | 1 | 2 |
| Other operating income | 65 | 78 | 243 |
| Total operating income | 113 | 85 | 270 |
| General administrative expenses | |||
| Personnel expenses | –87 | –1 | –5 |
| Other administrative expenses | –129 | –68 | –331 |
| Depreciation and amortisation of tangible and intangible assets | –7 | –1 | –6 |
| Total operating expenses | –223 | –70 | –342 |
| Profit before credit losses | –110 | 15 | –72 |
| Impairment gains and losses | 28 | ||
| Profit from participations in joint ventures | 19 | – | – |
| Net operating profit | –63 | 15 | –72 |
| Appropriations | – | – | 156 |
| Taxes for the period | –7 | –4 | –19 |
| Net profit | –70 | 11 | 65 |
| SEK million | Quarter 1 2018 |
Quarter 1 2017 |
Full-year 2017 |
|---|---|---|---|
| Net profit | –70 | 11 | 65 |
| Other comprehensive income | |||
| Items that may be reclassified subsequently to profit or loss | |||
| Translation difference, foreign operations | 2 | – | – |
| Total items that may be reclassified subsequently to profit or loss | 2 | – | – |
| Other comprehensive income for the period | 2 | – | – |
| Total comprehensive income for the period | –68 | 11 | 65 |
| Profit attributable to: | |||
| Owners of Hoist Finance AB (publ) | –68 | 11 | 65 |
| SEK million | 31 Mar 2018 |
31 Dec 2017 |
31 Mar 2017 |
|---|---|---|---|
| ASSETS | |||
| Cash | 0 | – | – |
| Treasury bills and Treasury bonds | 2,137 | – | – |
| Lending to credit institutions | 677 | 275 | 499 |
| Lending to the public | 23 | – | – |
| Acquired loan portfolios | 2,899 | – | – |
| Receivables, Group companies | 11,381 | 193 | 239 |
| Bonds and other securities | 3,441 | – | – |
| Shares and participations in subsidiaries | 2,148 | 1,688 | 1,688 |
| Shares and participations in joint ventures | 28 | – | – |
| Intangible assets | 118 | 64 | 26 |
| Tangible assets | 29 | 1 | 2 |
| Other assets | 256 | 24 | – |
| Deferred tax assets | 6 | – | – |
| Prepayments and accrued income | 37 | 9 | 8 |
| TOTAL ASSETS | 23,180 | 2,254 | 2,462 |
| LIABILITIES AND EQUITY | |||
| Liabilities | |||
| Deposits from the public | 14,345 | – | – |
| Tax liabilities | 40 | 35 | 28 |
| Other liabilities | 514 | 301 | 517 |
| Deferred tax liabilities | 2 | – | – |
| Accrued expenses and deferred income | 71 | 4 | 5 |
| Provisions | 59 | 0 | 0 |
| Senior debt | 4,571 | – | – |
| Subordinated debts | 848 | – | – |
| Total liabilities and provisions | 20,450 | 340 | 550 |
| Untaxed reserves | |||
| Equity | 165 | 84 | 60 |
| Restricted equity | |||
| Share capital | 27 | 27 | 27 |
| Statutory reserve | 13 | 3 | 3 |
| Revaluation reserve | 64 | – | – |
| Development expenditure fund Total restricted equity |
12 116 |
6 36 |
3 33 |
| Non-restricted equity | |||
| Other contributed equity | 2,099 | 1,722 | 1,694 |
| Reserves | 2 | – | – |
| Retained earnings | 418 | 7 | 114 |
| Profit for the period | –70 | 65 | 11 |
| Total non-restricted equity | 2,449 | 1,794 | 1,819 |
| Total equity | 2,565 | 1,830 | 1,852 |
| TOTAL LIABILITIES AND EQUITY | 23,180 | 2,254 | 2,462 |
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 2008:5 for the income statement and with 1995:1559 for the balance sheet. The Parent Company's Notes have not been restated and are therefore not entirely comparable. 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.
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.
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.
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.
Revaluations were previously presented in "Net revenue from acquired loan portfolios". As from 1 January 2018, revaluations are presented in "Impairment gains and 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.
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.
| Quarter 1 2018 |
Quarter 1 2017 |
Full-year 2017 |
|
|---|---|---|---|
| 1 EUR = SEK | |||
| Income statement (average) | 9.9639 | 9.5051 | 9.6331 |
| Balance sheet (at end of the period) | 10.2931 | 9.5464 | 9.8497 |
| 1 GBP = SEK | |||
| Income statement (average) | 11.2790 | 11.0521 | 10.9991 |
| Balance sheet (at end of the period) | 11.7617 | 11.1273 | 11.1045 |
| 1 PLN = SEK | |||
| Income statement (average) | 2.3845 | 2.1991 | 2.2629 |
| Balance sheet (at end of the period) | 2.4478 | 2.2634 | 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 segments |
Central Functions |
Eliminations | Group |
|---|---|---|---|---|---|---|---|---|
| Total operating income | 152 | 176 | 98 | 99 | 110 | 52 | –3 | 684 |
| of which, internal funding costs | –46 | –30 | –15 | –24 | –17 | 132 | – | 0 |
| Total operating expenses | –92 | –91 | –71 | –61 | –80 | –119 | – | –514 |
| Profit from participations in joint ventures |
– | – | – | – | 3 | 12 | – | 15 |
| Profit before tax | 60 | 85 | 27 | 38 | 33 | –55 | –3 | 185 |
| Quarter 1, 2017 | ||||||||
|---|---|---|---|---|---|---|---|---|
| SEK million | Great Britain | Italy | Germany | Poland | Other segments |
Central Functions |
Eliminations | Group |
| Total operating income | 140 | 111 | 103 | 84 | 96 | 69 | – | 603 |
| of which, internal funding costs | –46 | –38 | –25 | –19 | –28 | 156 | – | 0 |
| Total operating expenses | –101 | –73 | –60 | –43 | –77 | –92 | – | –446 |
| Profit from participations in joint ventures |
– | – | – | – | 14 | 14 | – | 28 |
| Profit before tax | 39 | 38 | 43 | 41 | 33 | –9 | – | 185 |
| Full-year 2017 | Hoist | |||||||
|---|---|---|---|---|---|---|---|---|
| SEK million | Great Britain | Italy | Germany | Finance Poland |
Other segments |
Central Functions |
Eliminations | Group |
| Total operating income | 551 | 518 | 369 | 294 | 360 | 460 | –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 |
| 31 March 2018 | |||||||
|---|---|---|---|---|---|---|---|
| SEK million | Great Britain | Italy | Germany | Poland | Other segments |
Central Functions |
Group |
| Run-off consumer loan portfolio | 20 | 20 | |||||
| Acquired loan portfolios | 5,044 | 4,249 | 2,016 | 2,022 | 2,524 | 15,855 | |
| Shares and participations in joint ventures1) |
237 | 237 | |||||
| Acquired loans | 5,044 | 4,249 | 2,036 | 2,022 | 2,524 | 237 | 16,112 |
| 31 December 2017 | |||||||
|---|---|---|---|---|---|---|---|
| SEK million | Great Britain | Italy | Germany | Poland | Other segments |
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 |
| SEK million | Great Britain | Italy | Germany | Poland | Other segments |
Central Functions |
Group |
|---|---|---|---|---|---|---|---|
| Run-off consumer loan portfolio | 30 | 30 | |||||
| Acquired loan portfolios | 3,717 | 3,083 | 1,909 | 1,542 | 2,257 | 12,508 | |
| Shares and participations in joint ventures1) |
245 | 245 | |||||
| Acquired loans | 3,717 | 3,083 | 1,939 | 1,542 | 2,257 | 245 | 12,783 |
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 | 31 Mar 2018 |
31 Dec 2017 |
31 Mar 2017 |
31 Mar 2018 |
31 Dec 2017 |
31 Mar 2017 |
|
| Gross carrying amount | 15,749 | 14,766 | 12,508 | 2,871 | – | – | |
| Loss allowance | 106 | n.a | n.a | 28 | n.a | n.a | |
| Net carrying amount | 15,855 | 14,766 | 12,508 | 2,899 | – | – |
| 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 | 617 | – | 617 | |||
| Interest income | 645 | – | 645 | |||
| Gross collections | –1,294 | – | –1,294 | |||
| Impairment losses and gains | – | 103 | 103 | |||
| Translation differences | 714 | 3 | 717 | |||
| Closing balance 31 Mar 2018 | 15,459 | 106 | 15,565 |
| portfolios | PARENT COMPANY | |||||
|---|---|---|---|---|---|---|
| SEK million | Gross carrying amount |
Loss allowance |
Net carrying amount |
|||
| Opening balance 1 Jan 2018 | – | – | – | |||
| Merger | 2,464 | – | 2,464 | |||
| IFRS 9 transition effects | 7 | – | 7 | |||
| Acquisitions | 141 | – | 141 | |||
| Interest income | 123 | – | 123 | |||
| Gross collections | –266 | – | –266 | |||
| Impairment losses and gains | – | 28 | 28 | |||
| Translation differences | 111 | 0 | 111 | |||
| Closing balance 31 Mar 2018 | 2,580 | 28 | 2,608 |
| loan portfolios | GROUP AND 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 | 287 | – | – | – | – | 287 | ||
| Translation differences | 3 | – | – | – | – | 3 | ||
| Closing balance 31 Mar 2018 | 290 | – | – | – | – | 290 |
| Changes in carrying value reported in the income statement |
–2,233 | –523 |
|---|---|---|
| Carrying value | 14,766 | 12,508 |
| Based on revised estimates (revaluation) | 10 | 5 |
| Based on opening balance forecast (amortisation) |
–2,2441) | –528 |
| Of which, designated at fair value | GROUP | |
|---|---|---|
| SEK million | 31 Dec 2017 |
31 Mar 2017 |
| Opening balance | 1,045 | 1,045 |
| Translation differences | 28 | –2 |
| Changes in value | ||
| Based on opening balance forecast (amortisation) |
–120 | –33 |
| Based on revised estimates (revaluation) | –13 | –7 |
| Carrying value | 940 | 1,003 |
| Changes in carrying value reported in the income statement |
–133 | –40 |
1) Including SEK –108m related to a partial disposal of a Polish loan portfolio.
| GROUP, 31 MARCH 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 |
||||||||
| Cash | 0 | 0 | 0 | |||||||||||
| Treasury bills and treasury bonds | 2,137 | 2,137 | 2,137 | |||||||||||
| Lending to credit institutions | 1,493 | 1,493 | 1,493 | |||||||||||
| Lending to the public | 20 | 20 | 20 | |||||||||||
| Acquired loan portfolios | 15,855 | 15,855 | 15,855 | |||||||||||
| Bonds and other securities | 3,441 | 3,441 | 3,441 | |||||||||||
| Other financial assets | 362 | 362 | 362 | |||||||||||
| Total | 5,578 | 17,730 | 23,308 | 23,308 | ||||||||||
| Deposits from the public | 14,345 | 14,345 | 14,345 | |||||||||||
| Derivatives | 18 | 103 | 121 | 121 | ||||||||||
| Senior debt | 4,571 | 4,571 | 4,740 | |||||||||||
| Subordinated debt | 848 | 848 | 851 | |||||||||||
| Other financial debts | 418 | 418 | 418 | |||||||||||
| Total | 18 | 103 | 20,182 | 20,303 | 20,475 |
| GROUP, 31 DECEMBER 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 | 0 | 0 | 0 | |||||||
| 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, 31 MARCH 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 | 1,595 | 1,595 | 1,595 | ||||||
| Lending to credit institutions | 1,064 | 1,064 | 1,064 | ||||||
| Lending to the public | 33 | 33 | 33 | ||||||
| Acquired loan portfolios | |||||||||
| of which, at fair value | 1,002 | 1,002 | 1,002 | ||||||
| of which, at amortised cost | 11,506 | 11,506 | 11,628 | ||||||
| Bonds and other securities | 3,052 | 3,052 | 3,052 | ||||||
| Other financial assets | 193 | 193 | 193 | ||||||
| Total | 5,649 | 12,799 | 18,448 | 18,570 | |||||
| Deposits from the public | 11,838 | 11,838 | 11,838 | ||||||
| Derivatives | 5 | 47 | 52 | 52 | |||||
| Senior debt | 3,144 | 3,144 | 3,290 | ||||||
| Subordinated debt | 343 | 343 | 394 | ||||||
| Other financial debts | 352 | 352 | 352 | ||||||
| Total | 5 | 47 | 15,677 | 15,728 | 15,926 |
| PARENT COMPANY, 31 MARCH 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 | ||||
| Cash | 0 | 0 | 0 | |||||||
| Treasury bills and treasury bonds | 2,137 | 2,137 | 2,137 | |||||||
| Lending to credit institutions | 677 | 677 | 677 | |||||||
| Lending to the public | 23 | 23 | 23 | |||||||
| Acquired loan portfolios | 2,899 | 2,899 | 2,899 | |||||||
| Receivables, Group companies | 13,273 | 13,273 | 13,273 | |||||||
| Bonds and other securities | 3,441 | 3,441 | 3,441 | |||||||
| Other financial assets | 235 | 235 | 235 | |||||||
| Total | 5,578 | 17,107 | 22,685 | 22,685 | ||||||
| Deposits from the public | 14,345 | 14,345 | 14,345 | |||||||
| Derivatives | 18 | 103 | 121 | 121 | ||||||
| Senior debt | 4,571 | 4,571 | 4,740 | |||||||
| Subordinated debt | 848 | 848 | 851 | |||||||
| Other financial debts | 453 | 453 | 453 | |||||||
| Total | 18 | 103 | 20,217 | 20,338 | 20,510 |
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:
valued based on quoted prices on active markets for similar instruments, quoted prices for identical or similar instruments traded on markets that are not active, or other valuation techniques in which all important input data is directly or indirectly observable in the market.
Level 3) Based on inputs that are not observable on the market. This category includes all instruments for which the valuation technique is based on data that is not observable and has a substantial impact upon the valuation.
| GROUP, 31 MARCH 2018 | ||||||
|---|---|---|---|---|---|---|
| SEK million | Level 1 | Level 2 | Level 3 | Total | ||
| Treasury bills and Treasury bonds | 2,137 | 2,137 | ||||
| Acquired loan portfolios | 15,855 | 15,855 | ||||
| Bonds and other securities | 3,441 | 3,441 | ||||
| Total assets | 5,578 | 15,855 | 21,433 | |||
| Derivatives | 121 | 121 | ||||
| Senior debts | 4,740 | 4,740 | ||||
| Subordinated debts | 851 | 851 | ||||
| Total liabilities | 5,712 | 5,712 |
| Group, 31 December 2017 | |||||||
|---|---|---|---|---|---|---|---|
| SEK million | Level 1 | Level 2 | Level 3 | Total | |||
| Treasury bills and Treasury bonds | 1,490 | 1,490 | |||||
| Acquired loan portfolios | |||||||
| of which, carried at fair value | 940 | 940 | |||||
| of which, carried at amortised cost | 13,426 | 13,426 | |||||
| Bonds and other securities | 3,689 | 3,689 | |||||
| Derivatives | 11 | 11 | |||||
| Total assets | 5,179 | 11 | 14,366 | 19,556 | |||
| Derivatives | 10 | 10 | |||||
| Senior debts | 4,532 | 4,532 | |||||
| Subordinated debts | 811 | 811 | |||||
| Total liabilities | 5,353 | 5,353 |
| GROUP, 31 MARCH 2017 | ||||||
|---|---|---|---|---|---|---|
| SEK million | Level 1 | Level 2 | Level 3 | Total | ||
| Treasury bills and Treasury bonds | 1,595 | 1,595 | ||||
| Acquired loan portfolios | ||||||
| of which, carried at fair value | 1,002 | 1,002 | ||||
| of which, carried at amortised cost | 11,628 | 11,628 | ||||
| Bonds and other securities | 3,052 | 3,052 | ||||
| Total assets | 4,647 | 12,630 | 17,277 | |||
| Derivatives | 52 | 52 | ||||
| Senior debts | 3,290 | 3,290 | ||||
| Subordinated debts | 394 | 394 | ||||
| Total liabilities | 3,736 | 3,736 |
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 Kredit AB (publ) ("Hoist Kredit"), 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 and the regulated entity Hoist Finance.
| Hoist Finance consolidated situation |
Hoist Finance AB (publ) | ||||||
|---|---|---|---|---|---|---|---|
| SEK million | 31 Mar 2018 |
31 Dec 2017 |
31 Mar 2017 |
31 Mar 2018 |
31 Dec 2017 |
31 Mar 2017 |
|
| Capital instruments and related share premium accounts | 1,287 | 1,287 | 1,287 | 1,287 | 483 | 483 | |
| Retained earnings | 1,053 | 745 | 775 | 239 | 402 | 565 | |
| Accumulated comprehensive income and other reserves | 295 | 282 | 335 | 611 | 1,081 | 1,082 | |
| Independently reviewed interim profits net of any foreseeable charge or dividend1) |
98 | 299 | – | –70 | 183 | – | |
| Intangible assets (net of related tax liability) | –303 | –287 | –243 | –118 | –44 | –34 | |
| Deferred tax assets that rely on future profitability | –30 | –21 | –42 | –6 | –3 | –3 | |
| Common Equity Tier 1 | 2,400 | 2,305 | 2,112 | 1,943 | 2,102 | 2,093 | |
| Capital instruments and the related share premium accounts | 380 | 380 | 380 | 380 | 380 | 380 | |
| Additional Tier 1 capital | 380 | 380 | 380 | 380 | 380 | 380 | |
| Tier 1 capital | 2,780 | 2,685 | 2,492 | 2,323 | 2,482 | 2,473 | |
| Capital instruments and the related share premium accounts | 848 | 803 | 343 | 848 | 803 | 343 | |
| Tier 2 capital | 848 | 803 | 343 | 848 | 803 | 343 | |
| Total own funds | 3,628 | 3,488 | 2,835 | 3,171 | 3,285 | 2,816 |
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 and the regulated entity Hoist Finance.
| Risk-weighted exposure amounts | Hoist Finance consolidated situation |
Hoist Finance AB (publ) | |||||
|---|---|---|---|---|---|---|---|
| SEK million | 31 Mar 2018 |
31 Dec 2017 |
31 Mar 2017 |
31 Mar 2018 |
31 Dec 2017 |
31 Mar 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 | 374 | 381 | 254 | 187 | 150 | 34 | |
| of which, counterparty credit risk | 46 | 54 | 24 | 46 | 54 | 24 | |
| Exposures to corporates | 217 | 136 | 189 | 11,503 | 10,935 | 10,521 | |
| Retail exposures | 20 | 16 | 22 | 20 | 16 | 22 | |
| Secured by immovable property | 147 | – | – | 147 | – | – | |
| Exposures in default | 16,663 | 15,349 | 13,309 | 2,729 | 2,496 | 2,573 | |
| Exposures in the form of covered bonds | 344 | 369 | 305 | 344 | 369 | 305 | |
| Equity exposures | – | – | – | 2,148 | 2,143 | 571 | |
| Other items | 115 | 145 | 142 | 67 | 44 | 7 | |
| Credit risk (standardised approach) | 17,880 | 16,396 | 14,221 | 17,145 | 16,153 | 14,033 | |
| Market risk (foreign exchange risk – standardised approach) | 95 | 113 | 44 | 95 | 113 | 44 | |
| Operational risk (standardised approach) | 3,158 | 3,158 | 2,623 | 1,128 | 1,128 | 893 | |
| Credit valuation adjustment (standardised approach) | 23 | 27 | 0 | 23 | 27 | 0 | |
| Total risk-weighted exposure amount | 21,156 | 19,694 | 16,888 | 18,391 | 17,421 | 14,970 |
| Capital requirements | Hoist Finance consolidated situation |
Hoist Finance AB (publ) | ||||
|---|---|---|---|---|---|---|
| SEK million | 31 Mar 2018 |
31 Dec 2017 |
31 Mar 2017 |
31 Mar 2018 |
31 Dec 2017 |
31 Mar 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 | 30 | 30 | 20 | 15 | 12 | 3 |
| of which, counterparty credit risk | 4 | 4 | 2 | 4 | 4 | 2 |
| Exposures to corporates | 17 | 11 | 15 | 920 | 875 | 842 |
| Retail exposures | 2 | 1 | 2 | 2 | 1 | 2 |
| Secured by immovable property | 12 | – | – | 12 | – | – |
| Exposures in default | 1,333 | 1,228 | 1,065 | 218 | 200 | 206 |
| Exposures in the form of covered bonds | 28 | 30 | 24 | 28 | 30 | 24 |
| Equity exposures | – | – | – | 172 | 171 | 46 |
| Other items | 9 | 12 | 11 | 5 | 4 | 1 |
| Credit risk (standardised approach) | 1,431 | 1,312 | 1,137 | 1,372 | 1,293 | 1,124 |
| Market risk (foreign exchange risk – standardised approach) | 8 | 9 | 4 | 8 | 9 | 4 |
| Operational risk (standardised approach) | 253 | 253 | 210 | 90 | 90 | 71 |
| Credit valuation adjustment (standardised approach) | 2 | 2 | 0 | 2 | 2 | 0 |
| Total own funds requirement – Pillar 1 | 1,694 | 1,576 | 1,351 | 1,472 | 1,394 | 1,199 |
| Pillar 2 | ||||||
| Concentration risk | 142 | 131 | 105 | 142 | 131 | 105 |
| Interest rate risk in the banking book | 48 | 36 | 33 | 48 | 36 | 33 |
| Pension risk | 3 | 3 | 4 | 3 | 3 | 0 |
| Other Pillar 2 risks | 27 | 26 | 0 | 27 | 26 | 0 |
| Total own funds requirement – Pillar 2 | 220 | 196 | 142 | 220 | 196 | 138 |
| Capital buffers | ||||||
| Capital conservation buffer | 529 | 492 | 422 | 460 | 436 | 374 |
| Countercyclical buffer | 10 | 11 | 10 | 9 | 8 | 19 |
| Total own funds requirement – Capital buffers | 539 | 503 | 432 | 469 | 444 | 393 |
| Total own funds requirements | 2,453 | 2,275 | 1,925 | 2,161 | 2,034 | 1,730 |
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 0.05 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, % | 31 Mar 2018 |
31 Dec 2017 |
31 Mar 2017 |
31 Mar 2018 |
31 Dec 2017 |
31 Mar 2017 |
|
| Common Equity Tier 1 capital ratio | 11.35 | 11.70 | 12.51 | 10.56 | 12.07 | 13.98 | |
| Tier 1 capital ratio | 13.14 | 13.63 | 14.75 | 12.63 | 14.25 | 16.52 | |
| Total capital ratio | 17.15 | 17.71 | 16.79 | 17.24 | 18.86 | 18.81 | |
| Institution-specific buffer requirements for CET1 capital | 7.05 | 7.05 | 7.06 | 7.05 | 7.05 | 7.12 | |
| of which, capital conservation buffer requirement | 2.50 | 2.50 | 2.50 | 2.50 | 2.50 | 2.50 | |
| of which, countercyclical capital buffer requirement | 0.05 | 0.05 | 0.06 | 0.05 | 0.05 | 0.12 | |
| Common Equity Tier 1 capital available to meet buffers1) | 6.85 | 7.20 | 8.01 | 6.06 | 7.57 | 9.48 |
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 31 March 2018, the internally assessed capital requirement for Hoist Finance was SEK 1,914 million (1,771), of which SEK 220 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 33 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 | 31 Mar 2018 |
31 Dec 2017 |
31 Mar 2017 |
31 Mar 2018 |
31 Dec 2017 |
31 Mar 2017 |
|
| Current account deposits | 9,555 | 8,580 | 7,708 | 9,555 | 8,580 | 7,708 | |
| Fixed-term deposits | 4,790 | 4,647 | 4,130 | 4,790 | 4,647 | 4,130 | |
| Senior debts | 4,571 | 4,355 | 3,144 | 4,571 | 4,355 | 3,144 | |
| Convertible debt instruments | 380 | 380 | 380 | 380 | 380 | 380 | |
| Subordinated debts | 848 | 803 | 343 | 848 | 803 | 343 | |
| Equity | 3,022 | 2,849 | 2,694 | 2,185 | 2,100 | 2,128 | |
| Other | 862 | 923 | 740 | 851 | 613 | 534 | |
| Balance sheet total | 24,028 | 22,537 | 19,139 | 23,180 | 21,478 | 18,367 |
The Group's Treasury Policy specifies a limit and a target level for the amount of available liquidity. Available liquidity totalled SEK 7,003 million (6,800) as per 31 March, 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 | 31 Mar 2018 |
31 Dec 2017 |
31 Mar 2017 |
|---|---|---|---|
| Cash and holdings in central banks | 0 | 0 | 3 |
| Deposits in other banks available overnight | 1,425 | 1,621 | 1,021 |
| Securities issued or guaranteed by sovereigns, central banks or multilateral development banks | 1,007 | 1,061 | 1,171 |
| Securities issued or guaranteed by municipalities or other public sector entities | 1,130 | 429 | 424 |
| Covered bonds | 3,441 | 3,689 | 3,052 |
| Securities issued by non-financial corporates | – | – | – |
| Securities issued by financial corporates | – | – | – |
| Other | – | – | – |
| Total | 7,003 | 6,800 | 5,671 |
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 | |||
|---|---|---|---|
| SEK million | 31 Mar 2018 |
31 Dec 2017 |
31 Mar 2017 |
| Pledges and comparable collateral for own liabilities and | |||
| for reported commitments for provisions | 53 | 49 | 40 |
| Group | Parent Company | ||||||
|---|---|---|---|---|---|---|---|
| SEK million | 31 Mar 2018 |
31 Dec 2017 |
31 Mar 2017 |
31 Mar 2018 |
31 Dec 2017 |
31 Mar 2017 |
|
| Commitments | 2,239 | 698 | 1,532 | 261 | – | – |
| EBIT margin | |||
|---|---|---|---|
| SEK million | Quarter 1 2018 |
Quarter 1 2017 |
Full year 2017 |
| Profit before tax | 185 | 185 | 581 |
| Net income financial transactions | 5 | 9 | 50 |
| Interest expense | 75 | 77 | 305 |
| Interest income excl. run-off consumer loan portfolio | 4 | 3 | 15 |
| EBIT | 269 | 274 | 951 |
| Net revenues from aquired loan portfolios | – | 665 | 2,644 |
| Interest income acquired loan portfolios | 645 | – | – |
| Interest income from run-off consumer loan portfolio | 0 | 2 | 5 |
| Impairment gains and losses | 103 | – | – |
| Fee and commission income | 17 | 21 | 73 |
| Profit from shares and participations in joint ventures | 15 | 27 | 76 |
| Other operating income | 3 | 4 | 13 |
| Total revenue | 783 | 719 | 2,811 |
| EBIT margin | 34 | 38 | 34 |
| SEK million | Quarter 1 2018 |
Quarter 1 2017 |
Full year 2017 |
|---|---|---|---|
| Profit for the period | 140 | 145 | 453 |
| + Income tax expense |
45 | 40 | 128 |
| +/– Net result from financial transactions | 5 | 9 | 50 |
| + Interest expense |
75 | 77 | 305 |
| – Interest income (excl. interest from run-off performing portfolio) |
4 | 3 | 14 |
| + Portfolio revaluations |
– | –5 | –11 |
| +/– Impairment gains and losses | –103 | – | – |
| + Depreciation and amortisation of tangible and intangible assets | 14 | 14 | 56 |
| EBITDA | 180 | 283 | 995 |
| + Amortisation on run-off portfolio |
– | 2 | 11 |
| + Amortisation on acquired loan portfolios |
– | 528 | 2,244 |
| + Gross cash collections on aquired loan portfolios |
1,294 | – | – |
| – Interest income on acquired loan portfolios |
–645 | – | – |
| EBITDA, adjusted | 829 | 813 | 3 250 |
| SEK thousand | Quarter 1 2018 |
Quarter 1 2017 |
Full year 2017 |
|---|---|---|---|
| Equity | 3,402 | 3,074 | 3,228 |
| Additional Tier 1 capital | –380 | –380 | –380 |
| Reversal of interest expense paid for AT1 capital | – | – | 28 |
| Reversal of items affecting comparability1) | – | – | 102 |
| Total equity | 3,022 | 2,694 | 2,978 |
| Total equity (quarterly average) | 2,949 | 2,628 | 2,752 |
| Profit for the period | 140 | 145 | 453 |
| Reversal of items affecting comparability1) | – | – | 102 |
| Estimated annual profit | 560 | 580 | 555 |
| Adjustment of interest on AT1 capital | –40 | –40 | –40 |
| Adjusted annual profit | 520 | 540 | 515 |
| Return on equity, % | 18 | 21 | 19 |
1) Items affecting comparability 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 | Remeasu rement |
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 | 948 |
| Fair value gain/loss during the period, if the acquired loan portfolio would not have been reclassified | 8 |
| Effective interest rate of reclassified acquired loans on date of initial application, % | 21 |
| Interest revenue recorded during the period | 44 |
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 14 May, 2018
Ingrid Bonde Chair of the Board
Cecilia Daun Wennborg Malin Eriksson Board member Board member
Liselotte Hjorth Joakim Rubin Board member Board member
Costas Thoupos Gunilla Wikman Board member Board member
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).
Net profit for the period adjusted for accrued unpaid interest on AT1 capital, 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.
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.
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.
loan portfolios.
acquired loan portfolios Gross cash flow on acquired loan portfolios comprises payments from the Group's customers on loans included in Group's acquired
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 id 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 year, 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 year, 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 mediumterm 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.
| Annual General Meeting | 16 May 2018 |
|---|---|
| Interim report Q2 2018 | 27 July 2018 |
| Interim report Q3 2018 | 25 October 2018 |
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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