Quarterly Report • Oct 26, 2017
Quarterly Report
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The total capital ratio was 19.43 per cent (16.76) and the CET1 capital ratio was 12.72 per cent (12.46).
Figures in brackets refer to January-September 2016 for income statement comparisons and to 31 December 2016 closing balance for balance sheet items.
Thanks to our strong financial position and long experience as leading debt restructuring partner to international banks, we are well positioned to capture future market growth. Jörgen Olsson
1) Key figures have been adjusted to show underlying earnings excluding items affecting comparability, totalling SEK 63m including tax, which arose in connection with the repurchase of subordinated loans and outstanding bonds during second quarter 2017.
Hoist Finance AB (publ) (the "Company" or the "Parent") is the parent company of the Hoist Finance group of companies ("Hoist Finance"). The Company's wholly owned subsidiary, Hoist Kredit AB (publ) ("Hoist Kredit") 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. In order to assess the operational performance of the debt purchasing and collection operations and to facilitate comparison with our competitors, Hoist Finance supplements its statutory financial statements with an operating income statement. The operating income statement is prepared based on the accounting and valuation principles used in the statutory financial statements, with no amendments or adjustments thereto.
The information in this interim report has been published pursuant to the EU's Financial Instruments Trading Act and Securities Market Act. This information was submitted for publication on 26 October 2017 at 8:00 AM CET.
Our operations continue to perform well, at the same time we continue to build the company in line with our strategy and towards our vision – a leading partner to international banks and financial institutions. The portfolio growth totalled 14 per cent over the last 12-month period, and we continue to approach our financial targets.
Progress also continued according to plan during the third quarter. Net revenue from acquired loan portfolios increased 5 per cent, total revenue however remained unchanged year-on-year due to lower service revenues and lower profit from shares and participations in joint ventures, which is in line with our communication from the beginning of the year. Profit before tax increased 40 per cent year-on-year, despite the fact that the quarter was charged with restructuring expenses in Region West and expenses for strategic projects amounting to SEK 7m.
We continue to grow in the countries where we operate, we continue to increase our operational efficiency and we continue to improve our funding structure. Therefore we are able to report a solid and stable trend of strong growth, stable margins and improved efficiency – quarter after quarter.
During the quarter we continued our long-term strategy to broaden and diversify our funding. We launched a deposit offer for retail customers in Germany, thereby complementing deposits in Swedish kronor with deposits in euro. In early October, EUR 100m of senior unsecured debt was repurchased and EUR 250m with longer maturity was issued. The issue was oversubscribed and closed at attractive levels. With the launch in Germany and the issue of senior unsecured debt, we reach a better match between our assets and liabilities and also an improved funding structure in relation to our assets.
During our capital markets day just over a year ago, we presented statistics showing that only one-third of non-performing loans in the European banking system were being sold. The trend since then has been to our advantage, with
A leading debt restructuring partner to international banks and financial institutions
more and more banks now choosing to divest non-performing loans to companies like Hoist Finance – companies that are specialised and considerably more efficient in managing non-performing loans.
We are confident that this trend will continue. A new accounting standard for financial instruments, IFRS 9, comes into effect at the turn of the year. There is also a far-reaching proposal from the ECB on loan loss allowances.
The new accounting standard entails changed principles regarding loan loss allowances and write-downs. Simplified, banks will provide for estimated credit losses of non-performing loans at an earlier stage than they currently do. Under the ECB's proposal a bank will need to make provision for 100 per cent of an unsecured non-performing loan within two years, and within seven years for secured non-performing loans.
Both of these changes will increase the capital tied up in banks' non-performing loans while also making it easier for a bank's decision to divest the asset at an earlier stage.
On the regional level, Region West and Region Mid reported improved yearon-year operating profit. Results for Region Central East were somewhat lower than last year due to lower portfolio growth over the past 12-month
period and decreased fee and commission income.
A self-service portal for our customers in the UK was launched during the quarter. The launch is part of our digital initiative and will facilitate our customers' selection of communication channel. The self-service website has gathered momentum quickly and is already delivering significant value. The proportion of plans set up on web compared to call centre has increased rapidly and is currently over 30 per cent. Coupled with this we also see that breakage rates are lower for web plans. Initial results are thus very encouraging and provide further confidence that our customers want to engage with us across digital media.
Developments during the quarter and the first nine months of the year confirm our growth objectives and our ambitious yet attainable targets for the full year and beyond. Thanks to our strong financial position and long experience as leading debt restructuring partner to international banks, we are well positioned to capture future market growth opportunities.
Jörgen Olsson CEO Hoist Finance AB (publ)
| SEK million | Quarter 3 2017 |
Quarter 3 2016 |
Change, % |
Jan–Sep 2017 |
Jan–Sep 2016 |
Change, % |
|---|---|---|---|---|---|---|
| Total revenue | 666 | 665 | 0 | 2,067 | 1,955 | 6 |
| EBITDA, adjusted | 764 | 716 | 7 | 2,387 | 2,173 | 10 |
| EBIT | 247 | 233 | 6 | 761 | 694 | 10 |
| EBIT margin, % | 37 | 35 | 2 pp | 37 | 35 | 2 pp |
| Profit before tax | 182 | 130 | 40 | 471 | 378 | 25 |
| Net profit for the period | 145 | 103 | 41 | 368 | 299 | 23 |
| Basic earnings per share, SEK | 1.68 | 1.27 | 32 | 4.18 | 3.69 | 13 |
| Diluted earnings per share, SEK1) | 1.68 | 1.25 | 34 | 4.17 | 3.61 | 16 |
| Portfolio acquisitions | 781 | 607 | 29 | 2,178 | 1,762 | 24 |
| SEK million | 30 Sep 2017 |
31 Dec 2016 |
Change, % |
|---|---|---|---|
| Carrying value on acquired loan portfolios2) | 13,170 | 12,658 | 4 |
| Gross 120-month ERC3) | 21,421 | 21,375 | 0 |
| Return on equity, %4) | 17 | 16 | 1 pp |
| Total capital ratio, % | 19.43 | 16.76 | 2.7 pp |
| CET1 ratio, % | 12.72 | 12.46 | 0.3 pp |
| Liquidity reserve | 5,702 | 5,789 | –1 |
| Number of employees (FTEs) | 1,308 | 1,285 | 3 |
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) Including run-off consumer loan portfolio and portfolios held in the Polish joint venture.
3) Excluding run-off consumer loan portfolio and portfolios held in the Polish joint venture.
4) In conjunction with the December 2016 issue of Additional Tier 1 capital, the definition of ROE was changed to exclude accrued, unpaid interest on AT1 capital and the carrying value of AT1 capital in equity.
Unless otherwise specified, all market, financial and operational comparisons refer to third quarter 2016. The analysis below follows the operating income statement.
Net revenue from acquired loan portfolios increased 5 per cent to SEK 635m (606), due mainly to growth and successful collection activities in Italy. Gross collections on acquired loan portfolios increased to SEK 1,134m (1,075). Portfolio amortisation and revaluation increased to SEK 499m (467), with portfolio revaluations accounting for SEK 8m (–8) of that amount. Portfolio acquisitions totalled SEK 781m (607) during the quarter, mainly attributable to the UK. Due to these and other previous acquisitions, portfolio growth was 14 per cent calculated over a 12-month period. Profit for participations in joint ventures totalled SEK 11m (27), with the 2016 comparative
figure affected by changes in value in the Polish joint venture in which Hoist Finance has been participating since 2011. Fee and commission income decreased 40 per cent to SEK 17m (28). The decline is mainly attributable to Poland, where a major service contract was terminated in early 2017. Total revenue was unchanged at SEK 666m (665).
Total operating expenses decreased to SEK 419m (432), due mainly to high legal collection costs in the UK and Poland during Q3 2016. The change was somewhat mitigated by the development in Italy, where legal collection costs increased year-on-year. These
factors also account for the development in collection costs, which totalled SEK 143m (171). Personnel expenses increased 8 per cent to SEK 171m (158) due to strengthening in Spain, Italy and within Central Functions as well as restructuring expenses. Other operating expenses, which totalled SEK 90m (90), also reflect the relatively high costs for change initiatives taken during the third quarter, including advisory services associated with the transition to new accounting standards and expenses for strategic projects. Depreciation and amortisation of tangible and intangible assets totalled SEK 14m (13).
Total financial items as per Hoist Finance's operating income statement were SEK –65m (–102).
Interest income totalled SEK –4m (–1) due to the prevailing interest rate scenario, under which government bonds and similar securities that comprise the greater part of Hoist Finance's liquidity portfolio no longer offer positive returns. Interest expenses, which totalled SEK –68m (–77), mainly include deposit-related interest expenses and interest expenses from debt instruments issued. The deposit-related expense is mainly unchanged, as there was no material change in either deposit volumes or margins. Interest expenses for the deposit offer recently launched in Germany were negligible during the third quarter. The decrease in total interest expense is accordingly attributable to issued debt instruments, with expenses for subordinated liabilities significantly reduced following the buy-back in May 2017 of an issued subordinated debt instrument carrying a high coupon rate and the issue of a new subordinated debt instrument carrying a significantly lower coupon rate. Net financial income totalled SEK 7m (–24), with year-on-year results and changes for both quarters mainly attributable to profit/loss from FX hedging. The application of hedge accounting was expanded starting in 2017 and, accordingly, most earnings from currency fluctuations are reported as other comprehensive income. Changes in value for interest rate hedging instruments were limited during the quarter. The same applies to changes in market value for bonds in the liquidity portfolio.
Unless otherwise specified, comparisons regarding balance sheet items refer to 31 December 2016.
Total assets increased SEK 688m as compared with 31 December 2016, totalling SEK 19,838m (19,150). The change is due to an SEK –784m decrease in treasury bills and treasury bonds, which was offset by an SEK 593m increase in bonds and other securities. Acquired loan portfolios increased SEK 531m, due primarily to acquisitions in the UK and Italy.
Total liabilities amounted to SEK 16,721m (16,225). Deposits from the public increased SEK 452m. Other liabilities decreased SEK –219m, due mainly to the settlement of previous debt through the repayment of collateral received to derivative counterparties. Senior unsecured debt decreased due to the repurchase of all outstanding bonds in respect of a bond loan issued in 2014. Subordinated liabilities increased net SEK 431m due to the issue of Tier 2 capital in the amount of EUR 80m and the repurchase of previously subordinated liabilities.
| SEK million | 30 Sep 2017 | 31 Dec 2016 | Change, % |
|---|---|---|---|
| Cash and interest-bearing | |||
| securities | 5,760 | 5,877 | –2 |
| Other assets1) | 14,078 | 13,273 | 6 |
| Total assets | 19,838 | 19,150 | 4 |
| Deposits from the public | 12,301 | 11,849 | 4 |
| Subordinated liabilities | 2,930 | 3,126 | –6 |
| Senior unsecured debt | 773 | 342 | >100 |
| Total interest-bearing liabilities | 16,004 | 15,317 | 4 |
| Other liabilities1) | 718 | 908 | –21 |
| Equity | 3,116 | 2,925 | 7 |
| Total liabilities and equity | 19,838 | 19,150 | 4 |
| CET1 ratio, % | 12.72 | 12.46 | 0.3 pp |
| Total capital ratio, % | 19.43 | 16.76 | 2.7 pp |
| Liquidity reserve | 5,702 | 5,789 | –1 |
| Acquired loans | |||
| Carrying value of acquired loans2) | 13,170 | 12,658 | 4 |
| Gross 120-month ERC3) | 21,421 | 21,375 | 0 |
1) This item does not correspond to an item of the same designation in the balance sheet, but rather to several corresponding items.
2) Including run-off consumer loan portfolio and portfolios held in the Polish joint venture. 3) Excluding run-off consumer loan portfolio and portfolios held in the Polish joint venture.
Hoist Finance funds its operations through deposits in Sweden and Germany and through the bond market. Deposits from the public in Sweden, which are carried out under the Hoist Finance brand, totalled SEK 12,159m (11,849). Of this amount, SEK 4,369m (4,266) is attributable to fixed term deposits of 12-, 24- and 36-month durations. Since September 2017, deposits for retail customers have been offered in Germany under the Hoist Finance name. Deposits in Germany totalled SEK 142m as at 30 September 2017. Of this amount, SEK 17m is attributable to fixed term deposits of 12- and 24-month durations.
As at 30 September 2017 outstanding bond debt totalled SEK 3,703m (3,468), of which SEK 2,930m (3,126) was senior unsecured debt. Hoist Finance, through Hoist Kredit AB (publ), issued new Tier 2 capital during the second quarter in order to refinance a similar outstanding subordinated bond loan, which was repurchased in connection with the transaction. A total of EUR 80m of Tier 2 capital was issued under the Hoist Finance EMTN programme. The previously issued subordinated bond loan of SEK 350m was repurchased in its entirety through a public offering in conjunction with the issue. All repurchased bonds have been cancelled.
Group equity totalled SEK 3,116m (2,925). The increase is mainly due to net profit for the period.
The total capital ratio improved to 19.43 per cent (16.76) and the CET1 ratio to 12.72 per cent (12.46). Hoist Finance is thus well capitalised for further expansion.
Hoist Finance's liquidity reserve, presented in accordance with the Swedish Bankers' Association's template, totalled SEK 5,702m (5,789).
Basic earnings per share totalled SEK 1.68 (1.27). Accrued, unpaid interest on AT1 capital is included in the calculation.
Comparative figures refer to third quarter 2016.
| SEK million | Quarter 3 2017 |
Quarter 3 2016 |
Full year 2016 |
|---|---|---|---|
| Cash flow from operating activities | 583 | 302 | 2,977 |
| Cash flow from investing activities | –1,202 | –674 | –4,605 |
| Cash flow from financing activities | 321 | 89 | 1,032 |
| Cash flow for the period | –298 | –708 | –597 |
Cash flow from operating activities totalled SEK 583m (302). Gross cash collections from acquired loan portfolios continued to increase in relation to acquired loan portfolios and totalled SEK 1,134m (1,075).
Cash flow from investing activities totalled SEK –1,202m (–674). Portfolio acquisitions increased during the quarter as compared with Q3 2016, totalling SEK 781m (607). A net total of SEK –415m was invested in bonds and other securities during the quarter as a result from inflow from deposits from the public and positive result from operating activities.
Cash flow from financing activities totalled SEK 321m (89) and is entirely attributable to deposits from the public. Of this amount, SEK 142m is attributable to the newly started deposit operations in Germany.
Total cash flow for the quarter amounted to SEK –298m, as compared with SEK 708m for third quarter 2016.
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 interpretation and application of existing laws, treaties, regulations, and guidance.
Credit risk for Hoist Finance's loan portfolios is deemed to be largely 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.
There were no major changes in Hoist Finance's operational risks during the quarter. 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 medium term.
Capitalisation for Hoist Finance remains strong, with a CET1 ratio that exceeds regulatory requirements by a good margin. Hoist Finance is therefore better able to absorb unanticipated events without jeopardising its solvency, and is well capitalised for continued growth.
Liquidity risk was low during the quarter. During the quarter, Hoist Finance issued additional bonds and launched deposits from the public in Germany. These two initiatives improved the Company's funding diversification and further reduced liquidity risk. 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.
Parent Company Hoist Finance AB (publ) reported a profit before tax of SEK 9m (–10) for third quarter 2017. Income and expenses are related to the Parent Company's function as a holding and purchasing company in the Hoist Finance Group.
The Parent Company's net sales totalled SEK 72m (46) during the third quarter. Earnings are attributable to management fees within the Group. Operating expenses totalled SEK 69m (59). The year-on-year increase is attributable to expenses related to internal businesses processes and to advisory services regarding forthcoming new IFRS regulations.
Hoist Finance has set up a cash pool structure to centralise Group liquidity. This affects the Company's consolidated liabilities and bank balances. The Company's cash pool has increased since the turn of the year due to the addition of subsidiaries and the new deposit operations in Germany in subsidiary Hoist Kredit AB (publ). The majority of the Group's subsidiaries are connected to the cash pool structure as of the third quarter. Interest income and interest expense are also impacted by the establishment of the cash pool, resulting in increased interest income for subsidiaries with negative bank balances.
Intangible assets increased SEK 24m due to major investments in the Group's IT environment, which is scheduled for operational implementation during 2018. Previous intra-group receivables and intra-group loans to subsidiaries were settled during the first six months of 2017 via group contributions.
The nature and scope of related-party transactions are described in the Annual Report. No significant transactions took place between Hoist Finance and its related parties during the third quarter.
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. The Parent Company serves as a holding and purchasing company for the operating subsidiary Hoist Kredit AB (publ) ("Hoist Kredit") and its sub-group. The Hoist Kredit Group acquires and holds the Group's loan portfolios and the loans are managed by its subsidiaries or foreign branch offices. These entities also provide management services on a commission basis to external parties.
The merger of Hoist Finance AB (publ) and Hoist Kredit AB (publ) has been initiated and is expected to be completed in early 2018. As part of this process, Hoist Finance applied for and was granted a licence to conduct financing operations. See the 2016 Annual Report for details on the Group's legal structure.
The number of shares totalled 80,719,567 at 30 September 2017, unchanged from the number of shares at 31 December 2016.
The share price closed at SEK 84.00 on 30 September 2017. A breakdown of the ownership structure is presented in the table below. As at 30 September 2017 the Company had 2,826 shareholders, compared with 3,298 at 31 December 2016.
| The ten largest shareholders, 30 Sep 2017 |
Share of capital and votes, % |
|---|---|
| Carve Capital AB | 9.7 |
| Zeres Capital | 8.7 |
| Swedbank Robur Funds | 8.5 |
| Handelsbanken Funds | 5.5 |
| Jörgen Olsson privately and through companies | 4.1 |
| Toscafund Asset Management Llp | 4.1 |
| Carnegie Funds | 3.8 |
| Didner & Gerge Funds | 3.4 |
| AFA Insurance | 3.2 |
| SEB Funds incl. Lux | 3.1 |
| Ten largest shareholders | 54.1 |
| Other shareholders | 45.9 |
| Total | 100.0 |
Sources: Modular Finance AB, 30 September 2017; ownership statistics from Holdings, Euroclear Sweden AB; and changes confirmed/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 designated by Carve Capital AB, Zeres Capital and Swedbank Robur Fonder. The Committee's mandate period extends until a new Nomination Committee is appointed. For the period preceding the 2018 Annual General Meeting, the composition of the Nomination Committee has been based on shareholder statistics as at the final business day of August 2017.
This interim report has not been reviewed by the Company's auditors.
Hoist Finance repurchased EUR 100m of senior unsecured debt and simultaneously issued EUR 250m with longer maturities. The transaction's settlement date was set at 4 October.
Hoist Finance Services AB (the "Company"), a subsidiary of Hoist Kredit AB (publ), has received a negative tax ruling from the Administrative Court in a tax case in which the Company is a party. The matter concerns additional tax and surtax of approximately SEK 44 million for the financial years 2012-2014. Hoist Finance maintains that laws in force governing taxation of the Company and the Group's business operations were complied with, and will be appealing to the Administrative Court of Appeal. The Company considers there to be a predominant probability that the Administrative Court of Appeal will decide in Hoist Finance's favour. This assessment is support by the Company's expert adviser. Hoist Finance will analyse the court ruling and provide its opinion on the judgment and its consequences. In light of this, no amount has been provided for.
| SEK thousand | Quarter 3 2017 |
Quarter 2 2017 |
Quarter 1 2017 |
Quarter 4 2016 |
Quarter 3 2016 |
|---|---|---|---|---|---|
| Gross collections on acquired loan portfolios | 1,133,761 | 1,198,123 | 1,186,339 | 1,104,772 | 1,074,719 |
| Portfolio amortisation and revaluation | –499,280 | –552,499 | –522,624 | –485,532 | –467,240 |
| Interest income from run-off consumer loan portfolio | 518 | 1,021 | 1,845 | 1,153 | –1,092 |
| Net revenue from acquired loan portfolios | 634,999 | 646,645 | 665,560 | 620,393 | 606,387 |
| Fee and commission income | 16,986 | 18,396 | 21,145 | 29,513 | 28,451 |
| Profit from shares and participations in joint ventures | 11,326 | 16,188 | 27,662 | 15,222 | 27,479 |
| Other income | 2,240 | 1,562 | 4,640 | 7,110 | 2,437 |
| Total revenue | 665,551 | 682,791 | 719,007 | 672,238 | 664,754 |
| Personnel expenses | –171,165 | –170,987 | –168,463 | –177,988 | –157,894 |
| Collection costs1) | –142,782 | –157,200 | –169,008 | –145,560 | –171,319 |
| Other operating expenses1) | –90,347 | –99,543 | –94,160 | –93,170 | –90,130 |
| Depreciation and amortisation of tangible and intangible assets | –14,258 | –14,173 | –13,919 | –13,891 | –12,812 |
| Total operating expenses | –418,552 | –441,903 | –445,550 | –430,609 | –432,155 |
| EBIT | 246,999 | 240,888 | 273,457 | 241,629 | 232,599 |
| Interest income excl. run-off consumer loan portfolio | –3,542 | –3,154 | –3,048 | 700 | –1,074 |
| Interest expense | –68,106 | –85,100 | –76,579 | –79,474 | –77,071 |
| Net financial income2) | 6,859 | –48,572 | –8,682 | –7,987 | –24,183 |
| Total financial items | –64,789 | –136,826 | –88,309 | –86,761 | –102,328 |
| Profit before tax | 182,210 | 104,062 | 185,148 | 154,868 | 130,271 |
1) Comparative figures have been adjusted due to the reclassification of non-deductible VAT related to collection costs in 2016 as collection costs (Region Mid Europe). 2) Including financing costs.
| SEK million | Quarter 3 2017 |
Quarter 4 2017 |
Quarter 1 2016 |
Quarter 2 2016 |
Quarter 3 2016 |
|---|---|---|---|---|---|
| EBIT margin, % | 37 | 35 | 38 | 36 | 35 |
| Return on book, %1) | 10.0 | 10.3 | 11.3 | 11.1 | 10.8 |
| Portfolio acquisitions | 781 | 786 | 611 | 1,568 | 607 |
| SEK million | 30 sep 2017 |
31 jun 2017 |
31 mar 2017 |
31 dec 2016 |
30 sep 2016 |
| Carrying value of acquired loans2) | 13,170 | 13,079 | 12,783 | 12,658 | 11,658 |
| Gross 120-month ERC3) | 21,421 | 21,417 | 21,297 | 21,375 | 19,450 |
| Return on equity, %4) | 17 | 15 | 21 | 16 | 16 |
| Total capital ratio, % | 19.43 | 19.73 | 16.79 | 16.76 | 15.45 |
| CET1 ratio, % | 12.72 | 12.99 | 12.51 | 12.46 | 12.63 |
| Liquidity reserve | 5,702 | 5,605 | 5,671 | 5,789 | 6,520 |
| Number of employees (FTEs) | 1,308 | 1,267 | 1,268 | 1,285 | 1,341 |
1) Excluding operating expenses in Central Functions. For information on the calculation of key ratios, see Definitions.
2) Including run-off consumer loan portfolio and portfolios held in the Polish joint venture.
3) Excluding run-off consumer loan portfolio and portfolios held in the Polish joint venture. For information on the calculation of key ratios, see Definitions.
4) Comparative figures have been adjusted for all periods in 2016.
Hoist Finance purchases and manages non-performing loans in ten European countries, all of which have different legislative frameworks, shifting traditions for providing financial services and varying attitudes with respect to repayment patterns. 12000 MSEK Förvärv per kvartal och segment
2 194 Operations in Europe are divided into three segments – Region West Europe, Region Mid Europe and Region Central East Europe.
| SEK thousand | Region West Europe |
Region Mid Europe |
Region Central East Europe |
Central Functions and Eliminations |
Group |
|---|---|---|---|---|---|
| Net revenue from acquired loan portfolios | 202,039 | Förvärv per segment 243,890 |
189,070 | – | 634,999 |
| Total revenue | 215,512 | 245,196 MSEK |
193,233 | 11,610 | 665,551 |
| Total operating expenses | –130,432 | –107,270 800 |
781 –98,219 |
–82,631 | –418,552 |
| EBIT | 85,080 | 700 137,926 |
201 607 95,014 |
–71,021 | 246,999 |
| EBIT margin, % | 39 | 600 56 |
29 10 49 92 |
– | 37 |
| Carrying value of acquired loan portfolios, SEKm1) | 5,328 | 500 4,141 400 |
3,470 | 231 | 13,170 |
| Gross 120-month ERC, SEKm2) | 8,764 | 6,687 300 |
5,970 | West Europe Region Central East Europe – Mid Europe Region Mid Europe |
21,421 |
1) Including run-off consumer loan portfolio and portfolios held in the Polish joint venture.
100 2) Excluding run-off consumer loan portfolio and portfolios held in the Polish joint venture. For information on the calculation of key ratios, see Definitions.
The earnings trend for each operating segment (excluding Central Functions and Eliminations), based on the operating income statement, is set forth in the following pages.
Segment overview Hoist Finance
France, Spain and the UK
Gross collections on acquired loan portfolios increased 19 per cent, due primarily to strong portfolio growth in the UK. Portfolio amortisation and revaluation totalled SEK 192m (111) during the quarter, with the low comparative figure from 2016 a result of high legal collection costs in the UK. Portfolio revaluations totalled SEK –16m (–11) during the quarter and were mainly attributable to revaluation of a Spanish portfolio for which collections were somewhat delayed. Fee and commission income continued to decrease in line with the previously communicated strategy of focusing on the acquisition and management of loan portfolios.
Earnings trend*
Total operating expenses decreased 19 per cent during the third quarter, with the decrease dependent primarily by improved operational efficiency and a lower level of legal collection activities as compared with Q3 2016. The decrease is somewhat offset by increased investments in Spain and restructuring expenses in the region that were charged to the quarterly result.
The region's EBIT increased 11 per cent to SEK 85m (77) for the quarter with a corresponding EBIT margin of 39 per cent (32). The improvement was driven mainly by strong portfolio growth in the UK in combination with operational efficiency improvements.
The region's return on book for third quarter 2017 decreased somewhat to 6.6 per cent (7.5). The comparative figure was affected mainly by portfolio revaluations and investments made to strengthen the Spanish operations and position it well for future portfolio acquisitions, and by the restructuring costs mentioned above.
The acquisition volume during the third quarter was SEK 570m (486) and is mainly attributable to acquisitions in the UK, where the market remained active.
The carrying value of acquired loan portfolios increased 18 per cent to SEK 5,328m (4,522) since the turn of the year. Gross ERC increased to SEK 8,764m (7,927) over the same period.
| SEK thousand | Quarter 3 2017 |
Quarter 3 2016 |
Change, % | Jan–Sep 2017 |
Jan–Sep 2016 |
Change, % | Full year 2016 |
|---|---|---|---|---|---|---|---|
| Gross collections on acquired loan portfolios | 394,338 | 332,199 | 19 | 1,136,431 | 950,491 | 20 | 1,296,766 |
| Portfolio amortisation and revaluation | –192,299 | –110,562 | 74 | –478,169 | –329,742 | 45 | –487,587 |
| Net revenue from acquired loan portfolios | 202,039 | 221,637 | –9 | 658,262 | 620,749 | 6 | 809,179 |
| Fee and commission income | 13,473 | 15,217 | –11 | 41,286 | 51,546 | –20 | 65,629 |
| Other income | 0 | 0 | – | 8 | 0 | >100 | – |
| Total revenue | 215,512 | 236,854 | –9 | 699,556 | 672,295 | 4 | 874,808 |
| Personnel expenses | –58,925 | –52,526 | 12 | –172,885 | –173,731 | 0 | –231,502 |
| Collection costs | –41,608 | –76,041 | –45 | –147,343 | –200,701 | –27 | –246,005 |
| Other operating expenses | –27,124 | –28,850 | –6 | –83,418 | –88,805 | –6 | –112,356 |
| Depreciation and amortisation of tangible and intangible assets |
–2,775 | –2,687 | 3 | –8,337 | –9,396 | –11 | –11,977 |
| Total operating expenses | –130,432 | –160,104 | –19 | –411,983 | –472,633 | –13 | –601,840 |
| EBIT | 85,080 | 76,750 | 11 | 287,573 | 199,662 | 44 | 272,968 |
| EBIT margin, % | 39 | 32 | 7 pp | 41 | 30 | 11 pp | 31 |
| Return on book, % | 6.6 | 7.5 | –0.9 pp | 7.7 | 6.5 | 1.2 pp | 6.5 |
| Expenses/Gross collections on acquired loan portfolios, % | 30 | 44 | –14 pp | 33 | 44 | –11 pp | 41 |
| Carrying value of acquired loan portfolios, SEKm | 5,328 | 4,281 | 24 | N/A | N/A | – | 4,522 |
| Gross 120-month ERC, SEKm | 8,764 | 7,461 | 17 | N/A | N/A | – | 7,927 |
*Based on the operating income statement, excluding operating segment Central Functions and Eliminations.
Gross collections on acquired loan portfolios increased 12 per cent, driven primarily by strong portfolio growth in Italy. Portfolio amortisation and revaluation decreased 7 per cent due mainly to positive portfolio revaluations, which totalled SEK 40m (2) during the third quarter. The increase is attributable to Italian portfolios, which have outperformed anticipated collection rates over time. Profit from shares and participations in joint ventures refers to the Greek operations.
Total operating expenses increased 20 per cent, with the increase attributable to portfolio growth and higher legal collection activities in Italy.
EBIT The region's EBIT totalled SEK 138m (96) for the quarter with a corresponding EBIT margin of 56 per cent (52). The comparative figure was affected by the previously mentioned portfolio revaluations in the region and by strong portfolio growth in Italy. The improvement was offset by lower acquisition activity in Belgium and the Netherlands.
The region's return on book for third quarter 2017 was 13.0 per cent (11.0), with the change related to the above-named effect on the comparative figures.
The acquisition volume during the quarter totalled SEK 10m (92) and was attributable to acquisitions in Belgium. The carrying value of acquired loan portfolios decreased since the turn of the year and totalled SEK 4,141m (4,331). Gross ERC decreased to SEK 6,687m (7,117) over the same period.
The operation in Greece continues to strengthen its position in order to enable future portfolio acquisitions.
| SEK thousand | Quarter 3 2017 |
Quarter 3 2016 |
Change, % | Jan–Sep 2017 |
Jan–Sep 2016 |
Change, % | Full year 2016 |
|---|---|---|---|---|---|---|---|
| Gross collections on acquired loan portfolios | 416,785 | 370,495 | 12 | 1,349,077 | 1,157,029 | 17 | 1,574,731 |
| Portfolio amortisation and revaluation | –172,895 | –186,872 | –7 | –669,345 | –560,715 | 19 | –763,410 |
| Net revenue from acquired loan portfolios | 243,890 | 183,623 | 33 | 679,732 | 596,314 | 14 | 811,321 |
| Fee and commission income | 829 | 1,380 | –40 | 3,632 | 3,606 | 1 | 5,006 |
| Profit from shares and participations in joint venture | –408 | –211 | 93 | 12,691 | 227 | >100 | 616 |
| Other income | 885 | 303 | >100 | 1,703 | 1,177 | 45 | 1,769 |
| Total revenue | 245,196 | 185,095 | 32 | 697,758 | 601,324 | 16 | 818,712 |
| Personnel expenses | –29,071 | –27,028 | 8 | –89,609 | –79,381 | 13 | –111,301 |
| Collection costs1) | –64,271 | –48,956 | 31 | –206,213 | –149,350 | 38 | –221,228 |
| Other operating expenses1) | –11,790 | –11,462 | 3 | –36,214 | –45,741 | –21 | –53,821 |
| Depreciation and amortisation of tangible and intangible assets |
–2,138 | –1,770 | 21 | –5,900 | –5,178 | 14 | –7,210 |
| Total operating expenses | –107,270 | –89,216 | 20 | –337,936 | –279,650 | 21 | –393,560 |
| EBIT | 137,926 | 95,879 | 44 | 359,822 | 321,674 | 12 | 425,152 |
| EBIT margin, % | 56 | 52 | 4 pp | 52 | 53 | –1 pp | 52 |
| Return on book, % | 13.0 | 11.0 | 2.0 pp | 11.1 | 12.0 | –0.9 pp | 10.7 |
| Expenses/Gross collections on acquired loan portfolios, % | 25 | 24 | 1 pp | 25 | 24 | 1 pp | 25 |
| Carrying value of acquired loan portfolios, SEKm | 4,141 | 3,491 | 19 | N/A | N/A | – | 4,331 |
| Gross 120-month ERC, SEKm | 6,687 | 5,840 | 15 | N/A | N/A | – | 7,117 |
*Based on the operating income statement, excluding operating segment Central Functions and Eliminations.
1) Comparative figures have been adjusted due to the reclassification of non-deductible VAT related to collection costs in 2016 as collection costs.
Poland, Germany and Austria
Gross collections on acquired loan portfolios decreased 13 per cent to SEK 323m (372) during the third quarter, with the decrease mainly attributable to a lower acquisition rate in the region as compared with last year. The decrease in gross collections on acquired loan portfolios is also the reason portfolio amortisation and revaluations decreased 21 per cent year-on-year. Portfolio revaluations totalled SEK –16m (1) during the quarter and are attributable to Poland, where portfolios collected earlier than anticipated were adjusted with respect to future collections. Fee and commission income decreased 77 per cent to SEK 3m (12), with the decrease attributable to the termination of a service contract in Poland earlier during the year.
Total operating expenses decreased 7 per cent during the quarter to SEK 98m (105). The decrease is mainly attributable to lower collection costs in Poland due to somewhat lower legal collection costs as compared with the comparative quarter.
EBIT for the third quarter totalled SEK 95m (111) with a corresponding EBIT margin of 49 per cent (51). The somewhat lower EBIT and EBIT margin are primarily due portfolio revaluations and decreased fee and commission income.
The region's return on book for third quarter 2017 was 10.9 per cent (12.1), with the decrease attributable to portfolio revaluations and to decreased fee and commission income.
The acquisition volume during the third quarter totalled SEK 201m (29) and is attributable to Germany and Poland. The carrying value of acquired loan portfolios decreased somewhat since the turn of the year, totalling SEK 3,470m (3,564). Gross ERC decreased to SEK 5,970m (6,331) over the same period.
| SEK thousand | Quarter 3 2017 |
Quarter 3 2016 |
Change, % | Jan–Sep 2017 |
Jan–Sep 2016 |
Change, % | Full year 2016 |
|---|---|---|---|---|---|---|---|
| Gross collections on acquired loan portfolios | 322,638 | 372,025 | –13 | 1,032,715 | 1,098,870 | –6 | 1,439,665 |
| Portfolio amortisation and revaluation | –134,086 | –169,806 | –21 | –426,889 | –530,218 | –19 | –655,210 |
| Interest income from run-off consumer loan portfolio | 518 | –1,092 | >–100 | 3,384 | 4,688 | –28 | 5,841 |
| Net revenue from acquired loan portfolios | 189,070 | 201,127 | –6 | 609,210 | 573,340 | 6 | 790,296 |
| Fee and commission income | 2,684 | 11,854 | –77 | 11,609 | 32,152 | –64 | 46,182 |
| Other income | 1,479 | 3,028 | –51 | 7,858 | 7,545 | 4 | 14,502 |
| Total revenue | 193,233 | 216,009 | –11 | 628,677 | 613,037 | 3 | 850,980 |
| Personnel expenses | –44,544 | –45,134 | –1 | –132,323 | –133,859 | –1 | –181,875 |
| Collection costs | –37,051 | –46,322 | –20 | –115,429 | –100,304 | 15 | –128,682 |
| Other operating expenses | –14,828 | –11,811 | 26 | –40,232 | –35,257 | 14 | –49,924 |
| Depreciation and amortisation of tangible and | |||||||
| intangible assets | –1,796 | –1,843 | –3 | –5,608 | –5,448 | 3 | –7,299 |
| Total operating expenses | –98,219 | –105,110 | –7 | –293,592 | –274,868 | 7 | –367,780 |
| EBIT | 95,014 | 110,899 | –14 | 335,085 | 338,169 | –1 | 483,200 |
| EBIT margin, % | 49 | 51 | –2 pp | 53 | 55 | –2 pp | 57 |
| Return on book, % | 10.9 | 12.1 | –1.2 pp | 12.8 | 12.6 | 0.2 pp | 13.6 |
| Expenses/Gross collections on acquired loan portfolios, % | 29 | 24 | 5 pp | 26 | 21 | 5 pp | 21 |
| Carrying value of acquired loan portfolios, SEKm1) | 3,470 | 3,638 | –5 | N/A | N/A | – | 3,564 |
| Gross 120-month ERC, SEKm2) | 5,970 | 6,239 | –4 | N/A | N/A | – | 6,331 |
*Based on the operating income statement, excluding operating segment Central Functions and Eliminations.
1) Including run-off consumer loan portfolio and portfolios held in the Polish joint venture.
2) Excluding run-off consumer loan portfolio and portfolios held in the Polish joint venture.
| SEK thousand | Quarter 3 2017 |
Quarter 3 2016 |
Jan–Sep 2017 |
Jan–Sep 2016 |
Full-year 2016 |
|---|---|---|---|---|---|
| Net revenue from acquired loan portfolios | 634,481 | 607,479 | 1,943,820 | 1,785,715 | 2,404,955 |
| Interest income | –3,024 | –2,166 | –6,360 | 705 | 2,558 |
| Interest expense | –68,106 | –77,071 | –229,785 | –220,814 | –300,288 |
| Net interest income | 563,351 | 528,242 | 1,707,675 | 1,565,606 | 2,107,225 |
| Fee and commission income | 16,986 | 28,451 | 56,527 | 87,304 | 116,817 |
| Net financial income | 6,859 | –24,183 | –50,395 | –90,802 | –97,529 |
| Other income | 2,240 | 2,437 | 8,442 | 6,541 | 13,651 |
| Total operating income | 589,436 | 534,947 | 1,722,249 | 1,568,649 | 2,140,164 |
| General administrative expenses | |||||
| Personnel expenses | –171,165 | –157,894 | –510,615 | –494,367 | –672,355 |
| Other operating expenses | –233,129 | –261,449 | –753,040 | –727,967 | –966,697 |
| Depreciation and amortisation of tangible and intangible assets |
–14,258 | –12,812 | –42,350 | –38,905 | –52,796 |
| Total operating expenses | –418,552 | –432,155 | –1,306,005 | –1,261,239 | –1,691,848 |
| Profit before credit losses | 170,884 | 102,792 | 416,244 | 307,410 | 448,316 |
| Net credit losses | – | – | – | – | –1,260 |
| Profit from shares and participations in joint ventures | 11,326 | 27,479 | 55,176 | 70,820 | 86,042 |
| Profit before tax | 182,210 | 130,271 | 471,420 | 378,230 | 533,098 |
| Income tax expense | –36,819 | –26,906 | –103,886 | –79,191 | –115,949 |
| Net profit for the period | 145,391 | 103,365 | 367,534 | 299,039 | 417,149 |
| Profit attributable to: | |||||
| Owners of Hoist Finance AB (publ) | 145,391 | 103,365 | 367,534 | 299,039 | 417,149 |
| Basic earnings per share, SEK1) | 1.68 | 1.27 | 4.18 | 3.69 | 5.07 |
| Diluted earnings per share, SEK1) 2) | 1.68 | 1.25 | 4.17 | 3.61 | 4.97 |
1) Following the 1:3 share split, each warrant entitles the holder to subscribe for three new shares.
2) Includes effect of 159,993 outstanding warrants.
| SEK thousand | Quarter 3 2017 |
Quarter 3 2016 |
Jan–Sep 2017 |
Jan–Sep 2016 |
Full–year 2016 |
|---|---|---|---|---|---|
| Net profit for the period | 145,391 | 103,365 | 367,534 | 299,039 | 417,149 |
| Other comprehensive income | |||||
| Items that will not be reclassified to profit or loss | |||||
| Revaluation of defined benefit pension plan | – | – | – | – | –1,941 |
| Revaluation of remuneration after terminated employment |
– | – | – | – | –617 |
| Tax attributable to items that will not be reclassified to profit or loss |
– | – | – | – | 654 |
| Total items that will not be reclassified to profit or loss |
– | – | – | – | –1,904 |
| Items that may be reclassified subsequently to profit or loss |
|||||
| Translation difference, foreign operations | –5,908 | 22,738 | 12,711 | –804 | –21,872 |
| Translation difference, joint venture | –7,696 | 9,868 | 3,642 | 7,445 | 1,489 |
| Hedging of currency risk in foreign operations | –25,956 | – | –82,364 | – | – |
| Hedging of currency risk in joint venture | 6,199 | –19,915 | –10,637 | –12,495 | –7,421 |
| Transferred to the income statement during the year | 433 | – | 2,211 | – | – |
| Tax attributable to items that may be reclassified to profit or loss |
4,177 | 4,381 | 23,341 | 5,919 | 4,803 |
| Total items that may be reclassified subsequently to profit or loss |
–28,751 | 17,072 | –51,096 | 65 | –23,001 |
| Other comprehensive income for the period | –28,751 | 17,072 | –51,096 | 65 | –24,905 |
| Total comprehensive income for the period | 116,640 | 120,437 | 316,438 | 299,104 | 392,244 |
| Profit attributable to: | |||||
| Owners of Hoist Finance AB (publ) | 116,640 | 120,437 | 316,438 | 299,104 | 392,244 |
| SEK thousand | 30 Sep 2017 |
31 Dec 2016 |
30 Sep 2016 |
|---|---|---|---|
| ASSETS | |||
| Cash | 2,998 | 3,073 | 262 |
| Treasury bills and Treasury bonds | 1,490,273 | 2,273,903 | 3,470,642 |
| Lending to credit institutions | 1,134,970 | 1,061,285 | 1,092,503 |
| Lending to the public | 31,817 | 35,789 | 44,181 |
| Acquired loan portfolios | 12,916,637 | 12,385,547 | 11,370,976 |
| Bonds and other securities | 3,131,696 | 2,538,566 | 2,059,714 |
| Participations in joint ventures | 229,862 | 241,276 | 248,683 |
| Intangible assets | 261,505 | 243,340 | 248,682 |
| Tangible assets | 40,759 | 40,815 | 39,597 |
| Other assets | 507,903 | 193,470 | 432,753 |
| Deferred tax assets | 33,248 | 47,269 | 68,394 |
| Prepayments and accrued income | 55,942 | 85,593 | 75,870 |
| Total assets | 19,837,610 | 19,149,926 | 19,152,257 |
| LIABILITIES AND EQUITY | |||
| Liabilities | |||
| Deposits from the public | 12,300,661 | 11,848,956 | 12,292,877 |
| Tax liabilities | 84,663 | 52,887 | 76,785 |
| Other liabilities | 213,683 | 432,865 | 248,383 |
| Deferred tax liabilities | 164,248 | 163,264 | 183,733 |
| Accrued expenses and deferred income | 201,577 | 203,442 | 199,485 |
| Provisions | 53,417 | 55,504 | 58,557 |
| Senior unsecured debt | 2,930,360 | 3,125,996 | 3,227,048 |
| Subordinated liabilities | 772,530 | 341,715 | 340,477 |
| Total liabilities | 16,721,139 | 16,224,629 | 16,627,345 |
| Equity | |||
| Share capital | 26,906 | 26,906 | 26,276 |
| Other contributed equity | 2,072,993 | 2,073,215 | 1,759,100 |
| Reserves | –118,191 | –67,095 | –44,029 |
| Retained earnings including profit for the period | 1,134,763 | 892,271 | 783,565 |
| Total equity | 3,116,471 | 2,925,297 | 2,524,912 |
| Total liabilities and equity | 19,837,610 | 19,149,926 | 19,152,257 |
| SEK thousand | Share capital | Other contributed capital |
Translation reserve |
Retained earnings including profit for the year |
Total equity |
|---|---|---|---|---|---|
| Opening balance 1 Jan 2017 | 26,906 | 2,073,215 | –67,095 | 892,271 | 2,925,297 |
| Comprehensive income for the period | |||||
| Profit for the period | 367,534 | 367,534 | |||
| Other comprehensive income | –51,096 | –51,096 | |||
| Total comprehensive income for the period | –51,096 | 367,534 | 316,438 | ||
| Transactions reported directly in equity | |||||
| Dividend | –104,935 | –104,935 | |||
| Warrants, repurchased and cancelled | –222 | –222 | |||
| Interest paid on capital contribution | –20,107 | –20,107 | |||
| Total transactions reported directly in equity | –222 | –125,042 | –125,264 | ||
| Closing balance 30 Sep 2017 | 26,906 | 2,072,993 | –118,191 | 1,134,763 | 3,116,471 |
| SEK thousand | Share capital | Other contributed capital |
Translation reserve |
Retained earnings including profit for the year |
Total equity |
|---|---|---|---|---|---|
| Opening balance 1 Jan 2016 | 26,178 | 1,755,676 | –44,094 | 551,000 | 2,288,760 |
| Comprehensive income for the period | |||||
| Profit for the period | 417,149 | 417,149 | |||
| Other comprehensive income | –23,001 | –1,904 | –24,905 | ||
| Total comprehensive income for the period | –23,001 | 415,245 | 392,244 | ||
| Transactions reported directly in equity | |||||
| Dividend | –58,974 | –58,974 | |||
| New share issue | 728 | 34,568 | 35,296 | ||
| Additional Tier 1 capital instruments | 283,3351) | 283,335 | |||
| Warrants, repurchased and cancelled | –2,066 | –2,066 | |||
| Interest paid on capital contribution | –15,000 | –15,000 | |||
| Tax effect on items reported directly in equity | 1,702 | 1,702 | |||
| Total transactions reported directly in equity | 728 | 317,539 | –73,974 | 244,293 | |
| Closing balance 31 Dec 2016 | 26,906 | 2,073,215 | –67,095 | 892,271 | 2,925,297 |
1) Nominal amount of SEK 291 million has been reduced by transactions costs of SEK 8 million.
| SEK thousand | Share capital | Other contributed capital |
Translation reserve |
Retained earnings including profit for the year |
Total equity |
|---|---|---|---|---|---|
| Opening balance 1 Jan 2016 | 26,178 | 1,755,676 | –44,094 | 551,000 | 2,288,760 |
| Comprehensive income for the period Profit for the period |
299,039 | 299,039 | |||
| Other comprehensive income | 65 | 65 | |||
| Total comprehensive income for the period | 65 | 299,039 | 299,104 | ||
| Transactions reported directly in equity | |||||
| Dividend | –58,974 | –58,974 | |||
| New share issue | 98 | 4,790 | 4,888 | ||
| Warrants, repurchased and cancelled | –1,366 | –1,366 | |||
| Interest paid on capital contribution | –7,500 | –7,500 | |||
| Total transactions reported directly in equity | 98 | 3,424 | –66,474 | –62,952 | |
| Closing balance 30 Sep 2016 | 26,276 | 1,759,100 | –44,029 | 783,565 | 2,524,912 |
| SEK thousand | Quarter 3 2017 |
Quarter 3 2016 |
Jan–Sep 2017 |
Jan–Sep 2016 |
Full-year 2016 |
|---|---|---|---|---|---|
| OPERATING ACTIVITIES | |||||
| Profit/loss before tax | 182,210 | 130,271 | 421,420 | 378,230 | 533,097 |
| of which, paid-in interest | 518 | –1,093 | 3,384 | 4,687 | 5,841 |
| of which, interest paid | –50,271 | –30,437 | –171,683 | –156,117 | –288,713 |
| Adjustment for items not included in cash flow | |||||
| Portfolio amortisation and revaluation | 499,281 | 467,241 | 1,574,404 | 1,420,676 | 1,906,208 |
| Other non-cash items | 222,807 | –35,053 | 145,325 | 245,104 | 232,902 |
| Realised profit from divestment of shares and partici pations in joint ventures |
–13,445 | –24,896 | –47,952 | –28,687 | –42,546 |
| Income tax paid | 6,780 | 674 | –37,801 | –25,673 | –49,000 |
| Total | 897,633 | 538,237 | 2,105,396 | 1,989,650 | 2,580,661 |
| Increase/decrease in lending to the public | –5,008 | 20,524 | 3,972 | 33,813 | 42,681 |
| Increase/decrease in other assets | –276,806 | –121,202 | –271,129 | 15,118 | 221,233 |
| Increase/decrease in other liabilities | –32,989 | –135,226 | –162,513 | –64,590 | 131,956 |
| Total | –314,803 | –235,904 | –429,670 | –15,659 | 395,870 |
| Cash flow from operating activities | 582,830 | 302,333 | 1,675,726 | 1,973,991 | 2,976,531 |
| INVESTING ACTIVITIES | |||||
| Acquired loan portfolios | –781,320 | –606 ,677 | –2,177,990 | –1,761,862 | –3,329,382 |
| Investments in intangible assets | –19,360 | –14,912 | –46,942 | –26,366 | –35,756 |
| Investments in tangible assets | –1,712 | –1,948 | –11,831 | –10,969 | –18,360 |
| Investments in/divestments of bonds and other securities |
–415,085 | –80,002 | –600,003 | –750,888 | –1,232,503 |
| Investments in subsidiaries | – | – | –21,815 | –25,204 | –40,788 |
| Acquired shares and participations in joint ventures | – | – | – | –74 | –74 |
| Divested shares and participations in joint ventures | 15,650 | 29,065 | 56,324 | 35,220 | 51,891 |
| Cash flow from investing activities | –1,201,827 | –674,474 | –2,802,257 | –2,540,143 | –4,604,972 |
| FINANCING ACTIVITIES | |||||
| Deposits from the public | 321,312 | –413,278 | 445,926 | –554,027 | –957,707 |
| Issued bonds | – | 501,033 | – | 2,779,393 | 2,771,876 |
| Repurchase of issued bonds | – | – | –276,867 | –976,284 | –976,570 |
| Buy-back of issued bonds | – | – | – | – | –58,000 |
| Issued Tier 2 capital | – | – | 781,328 | – | – |
| Repurchase of subordinated loan | – | – | –399,550 | – | – |
| Issued Additional Tier 1 capital | – | – | – | – | 285,396 |
| Interest paid on AT1 capital | – | – | –27,607 | –7,500 | –7,500 |
| New share issue | – | 108 | – | 4,888 | 35,296 |
| Warrants, repurchased and cancelled | – | 640 | –222 | –1,366 | –2,066 |
| Dividend paid | – | – | –104,935 | –58,974 | –58,974 |
| Cash flow from financing activities | 321,312 | 88,503 | 418,073 | 1,186,130 | 1,031,751 |
| Cash flow for the period | –297,685 | –283,638 | –708,458 | 619,978 | –596,690 |
| Cash at beginning of the period | 2,933,900 | 4,830,538 | 3,338,261 | 3,936,624 | 3,936,624 |
| Translation difference | –7,974 | 16,507 | –1,562 | 6,805 | –1,673 |
| Cash at end of the period* | 2,628,241 | 4,563,407 | 2,628,241 | 4,563,407 | 3,338,261 |
*Comprised of cash, Treasury bills/bonds and lending to credit institutions.
| SEK thousand | Quarter 3 2017 |
Quarter 3 2016 |
Jan–Sep 2017 |
Jan–Sep 2016 |
Full-year 2016 |
|---|---|---|---|---|---|
| Net sales | 72,214 | 46,006 | 202,414 | 133,538 | 195,846 |
| Other external expenses | –66,004 | –56,259 | –207,879 | –148,769 | –219,855 |
| Personnel expenses | –1,991 | –1,736 | –3,873 | –5,909 | –7,100 |
| Depreciation and amortisation | –1,412 | –1,240 | –4,285 | –3,615 | –4,891 |
| Total operating expenses | –69,407 | –59,235 | –216,037 | –158,293 | –231,846 |
| Operating profit | 2,807 | –13,229 | –13,623 | –24,755 | –36,000 |
| Other interest income | 7,035 | 3,698 | 22,756 | 3,492 | 10,555 |
| Interest expense and similar costs | –694 | –391 | –2,837 | –713 | –1,602 |
| Total income from financial items | 6,341 | 3,307 | 19,919 | 2,779 | 8,953 |
| Earnings from participations in Group companies | – | – | – | – | 210,000 |
| Appropriations (tax allocation reserve) | – | – | – | – | –36,483 |
| Profit/loss before tax | 9,148 | –9,922 | 6,296 | –21,976 | 146,470 |
| Income tax expense | –2,087 | 1,322 | –1,503 | 3,968 | –29,150 |
| Net profit for the period1) | 7,061 | –8,600 | 4,793 | –18,008 | 117,320 |
1) Profit/loss for the period corresponds to Comprehensive income for the period.
| SEK thousand | 30 Sep 2017 |
31 Dec 2016 |
30 Sep 2016 |
|---|---|---|---|
| ASSETS | |||
| Non-current assets | |||
| Licences and software | 48,733 | 25,169 | 21,628 |
| Total intangible assets | 48,733 | 25,169 | 21,628 |
| Equipment | 1,612 | 2,417 | 2,703 |
| Total tangible assets | 1,612 | 2,417 | 2,703 |
| Shares and participations in subsidiaries | 1,687,989 | 1,687,989 | 1,687,989 |
| Deferred tax asset | – | – | 3,968 |
| Total financial assets | 1,687,989 | 1,687,989 | 1,691,957 |
| Total non-current assets | 1,738,334 | 1,715,575 | 1,716,288 |
| Current assets | |||
| Receivables, Group companies | 41,713 | 257,501 | 51,131 |
| Other receivables | 35 | 402 | 3,657 |
| Prepaid expenses and deferred income | 7,120 | 8,506 | 5,608 |
| Total current receivables | 48,868 | 266,409 | 60,396 |
| Cash and bank balances | 409,095 | 328,457 | 496,619 |
| Total current assets | 457,963 | 594,866 | 557,015 |
| Total assets | 2,196,297 | 2,310,441 | 2,273,303 |
| SEK thousand | 30 Sep 2017 |
31 Dec 2016 |
30 Sep 2016 |
|---|---|---|---|
| EQUITY AND LIABILITIES | |||
| Equity | |||
| Restricted equity | |||
| Share capital | 26,906 | 26,906 | 26,276 |
| Statutory reserve | 3,098 | 3,098 | 3,098 |
| Development expenditure fund | 4,871 | 1,215 | – |
| Total restricted equity | 34,875 | 31,219 | 29,374 |
| Non-restricted equity | |||
| Other contributed equity | 1,693,416 | 1,693,638 | 1,664,560 |
| Retained earnings | 7,457 | –1,272 | –57 |
| Profit/loss for the period | 4,793 | 117,320 | –18,008 |
| Total non-restricted equity | 1,705,666 | 1,809,686 | 1,646,495 |
| Total shareholders' equity | 1,740,541 | 1,840,905 | 1,675,869 |
| Untaxed reserves | 59,995 | 59,995 | 23,512 |
| Provisions | |||
| Pension provisions | 36 | 24 | 27 |
| Total provisions | 36 | 24 | 27 |
| Non-current liabilities | |||
| Intra-Group loans | – | 65,000 | 65,000 |
| Total non-current liabilities | – | 65,000 | 65,000 |
| Current liabilities | |||
| Accounts payable | 7,563 | 12,863 | 7,093 |
| Tax liabilities | 19,464 | 27,157 | 15,616 |
| Liabilities, Group companies | 361,016 | 298,153 | 481,449 |
| Other current liabilities | 2,698 | 3,506 | – |
| Accrued expenses and deferred income | 4,984 | 2,838 | 4,737 |
| Total current liabilities | 395,725 | 344,517 | 508,895 |
| Total equity, provisions and liabilities | 2,196,297 | 2,310,441 | 2,273,303 |
This interim report was prepared in accordance with IAS 34, Interim Financial Reporting. The consolidated accounts were prepared in accordance with the International Financial Reporting Standards (IFRS) and interpretations thereof as adopted by the European Union. The accounting follows the Swedish Annual Accounts Act for Credit Institutions and Securities Companies (1995:1559) and the regulatory code issued by the Swedish Financial Supervisory Authority on Annual Reports in Credit Institutions and Securities Companies (FFFS 2008:25), including applicable amendments. The Swedish Financial Reporting Board's RFR 1, Supplementary Accounting Rules for Groups, has also been applied.
The Parent Company Hoist Finance AB's (publ) accounts were prepared in accordance with the Swedish Annual Accounts Act (1995:1554) 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 2, Accounting for Legal Entities, was also applied.
No IFRS or IFRIC amendments that became effective in 2017 have had any material impact on the Group's financial statements or capital adequacy.
Hoist Finance has chosen to expand hedge accounting as from 1 January 2017 to include currency hedges used to hedge net investments in foreign operations. Under this expanded hedge accounting, a larger share of exchange rate fluctuations previously reported as 'Net financial income' will be reported as 'Other comprehensive income'.
Hoist Finance has chosen to present cash flow statements using the indirect method as from first quarter 2017, as this format better reflects the way in which the Group monitors cash flow. Comparative figures for third quarter and full-year 2016 have been adjusted accordingly.
A number of new or amended IFRS that will come into effect during the coming financial years were not applied in advance as at the issuance of this interim report. Hoist Finance does not intend to apply new or amended standards in advance. For detailed information see the Annual report 2016.
In all other material respects, the Group's and Parent Company's accounting policies and bases for calculation and presentation remain unchanged from those applied in the 2016 annual report.
| Quarter 3 2017 |
Quarter 3 2016 |
Full-year 2016 |
|
|---|---|---|---|
| 1 EUR = SEK | |||
| Income statement (average) | 9.5803 | 9.3682 | 9.4622 |
| Balance sheet (at end of the period) | 9.5668 | 9.6320 | 9.5669 |
| 1 GBP = SEK | |||
| Income statement (average) | 10.9844 | 11.6989 | 11.5849 |
| Balance sheet (at end of the period) | 10.8669 | 11.1681 | 11.1787 |
| 1 PLN = SEK | |||
| Income statement (average) | 2.2460 | 2.1494 | 2.1688 |
| Balance sheet (at end of the period) | 2.2189 | 2.2318 | 2.1662 |
| Consolidated income statement | Quarter 3 | Quarter 3 | Jan–Sep | Jan–Sep | Full-year |
|---|---|---|---|---|---|
| SEK thousand | 2017 | 2016 | 2017 | 2016 | 2016 |
| Revenues from acquired loan portfolios | 634,481 | 607,479 | 1,943,820 | 1,785,715 | 2,404,955 |
| of which, gross cash collections | 1,133,761 | 1,074,719 | 3,518,223 | 3,206,390 | 4,311,162 |
| of which, portfolio amortisation and revaluation | –499,280 | –467,240 | –1,574,403 | –1,420,675 | –1,906,207 |
| Interest income | –3,024 | –2,166 | –6,360 | 705 | 2,558 |
| of which, interest income from run-off consumer loan portfolio | 518 | –1,092 | 3,384 | 4,688 | 5,841 |
| of which, interest income excl. run-off consumer loan portfolio1) | –3,542 | –1,074 | –9,744 | –3,983 | –3,283 |
| Interest expense | –68,106 | –77,071 | –229,785 | –220,814 | –300,288 |
| Net interest income | 563,351 | 528,242 | 1,707,675 | 1,565,606 | 2,107,225 |
| Fee and commission income | 16,986 | 28,451 | 56,527 | 87,304 | 116,817 |
| Net financial income1) | 6,859 | –24,183 | –50,395 | –90,802 | –97,529 |
| Other income | 2,240 | 2,437 | 8,442 | 6,541 | 13,651 |
| Total operating income | 589,436 | 534,947 | 1,722,249 | 1,568,649 | 2,140,164 |
| General administrative expenses | |||||
| Personnel expenses | –171,165 | –157,894 | –510,615 | –494,367 | –672,355 |
| Other operating expenses | –233,129 | –261,449 | –753,040 | –727,967 | –966,697 |
| Depreciation and amortisation of tangible and intangible assets | –14,258 | –12,812 | –42,350 | –38,905 | –52,796 |
| Total operating expenses | –418,552 | –432,155 | –1,306,005 | –1,261,239 | –1,691,848 |
| Profit before loan losses | 170,884 | 102,792 | 416,244 | 307,410 | 448,316 |
| Net credit losses | – | – | – | – | –1,260 |
| Profit from shares and participations in joint ventures | 11,326 | 27,479 | 55,176 | 70,820 | 86,042 |
| Profit before tax | 182,210 | 130,271 | 471,420 | 378,230 | 533,098 |
| on segment reporting | Quarter 3 | Quarter 3 | Jan–Sep | Jan–Sep | Full-year |
|---|---|---|---|---|---|
| SEK thousand | 2017 | 2016 | 2017 | 2016 | 2016 |
| Gross cash collections on acquired loan portfolios | 1,133,761 | 1,074,719 | 3,518,223 | 3,206,390 | 4,311,162 |
| Portfolio amortisation and revaluation | –499,280 | –467,240 | –1,574,403 | –1,420,675 | –1,906,207 |
| Interest income from run-off consumer loan portfolio | 518 | –1,092 | 3,384 | 4,688 | 5,841 |
| Net revenue from acquired loan portfolios | 634,999 | 606,387 | 1,947,204 | 1,790,403 | 2,410,796 |
| Fee and commission income | 16,986 | 28,451 | 56,527 | 87,304 | 116,817 |
| Profit from shares and participations in joint ventures | 11,326 | 27,479 | 55,176 | 70,820 | 86,042 |
| Other income | 2,240 | 2,437 | 8,442 | 6,541 | 13,651 |
| Total revenue | 665,551 | 664,754 | 2,067,349 | 1,955,068 | 2,627,306 |
| Personnel expenses | –171,165 | –157,894 | –510,615 | –494,367 | –672,355 |
| Collection costs1) | –142,782 | –171,319 | –468,990 | –450,355 | –595,915 |
| Other operating expenses1) | –90,347 | –90,130 | –284,050 | –277,612 | –370,782 |
| Depreciation and amortisation of tangible and intangible assets | –14,258 | –12,812 | –42,350 | –38,905 | –52,796 |
| Total operating expenses | –418,552 | –432,155 | –1,306,005 | –1,261,239 | –1,691,848 |
| EBIT | 246,999 | 232,599 | 761,344 | 693,829 | 935,458 |
| Interest income excl. run-off consumer loan portfolio | –3,542 | –1,074 | –9,744 | –3,983 | –3,283 |
| Interest expense | –68,106 | –77,071 | –229,785 | –220,814 | –300,288 |
| Net financial income2) | 6,859 | –24,183 | –50,395 | –90,802 | –98,789 |
| Total financial items | –64,789 | –102,328 | –289,924 | –315,599 | –402,360 |
| Profit/loss before tax | 182,210 | 130,271 | 471,420 | 378,230 | 533,098 |
1) Comparative figures have been adjusted due to the reclassification of banking fees from Other operating expenses to Collection costs.
Segment reporting has been prepared based on the manner in which executive management monitors operations. This differs from statutory account preparation; the material differences are as follows:
Group costs for central and supporting functions are not allocated to the operating segments but are reported as Central Functions and Eliminations.
A financing cost is allocated to the operating segments based on the acquired loan portfolio assets. The difference between the actual financing cost and the standardised cost is included in 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.
| Income statement, Quarter 3 2017 | Region West | Region Mid | Region Central East |
Central Functions and |
|
|---|---|---|---|---|---|
| SEK thousand | Europe | Europe | Europe | Eliminations | Group |
| Gross cash collections on acquired loan portfolios | 394,338 | 416,785 | 322,638 | – | 1,133,761 |
| Portfolio amortisation and revaluation | –192,299 | –172,895 | –134,086 | – | –499,280 |
| Interest income from run-off consumer loan portfolio | – | – | 518 | – | 518 |
| Net revenue from acquired loan portfolios | 202,039 | 243,890 | 189,070 | – | 634,999 |
| Fee and commission income | 13,473 | 829 | 2,684 | – | 16,986 |
| Profit from shares and participations in joint ventures | – | –408 | – | 11,734 | 11,326 |
| Other income | 0 | 885 | 1,479 | –124 | 2,240 |
| Total revenue | 215,512 | 245,196 | 193,233 | 11,610 | 665,551 |
| Personnel expenses | –58,925 | –29,071 | –44,544 | –38,625 | –171,165 |
| Collection costs | –41,608 | –64,271 | –37,051 | 148 | –142,782 |
| Other operating expenses | –27,124 | –11,790 | –14,828 | –36,605 | –90,347 |
| Depreciation and amortisation of tangible | |||||
| and intangible assets | –2,775 | –2,138 | –1,796 | –7,549 | –14,258 |
| Total operating expenses | –130,432 | –107,270 | –98,219 | –82,631 | –418,552 |
| EBIT | 85,080 | 137,926 | 95,014 | –71,021 | 246,999 |
| Interest income excl. run-off consumer loan portfolio | – | – | 275 | –3,817 | –3,542 |
| Interest expense | – | –25 | –6 | –68,075 | –68,106 |
| Net financial income1) | –65,168 | –52,195 | –43,125 | 167,347 | 6,859 |
| Total financial items | –65,168 | –52,220 | –42,856 | 95,455 | –64,789 |
| Profit/loss before tax | 19,912 | 85,706 | 52,158 | 24,434 | 182,210 |
| Income statement, Quarter 3 2016 | Region | Central | |||
|---|---|---|---|---|---|
| SEK thousand | Region West Europe |
Region Mid Europe |
Central East Europe |
Functions and Eliminations |
Group |
| Gross cash collections on acquired loan portfolios | 332,199 | 370,495 | 372,025 | – | 1,074,719 |
| Portfolio amortisation and revaluation | –110,562 | –186,872 | –169,806 | – | –467,240 |
| Interest income from run-off consumer loan portfolio | – | – | –1,092 | – | –1,092 |
| Net revenue from acquired loan portfolios | 221,637 | 183,623 | 201,127 | – | 606,387 |
| Fee and commission income | 15,217 | 1,380 | 11,854 | – | 28,451 |
| Profit from shares and participations in joint ventures | – | –211 | – | 27,690 | 27,479 |
| Other income | 0 | 303 | 3,028 | –894 | 2,437 |
| Total revenue | 236,854 | 185,095 | 216,009 | 26,796 | 664,754 |
| Personnel expenses | –52,526 | –27,028 | –45,134 | –33,206 | –157,894 |
| Collection costs1) | –76,041 | –48,956 | –46,322 | – | –171,319 |
| Other operating expenses1) | –28,850 | –11,462 | –11,811 | –38,007 | –90,130 |
| Depreciation and amortisation of tangible and intangible assets |
–2,687 | –1,770 | –1,843 | –6,512 | –12,812 |
| Total operating expenses | –160,104 | –89,216 | –105,110 | –77,725 | –432,155 |
| EBIT | 76,750 | 95,879 | 110,899 | –50,929 | 232,599 |
| Interest income excl. run-off consumer loan portfolio | 101 | – | 525 | –1,700 | –1,074 |
| Interest expense | – | –21 | –8 | –77,042 | –77,071 |
| Net financial income2) | –53,096 | –43,202 | –45,377 | 117,492 | –24,183 |
| Total financial items | –52,995 | –43,223 | –44,860 | 38,750 | –102,328 |
| Profit/loss before tax | 23,755 | 52,656 | 66,039 | –12,179 | 130,271 |
1) Comparative figures have been adjusted due to the reclassification of banking fees from Other operating expenses to Collection costs.
| Income statement, Jan-Sep 2017 | Region | Central | |||
|---|---|---|---|---|---|
| SEK thousand | Region West Europe |
Region Mid Europe |
Central East Europe |
Functions and Eliminations |
Group |
| Gross cash collections on acquired loan portfolios | 1,136,431 | 1,349,077 | 1,032,715 | – | 3,518,223 |
| Portfolio amortisation and revaluation | –478,169 | –669,345 | –426,889 | – | –1,574,403 |
| Interest income from run-off consumer loan portfolio | – | – | 3,384 | – | 3,384 |
| Net revenue from acquired loan portfolios | 658,262 | 679,732 | 609,210 | – | 1,947,204 |
| Fee and commission income | 41,286 | 3,632 | 11,609 | – | 56,527 |
| Profit from shares and participations in joint ventures | – | 12,691 | – | 11,734 | 55,176 |
| Other income | 8 | 1,703 | 7,858 | –124 | 8,442 |
| Total revenue | 699,556 | 697,758 | 628,677 | 11,610 | 2,067,349 |
| Personnel expenses | –172,885 | –89,609 | –132,323 | –38,625 | –510,615 |
| Collection costs | –147,343 | –206,213 | –115,429 | 148 | –468,990 |
| Other operating expenses | –83,418 | –36,214 | –40,232 | –36,605 | –284,050 |
| Depreciation and amortisation of tangible and intangible assets |
–8,337 | –5,900 | –5,608 | –7,549 | –42,350 |
| Total operating expenses | –411,983 | –337,936 | –293,592 | –82,631 | –1,306,005 |
| EBIT | 287,573 | 359,822 | 335,085 | –71,021 | 761,344 |
| Interest income excl. run-off consumer loan portfolio | – | –1 | 832 | –3,817 | –9,744 |
| Interest expense | – | –79 | –14 | –68,075 | –229,785 |
| Net financial income1) | –182,231 | –162,481 | –130,231 | 167,347 | –50,395 |
| Total financial items | –182,231 | –162,561 | –129,413 | 95,455 | –289,924 |
| Profit/loss before tax | 105,342 | 197,261 | 205,672 | 24,434 | 471,420 |
| Income statement, Jan-Sep 2016 | Region West | Region Mid | Region Central East |
Central Functions and |
|
|---|---|---|---|---|---|
| SEK thousand | Europe | Europe | Europe | Eliminations | Group |
| Gross cash collections on acquired loan portfolios | 950,491 | 1,157,029 | 1,098,870 | – | 3,206,390 |
| Portfolio amortisation and revaluation | –329,742 | –560,715 | –530,218 | – | –1,420,675 |
| Interest income from run-off consumer loan portfolio | – | – | 4,688 | – | 4,688 |
| Net revenue from acquired loan portfolios | 620,749 | 596,314 | 573,340 | – | 1,790,403 |
| Fee and commission income | 51,546 | 3,606 | 32,152 | – | 87,304 |
| Profit from shares and participations in joint ventures | – | 227 | – | 70,593 | 70,820 |
| Other income | 0 | 1,177 | 7,545 | –2,181 | 6,541 |
| Total revenue | 672,295 | 601,324 | 613,037 | 68,412 | 1,955,068 |
| Personnel expenses | –173,731 | –79,381 | –133,859 | –107,396 | –494,367 |
| Collection costs1) | –200,701 | –149,350 | –100,304 | – | –450,355 |
| Other operating expenses1) | –88,805 | –45,741 | –35,257 | –107,809 | –277,612 |
| Depreciation and amortisation of tangible and intangible assets |
–9,396 | –5,178 | –5,448 | –18,883 | –38,905 |
| Total operating expenses | –472,633 | –279,650 | –274,868 | –234,088 | –1,261,239 |
| EBIT | 199,662 | 321,674 | 338,169 | –165,676 | 693,829 |
| Interest income excl. run-off consumer loan portfolio | 101 | – | 1,253 | –5,337 | –3,983 |
| Interest expense | –3 | –56 | –27 | –220,728 | –220,814 |
| Net financial income2) | –152,196 | –133,210 | –135,017 | 329,621 | –90,802 |
| Total financial items | –152,098 | –133,266 | –133,791 | 103,556 | –315,599 |
| Profit/loss before tax | 47,564 | 188,408 | 204,378 | –62,120 | 378,230 |
1) Comparative figures have been adjusted due to the reclassification of banking fees from Other operating expenses to Collection costs.
| Income statement, Full-year 2016 | Region | Central | |||
|---|---|---|---|---|---|
| SEK thousand | Region West Europe |
Region Mid Europe |
Central East Europe |
Functions and Eliminations |
Group |
| Gross cash collections on acquired loan portfolios | 1,296,766 | 1,574,731 | 1,439,665 | – | 4,311,162 |
| Portfolio amortisation and revaluation | –487,587 | –763,410 | –655,210 | – | –1,906,207 |
| Interest income from run-off consumer loan portfolio | – | – | 5,841 | – | 5,841 |
| Net revenue from acquired loan portfolios | 809,179 | 811,321 | 790,296 | – | 2,410,796 |
| Fee and commission income | 65,629 | 5,006 | 46,182 | – | 116,817 |
| Profit from shares and participations in joint ventures | – | 616 | – | 85,426 | 86,042 |
| Other income | – | 1,769 | 14,502 | –2,620 | 13,651 |
| Total revenue | 874,808 | 818,712 | 850,980 | 82,806 | 2,627,306 |
| Personnel expenses | –231,502 | –111,301 | –181,875 | –147,677 | –672,355 |
| Collection costs | –246,005 | –221,228 | –128,682 | – | –595,915 |
| Other operating expenses | –112,356 | –53,821 | –49,924 | –154,681 | –370,782 |
| Depreciation and amortisation of tangible and intangible assets |
–11,977 | –7,210 | –7,299 | –26,310 | –52,796 |
| Total operating expenses | –601,840 | –393,560 | –367,780 | –328,668 | –1,691,848 |
| EBIT | 272,968 | 425,152 | 483,200 | –245,862 | 935,458 |
| Interest income excl. run-off consumer loan portfolio | 101 | – | 3,513 | –6,897 | –3,283 |
| Interest expense | –3 | –102 | –1,347 | –298,836 | –300,288 |
| Net financial income1) | –207,219 | –182,721 | –181,453 | 472,604 | –98,789 |
| Total financial items | –207,121 | –182,823 | –179,287 | 166,871 | –402,360 |
| Profit/loss before tax | 65,847 | 242,329 | 303,913 | –78,991 | 533,098 |
| Acquired loans, 30 Sep 2017 | Region | Central | |||
|---|---|---|---|---|---|
| SEK thousand | Region West Europe |
Region Mid Europe |
Central East Europe |
Functions and Eliminations |
Group |
| Run-off consumer loan portfolio | 22,941 | 22,941 | |||
| Acquired loan portfolios | 5,328,348 | 4,140,792 | 3,447,497 | 12,916,637 | |
| Shares and participations in joint ventures1) | 230,382 | 230,382 | |||
| Acquired loans | 5,328,348 | 4,140,792 | 3,470,438 | 230,382 | 13,169,960 |
| Acquired loans, 31 Dec 2016 | Region | Central | |||
|---|---|---|---|---|---|
| SEK thousand | Region West Europe |
Region Mid Europe |
Central East Europe |
Functions and Eliminations |
Group |
| Run-off consumer loan portfolio | 32,194 | 32,194 | |||
| Acquired loan portfolios | 4,522,429 | 4,331,437 | 3,531,681 | 12,385,547 | |
| Shares and participations in joint ventures1) | 240,580 | 240,580 | |||
| Acquired loans | 4,522,429 | 4,331,437 | 3,563,875 | 240,580 | 12,658,321 |
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.
| Acquired loans, 30 Sep 2016 | Region | Central | ||||
|---|---|---|---|---|---|---|
| SEK thousand | Region West Europe |
Region Mid Europe |
Central East Europe |
Functions and Eliminations |
Group | |
| Run-off consumer loan portfolio | 38,929 | 38,929 | ||||
| Acquired loan portfolios | 4,281,071 | 3,491,015 | 3,598,890 | 11,370,976 | ||
| Shares and participations in joint ventures | 248,375 | 248,375 | ||||
| Acquired loans | 4,281,071 | 3,491,015 | 3,637,819 | 248,375 | 11,658,280 |
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:
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, 30 September 2017 | |||||||
|---|---|---|---|---|---|---|---|
| SEK thousand | Loan portfolios |
Financing | Carrying value |
Fair value | Level 1 | Level 2 | Level 3 |
| Treasury bills and Treasury bonds | 1,490,273 | 1,490,273 | 1,490,273 | 1,490,273 | |||
| Acquired loan portfolios | |||||||
| of which, carried at fair value | 947,325 | 947,325 | 947,325 | 947,325 | |||
| of which, carried at amortised cost | 11,969,312 | 11,969,312 | 11,881,983 | 11,881,983 | |||
| Bonds and other securities | 3,131,696 | 3,131,696 | 3,131,696 | 3,131,696 | |||
| Derivatives | 42,196 | 42,196 | 42,196 | 42,196 | |||
| Total assets | 12,916,637 | 4,664,165 | 17,580,802 | 17,493,473 | 4,621,969 | 42,196 | 12,829,308 |
| Additional purchase price liability | 25,736 | 25,736 | 25,736 | 25,736 | |||
| Derivatives | 2,612 | 2,612 | 2,612 | 2,612 | |||
| Senior unsecured debt | 2,930,360 | 2,930,360 | 3,097,753 | 3,097,753 | |||
| Subordinated liabilities | 772,530 | 772,530 | 779,977 | 779,977 | |||
| Total liabilities | 3,731,238 | 3,731,238 | 3,906,078 | 3,880,342 | 25,736 |
| Group, 31 December 2016 | |||||||
|---|---|---|---|---|---|---|---|
| SEK thousand | Loan portfolios |
Financing | Carrying value |
Fair value | Level 1 | Level 2 | Level 3 |
| Treasury bills and Treasury bonds | 2,273,903 | 2,273,903 | 2,273,903 | 2,273,903 | |||
| Acquired loan portfolios | |||||||
| of which, carried at fair value | 1,044,660 | 1,044,660 | 1,044,660 | 1,044,660 | |||
| of which, carried at amortised cost | 11,340,887 | 11,340,887 | 11,459,565 | 11,459,565 | |||
| Bonds and other securities | 2,538,566 | 2,538,566 | 2,538,566 | 2,474,849 | 63,717 | ||
| Derivatives | 29,167 | 29,167 | 29,167 | 29,167 | |||
| Total assets | 12,385,547 | 4,841,636 | 17,227,183 | 17,345,861 | 4,748,752 | 29,167 | 12,567,942 |
| Additional purchase price liability | 46,808 | 46,808 | 46,808 | 46,808 | |||
| Derivatives | 5,397 | 5,397 | 5,397 | 5,397 | |||
| Senior unsecured debt | 3,125,996 | 3,125,996 | 3,291,549 | 3,291,549 | |||
| Subordinated liabilities | 341,715 | 341,715 | 398,125 | 398,125 | |||
| Total liabilities | 3,519,916 | 3,519,916 | 3,741,879 | 3,695,071 | 46,808 |
| Group, 30 September 2016 | |||||||
|---|---|---|---|---|---|---|---|
| SEK thousand | Loan portfolios |
Financing | Carrying value |
Fair value | Level 1 | Level 2 | Level 3 |
| Treasury bills and Treasury bonds | 3,470,642 | 3,470,642 | 3,470,642 | 3,470,642 | |||
| Acquired loan portfolios | |||||||
| of which, carried at fair value | 1,087,881 | 1,087,881 | 1,087,881 | 1,087,881 | |||
| of which, carried at amortised cost | 10,283,095 | 10,283,095 | 10,640,057 | 10,640,057 | |||
| Bonds and other securities | 2,059,714 | 2,059,714 | 2,059,714 | 1,979,421 | 80,293 | ||
| Derivatives | 4,754 | 4,754 | 4,754 | 4,754 | |||
| Total assets | 11,370,976 | 5,535,110 | 16,906,086 | 17,263,048 | 5,450,063 | 4,754 | 11,808,231 |
| Additional purchase price liability | 48,261 | 48,261 | 48,261 | 48,261 | |||
| Derivatives | 23,395 | 23,395 | 23,395 | 23,395 | |||
| Senior unsecured debt | 3,227,048 | 3,227,048 | 3,336,422 | 3,336,422 | |||
| Subordinated liabilities | 340,477 | 340,477 | 405,125 | 405,125 | |||
| Total liabilities | 3,639,181 | 3,639,181 | 3,813,203 | 3,764,942 | 48,261 |
Cash flow forecasts are discounted at the market rate when calculating the carrying value of acquired loan portfolios recorded at amortised cost. As regards the market rate, IRR is calculated based on an established WACC (Weighted Average Cost of Capital) model with a final conservative adjustment. For acquired loan portfolios recorded at fair value, the valuation approach, key input data and valuation sensitivity for material changes thereto are described in the Accounting Principles in the annual report 2016.
Derivatives used for hedging were model-valued using interest and currency market rates as input data.
Treasury bills and treasury bonds, and bonds and other fixed income instruments, are valued based on quoted rates.
The fair value of liabilities in the form of issued bonds and other subordinated liabilities was determined with reference to observable market prices quoted by external market players/places. In cases where more than one market price observation is available, fair value is determined at the arithmetic mean of the market prices.
Carrying values for accounts receivable and accounts payable are deemed approximations of fair value. The fair value of current loans corresponds to their carrying value due to the limited impact of discounting.
| Acquired loan portfolios | Group | |||||
|---|---|---|---|---|---|---|
| SEK thousand | 30 Sep 2017 |
31 Dec 2016 |
30 Sep 2016 |
|||
| Opening balance | 12,385,547 | 11,014,699 | 11,014,699 | |||
| Acquisitions | 2,177,990 | 3,329,382 | 1,761,862 | |||
| Adjustment of acquisition analysis |
– | –29,536 | –29,826 | |||
| Translation differences | –72,496 | –22,785 | 44,921 | |||
| Changes in value | ||||||
| Based on opening balance forecast (amortisation) |
–1,588,254 | –1,911,916 | –1,403,722 | |||
| Based on revised estimates (revaluation) |
13,850 | 5,703 | –16,958 | |||
| Carrying value | 12,916,637 | 12,385,547 | 11,370,976 | |||
| Changes in carrying value reported in the income statement |
–1,574,404 | –1,906,213 | –1,420,680 |
| Of which, designated at fair value | Group | ||
|---|---|---|---|
| SEK thousand | 30 Sep 2017 |
31 Dec 2016 |
30 Sep 2016 |
| Opening balance | 1,044,660 | 1,177,808 | 1,177,808 |
| Translation differences | 116 | 52,874 | 59,872 |
| Changes in value | |||
| Based on opening balance forecast (amortisation) |
–90,527 | –186,090 | –147,925 |
| Based on revised estimates (revaluation) |
–6,924 | 68 | –1,874 |
| Carrying value | 947,325 | 1,044,660 | 1,087,881 |
| Changes in carrying value reported in the income statement |
–97,451 | –186,022 | –149,799 |
While Hoist Finance considers the assumptions made in assessing fair value to be reasonable, the application of other methods and assumptions may produce a different fair value. For Level 3 fair value, a reasonable change in one or several assumptions would have the following impact on earnings:
| Group | |||||
|---|---|---|---|---|---|
| SEK thousand | 30 Sep 2017 | 31 Dec 2016 | 30 Sep 2016 | ||
| Carrying value of loan portfolios | 12,916,637 | 12,385,547 | 11,370,976 | ||
| A 5% increase in estimated cash flow over the 10-year forecast period would increase the carrying value by: |
636,096 | 558,977 | 555,126 | ||
| of which, valued at fair value | 47,372 | 51,685 | 53,854 | ||
| A 5% decrease in estimated cash flow over the forecast period would reduce the carrying value by: |
–636,096 | –558,977 | –555,126 | ||
| of which, valued at fair value | –47,372 | –51,685 | –53,854 | ||
| Carrying value of loan portfolios acquired prior to 1 July 2011 | 947,325 | 1,044,660 | 1,087,881 | ||
| A 1% decrease in the market rate of interest would increase the carrying value by: | 28,572 | 31,174 | 30,517 | ||
| A 1% increase in the market rate of interest would reduce the carrying value by: | –27,038 | –29,483 | –28,940 | ||
| Shortening the forecast period by 1 year would reduce the carrying value by: | –21,437 | –26,534 | –8,323 | ||
| Lengthening the forecast period by 1 year would increase the carrying value by: | 16,787 | 20,938 | 5,998 |
The Group has chosen to categorise portfolios acquired prior to 1 July 2011 as designated at fair value through profit or loss, as these financial assets are managed and their performance is evaluated on a fair value basis in accordance with the Group's risk management policies. Information on the portfolios is provided internally to Group Management on this basis. The underlying concept for valuation at fair value is to assess the carrying value of an asset by using the best available price for the asset. Loan portfolios are typically not traded publicly and, consequently, there are no market prices available. Most participants in the industry, however, apply similar pricing methods for portfolio acquisitions and calculate the present value of cash flows that correspond to the market value of a portfolio.
The three main influencing factors in calculating fair value are: (i) the gross collections forecast, (ii) the cost level, and (iii) the market discount rate. Each month, the Group looks at the forward ten years'
net collection forecasts for all portfolios and discounts the forecasts to present value, which serves as the basis for calculating the reported fair value for each portfolio.
The insights that Hoist Finance, as one of the industry's biggest players, gains from the many portfolio transactions the Company participates in or has knowledge of form an important component in estimating a market discount rate. The discount rate corresponding to the market's required return is updated regularly and reflects actual return on relevant and comparable transactions in the market. Portfolios are currently valued at an IRR of 12 per cent over a ten-year period.
The estimated market discount rate is only applied to the portion of the portfolios valued at fair value. For the portfolios valued at amortised cost, the IRR at which the original acquisition was carried out is applied and the revenues are expensed at this effective interest rate.
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.
The table below shows own funds for Hoist Finance and for the regulated entity Hoist Kredit.
| Hoist Finance consolidated situation | Hoist Kredit AB (publ) | |||||
|---|---|---|---|---|---|---|
| Own funds, SEK thousand | 30 Sep 2017 | 31 Dec 2016 | 30 Sep 2016 | 30 Sep 2017 | 31 Dec 2016 | 30 Sep 2016 |
| Capital instruments and related share premium accounts | 1,286,805 | 1,286,805 | 1,286,805 | 482,963 | 482,963 | 482,963 |
| Retained earnings | 755,132 | 472,965 | 478,943 | 552,622 | 307,205 | 481,032 |
| Accumulated comprehensive income and other reserves | 279,976 | 331,293 | 358,106 | 1,080,620 | 1,081,949 | 1,063,454 |
| Independently reviewed interim profits net of any foreseeable charge or dividend1) |
155,500 | 292,004 | 136,972 | 0 | 267,191 | 105,191 |
| Intangible assets (net of related tax liability) | –261,505 | –243,340 | –248,682 | –42,972 | –37,647 | –38,854 |
| Deferred tax assets that rely on future profitability | –33,248 | –47,268 | –68,394 | –3,845 | –2,734 | –2,621 |
| Common Equity Tier 1 | 2,182,660 | 2,092,459 | 1,943,750 | 2,069,388 | 2,098,927 | 2,091,165 |
| Capital instruments and the related share premium accounts | 379,577 | 379,577 | 93,000 | 379,577 | 379,577 | 93,000 |
| Additional Tier 1 capital | 379,577 | 379,577 | 93,000 | 379,577 | 379,577 | 93,000 |
| Tier 1 capital | 2,562,237 | 2,472,036 | 2,036,750 | 2,448,965 | 2,478,504 | 2,184,165 |
| Capital instruments and the related share premium accounts | 772,530 | 341,715 | 340,477 | 772,530 | 341,715 | 340,477 |
| Tier 2 capital | 772,530 | 341,715 | 340,477 | 772,530 | 341,715 | 340,477 |
| Total own funds for capital adequacy purposes | 3,334,767 | 2,813,751 | 2,377,227 | 3,221,495 | 2,820,219 | 2,524,642 |
1) Regulatory dividend deduction is calculated at 30 per cent of reviewed net profit for the period, 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 Kredit.
| Hoist Finance consolidated situation | Hoist Kredit AB (publ) | |||||
|---|---|---|---|---|---|---|
| Risk-weighted exposure amounts, SEK thousand | 30 Sep 2017 | 31 Dec 2016 | 30 Sep 2016 | 30 Sep 2017 | 31 Dec 2016 | 30 Sep 2016 |
| 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 | 335,135 | 261,882 | 289,428 | 137,487 | 78,060 | 69,184 |
| of which, counterparty credit risk | 57,051 | 29,036 | 23,429 | 57,051 | 29,036 | 23,429 |
| Exposures to corporates | 153,872 | 199,920 | 285,195 | 9,259,830 | 10,238,303 | 9,335,214 |
| Retail exposures | 17,206 | 24,146 | 29,197 | 17,206 | 24,146 | 29,197 |
| Exposures in default | 13,556,550 | 13,270,498 | 11,765,445 | 2,473,404 | 2,646,432 | 2,726,792 |
| Exposures in the form of covered bonds | 313,170 | 247,485 | 197,942 | 313,170 | 247,485 | 197,942 |
| Equity exposures | – | – | – | 1,923,786 | 570,038 | 570,038 |
| Other items | 104,339 | 132,315 | 120,664 | 26,355 | 6,116 | 154,384 |
| Credit risk (standardised approach) | 14,480,272 | 14,136,246 | 12,687,871 | 14,151,238 | 13,810,580 | 13,082,752 |
| Market risk (foreign exchange risk – standardised approach) |
21,766 | 28,858 | 93,699 | 21,766 | 28,858 | 93,699 |
| Operational risk (basic indicator approach) | – | – | 2,600,728 | – | – | 755,709 |
| Operational risk (standardised approach) | 2,622,890 | 2,622,373 | – | 893,024 | 893,024 | – |
| Credit valuation adjustment (standardised approach) | 35,978 | 0 | 2,047 | 35,978 | 0 | 2,047 |
| Total risk-weighted exposure amount | 17,160,906 | 16,787,477 | 15,384,345 | 15,102,006 | 14,732,462 | 13,934,207 |
| Hoist Finance consolidated situation | Hoist Kredit AB (publ) | |||||
|---|---|---|---|---|---|---|
| Capital requirements, SEK thousand | 30 Sep 2017 | 31 Dec 2016 | 30 Sep 2016 | 30 Sep 2017 | 31 Dec 2016 | 30 Sep 2016 |
| 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 | 26,811 | 20,951 | 23,154 | 10,999 | 6,245 | 5,535 |
| of which, counterparty credit risk | 4,564 | 2,323 | 1,874 | 4,564 | 2,323 | 1,874 |
| Exposures to corporates | 12,310 | 15,994 | 22,816 | 740,786 | 819,064 | 746,817 |
| Retail exposures | 1,376 | 1,932 | 2,336 | 1,376 | 1,932 | 2,336 |
| Exposures in default | 1,084,524 | 1,061,640 | 941,236 | 197,872 | 211,715 | 218,143 |
| Exposures in the form of covered bonds | 25,054 | 19,799 | 15,835 | 25,054 | 19,799 | 15,835 |
| Equity exposures | – | – | – | 153,903 | 45,603 | 45,603 |
| Other items | 8,347 | 10,583 | 9,653 | 2,109 | 489 | 12,351 |
| Credit risk (standardised approach) | 1,158,422 | 1,130,899 | 1,015,030 | 1,132,099 | 1,104,847 | 1,046,620 |
| Market risk (foreign exchange risk-standardised approach) |
1,741 | 2,309 | 7,496 | 1,741 | 2,309 | 7,496 |
| Operational risk (basic indicator approach) | – | – | 208,058 | – | – | 60,457 |
| Operational risk (standardised approach) | 209,831 | 209,790 | – | 71,442 | 71,442 | – |
| Credit valuation adjustment (standardised approach) | 2,878 | 0 | 164 | 2,878 | 0 | 164 |
| Total own funds requirement – Pillar 1 | 1,372,872 | 1,342,998 | 1,230,748 | 1,208,160 | 1,178,598 | 1,114,737 |
| Total own funds requirement – Pillar 2 | 194,217 | 136,891 | 123,337 | 194,217 | 132,785 | 119,996 |
|---|---|---|---|---|---|---|
| Other Pillar 2 risks | 22,978 | 794 | 835 | 22,978 | 794 | 1,600 |
| Pension risk | 3,000 | 4,106 | 4,106 | 3,000 | – | – |
| Interest rate risk in the banking book | 36,685 | 30,000 | 27,897 | 36,685 | 30,000 | 27,897 |
| Concentration risk | 131,554 | 101,991 | 90,499 | 131,554 | 101,991 | 90,499 |
| Total own funds requirements | 2,004,494 | 1,905,945 | 1,745,688 | 1,790,932 | 1,690,465 | 1,593,409 |
|---|---|---|---|---|---|---|
| Total own funds requirement – Capital buffers | 437,405 | 426,056 | 391,603 | 388,555 | 379,082 | 358,676 |
| Countercyclical buffer | 8,382 | 6,370 | 6,994 | 11,005 | 10,770 | 10,321 |
| Capital conservation buffer | 429,023 | 419,686 | 384,609 | 377,550 | 368,312 | 348,355 |
The own funds for the Company's consolidated situation totalled SEK 3,335m (2,814) as at 30 September 2017, exceeding the own funds requirements by a good margin.
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 institution-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 for Hoist Finance and for the regulated entity Hoist Kredit. The table also shows 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 Kredit AB (publ) | ||||||
|---|---|---|---|---|---|---|---|
| Capital ratios and capital buffers, % | 30 Sep 2017 | 31 Dec 2016 | 30 Sep 2016 | 30 Sep 2017 | 31 Dec 2016 | 30 Sep 2016 | |
| Common Equity Tier 1 capital ratio | 12.72 | 12.46 | 12.63 | 13.70 | 14.25 | 15.01 | |
| Tier 1 capital ratio | 14.93 | 14.73 | 13.24 | 16.22 | 16.82 | 15.67 | |
| Total capital ratio | 19.43 | 16.76 | 15.45 | 21.33 | 19.14 | 18.12 | |
| Institution-specific buffer requirements for CET1 capital | 7.05 | 7.04 | 7.05 | 7.07 | 7.07 | 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 | 0.05 | 0.04 | 0.05 | 0.07 | 0.07 | 0.07 | |
| Common Equity Tier 1 capital available to meet buffers1) | 8.22 | 7.96 | 7.24 | 9.20 | 9.75 | 9.67 |
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.
The internally assessed capital requirement for Hoist Finance consolidated situation totalled SEK 1,567m (1,480) at 30 September 2017, of which SEK 194m (137) is 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 bonds and own funds instruments, as well as equity. The majority of deposits from the public are payable on demand (variable deposits – "floating"), while about 36 per cent (36) 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.
| Funding | Hoist Finance consolidated situation | Hoist Kredit AB (publ) | |||||
|---|---|---|---|---|---|---|---|
| SEK thousand | 30 Sep 2017 | 31 Dec 2016 | 30 Sep 2016 | 30 Sep 2017 | 31 Dec 2016 | 30 Sep 2016 | |
| Deposits from the public, floating | 7,914,735 | 7,582,909 | 8,014,226 | 7,914,735 | 7,582,909 | 8,014,226 | |
| Deposits from the public, fixed | 4,385,926 | 4,266,047 | 4,278,651 | 4,385,926 | 4,266,047 | 4,278,651 | |
| Senior unsecured debt | 2,930,360 | 3,125,996 | 3,227,048 | 2,930,360 | 3,125,996 | 3,227,048 | |
| Convertible debt instruments | 379,577 | 379,577 | 93,000 | 379,577 | 379,577 | 93,000 | |
| Subordinated liabilities | 772,530 | 341,715 | 340,477 | 772,530 | 341,715 | 340,477 | |
| Equity | 2,736,894 | 2,545,719 | 2,431,912 | 2,199,184 | 2,139,996 | 2,245,996 | |
| Other | 717,588 | 907,963 | 766,943 | 325,305 | 632,535 | 289,821 | |
| Balance sheet total | 19,837,610 | 19,149,926 | 19,152,257 | 18,907,617 | 18,468,775 | 18,489,219 |
The Group's treasury policy stipulates limits on how much liquidity is to be available and the nature of such liquidity. As 30 September 2017, available liquidity totalled SEK 5,702m (5,789), which is well in excess of the limit.
Hoist Finance's liquidity reserve, presented below pursuant to the Swedish Bankers' Association's template, primarily comprises bonds issued by the Swedish government and Swedish municipalities, as well as covered bonds.
| SEK thousand | 30 Sep 2017 | 31 Dec 2016 | 30 Sep 2016 |
|---|---|---|---|
| Cash and holdings in central banks | 2,998 | 3,073 | 262 |
| Deposits in other banks available overnight | 1,077,119 | 1,036,749 | 1,069,470 |
| Securities issued or guaranteed by sovereigns, central banks or multilateral development banks |
1,361,384 | 1,528,116 | 1,666,712 |
| Securities issued or guaranteed by municipalities or other public sector entities | 128,889 | 745,786 | 1,803,931 |
| Covered bonds | 3,131,696 | 2,474,849 | 1,979,420 |
| Securities issued by non-financial corporates | – | – | – |
| Securities issued by financial corporates | – | – | – |
| Other | – | – | – |
| Total | 5,702,086 | 5,788,573 | 6,519,795 |
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 thousand | 30 Sep 2017 | 31 Dec 2016 | 30 Sep 2016 | 30 Sep 2017 | 31 Dec 2016 | 30 Sep 2016 |
| Pledges and comparable collateral for own liabilities and for reported commitments for provisions |
748 | 478 | 482 | – | – | – |
| Group | Parent Company | |||||
|---|---|---|---|---|---|---|
| SEK thousand | 30 Sep 2017 | 31 Dec 2016 | 30 Sep 2016 | 30 Sep 2017 | 31 Dec 2016 | 30 Sep 2016 |
| Commitments | 1,042,229 | 1,565,944 | 487,943 | – | – | – |
| SEK thousand | Quarter 3 2017 |
Quarter 3 2016 |
Full year 2016 |
|---|---|---|---|
| EBIT | 246,999 | 232,599 | 935,458 |
| + Operating expenses in Central Functions | 82,631 | 77,725 | 328,668 |
| EBIT excl operating expenses in Central Functions1) | 1,318,520 | 1,241,297 | 1,264,126 |
| Average carrying value of aquired loans2) | 13,124,497 | 11,509,178 | 11,968,471 |
| Return on book, % | 10.0 | 10.8 | 10.6 |
1) Calculated on an annualised basis (quarterly).
2) Calculated as average on previous period.
| SEK thousand | Quarter 3 2017 |
Quarter 3 2016 |
Jan–Sep 2017 |
Jan–Sep 2016 |
Full year 2016 |
|---|---|---|---|---|---|
| Profit for the period | 145,391 | 103,365 | 367,534 | 299,039 | 417,149 |
| + Income tax expense |
36,819 | 26,906 | 103,886 | 79,191 | 115,949 |
| + Portfolio revaluations |
–8,378 | 8,416 | –13,850 | 16,959 | –5,703 |
| – Interest income (excl. Interest from run-off performing portfolio) |
3,541 | 1,074 | 9,743 | 3,982 | 3,283 |
| + Interest expense |
68,106 | 77,071 | 229,785 | 220,814 | 300,288 |
| +/– Net result from financial transactions, incl. Net credit losses | –6,859 | 24,183 | 50,395 | 90,802 | 98,789 |
| + Depreciation and amortisation of tangible and intangible assets |
14,258 | 12,812 | 42,350 | 38,905 | 52,796 |
| EBITDA | 252,878 | 253,827 | 789,843 | 749,692 | 982,551 |
| + Amortisation on run-off portfolio |
3,868 | 7,545 | 9,253 | 19,436 | 26,171 |
| + Amortisation on acquired loan portfolios |
507,658 | 454,332 | 1,588,254 | 1,403,722 | 1,911,916 |
| EBITDA, adjusted | 764,404 | 715,704 | 2,387,350 | 2,172,850 | 2,920,638 |
| Book value of run-off consumer loan portfolio | 22,941 | 38,929 | 22,941 | 38,929 | 32,194 |
| SEK thousand | 30 Sep 2017 |
|---|---|
| Equity | 3,116,467 |
| Additional Tier 1 capital | –379,577 |
| Reversal of interest expense paid for AT1 capital | 20,107 |
| Reversal of items affecting comparability1) | 63,348 |
| Total equity | 2,820,347 |
| Total equity (quarterly average) | 2,694,876 |
| Profit for the period | 367,534 |
| Reversal of items affecting comparability1) | 63,348 |
| Estimated annual profit | 574,509 |
| Adjustment of interest on AT1 capital | –39,754 |
| Adjusted annual profit | 534,755 |
| Return on equity, % | 20 |
1) Items affecting comparability refer to costs which arose in connection with the restructuring of subordinated liabilities and outstanding bonds during the second quarter 2017, including tax.
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, 25 October 2017
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 CEO Board member
| SEK thousand | Quarter 3 2017 |
Quarter 3 2016 |
|---|---|---|
| Gross cash collections on acquired loan portfolios | 1,133,761 | 1,074,719 |
| Portfolio amortisation and revaluation | –499,280 | –467,240 |
| Interest income from run-off consumer loan portfolio | 518 | –1,092 |
| Net revenue from acquired loan portfolios | 634,999 | 606,387 |
| Fee and commission income | 16,986 | 28,451 |
| Profit from shares and participations in joint ventures | 11,326 | 27,479 |
| Other income | 2,240 | 2,437 |
| Total revenue | 665,551 | 664,754 |
| Personnel expenses | –171,165 | –157,894 |
| Collection costs | –142,782 | –171,319 |
| Other operating expenses | –90,347 | –90,130 |
| Depreciation and amortisation of tangible and intangible assets | –14,258 | –12,812 |
| Total operating expenses | –418,552 | –432,155 |
| Operating profit (EBIT) | 246,999 | 232,599 |
| Funding | ||
| Interest income excl. run-off consumer loan portfolio | –3,542 | –1,074 |
| Interest expense | –68,106 | –77,071 |
| Net financial income | 6,859 | –24,183 |
| Total financial items | –64,789 | –102,328 |
| Profit before tax | 182,210 | 130,271 |
| SEK thousand | Quarter 3 2017 |
Quarter 3 2016 |
|---|---|---|
| Revenue from acquired loan portfolios | 634,481 | 607,479 |
| Interest income | –3,024 | –2,166 |
| Interest expense | –68,106 | –77,071 |
| Net interest income | 563,351 | 528,242 |
| Fee and commission income | 16,986 | 28,451 |
| Net financial income | 6,859 | –24,183 |
| Other income | 2,240 | 2,437 |
| Total operating income | 589,436 | 534,947 |
| General administrative expenses | ||
| Personnel expenses | –171,165 | –157,894 |
| Other operating expenses | –233,129 | –261,449 |
| Depreciation and amortisation of tangible and intangible assets | –14,258 | –12,812 |
| Total operating expenses | –418,552 | –432,155 |
| Profit before credit losses | 170,884 | 102,792 |
| Net credit losses | – | – |
| Profit from shares and participations in joint ventures | 11,326 | 27,479 |
| Profit before tax | 182,210 | 130,271 |
Hoist Finance supplements its statutory presentation of the income statement with an operating income statement in order to assess the operational performance of the debt purchasing and collection operations and to facilitate comparison with our competitors.
The operating income statement does not include any amendments or adjustments as compared with the statutory income statement. The same accounting and valuation principles are applied in both versions.
Hoist Finance regards the acquisition and management of acquired loan portfolios as the Group's core operational activity. Deposit-taking in HoistSpar is thus part of the Group's financing activity.
An outline guide is presented to the left in order to assist understanding of our financial performance presented in the statutory income statement as compared with the operating income statement.
The statutory income statement complies with the Swedish Financial Supervisory Authority's general recommendations FFFS 2008:25.
In an analysis of Hoist Finance's operating profit (EBIT), income and expenses attributable to the acquisition and management of loan portfolios, run-off consumer loan portfolios, fee and commission income, profit from joint ventures as well as general administration are regarded as our operational activity.
Interest expenses for deposit-taking are regarded as financing expenses.
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 reports. 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. Furthermore, during the period, Hoist Finance has opted to present Return on equity, excluding items affecting comparability, as alternative performance measure. Alternative performance measures are described below.
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 or debts that arise from the same originator.
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.
Minimum capital requirements for credit risk, market risk and operational risk.
Capital requirements beyond those stipulated in Pillar 1.
Capital instruments and associated share premium reserves that fulfil the requirements of Regulation (EU) 575/2013 of the European Parliament and the Council, and other equity items that may be included in CET1 capital, less regulatory dividend deduction and deductions for items such as goodwill and deferred tax assets.
Common Equity Tier 1 in relation to total risk exposure amount.
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.
EBIT (operating earnings), less depreciation/ impairments and amortisation for run-off consumer loan portfolio and depreciation of acquired loan portfolios.
Earnings Before Interest and Tax. Operating profit before financial items and tax.
EBIT (operating earnings) divided by total revenue.
on acquired loan portfolios Operating expenses less fee and commission income, divided by the sum of gross cash collections and interest income from the run-off consumer loan portfolios. The expenses related to fee and commission income are calculated with reference to commission income costs related to other income and actual profit margin.
Fees for providing debt management services to third parties.
"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 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.
Gross cash flow from the Group's customers on loans included in Group's acquired loan portfolios.
Items that interfere with comparison due to the irregularity of their occurrence and/or size as compared with other items.
Legal collections relate to the cash received following the initiation of Hoist Finance's litigation process. This process assesses customers' solvency and follows regulatory and legal requirements.
The sum of gross cash collections from acquired loan portfolios and income from the run-off consumer loan portfolio, less portfolio amortization and revaluation.
Sum of Tier 1 capital and Tier 2 capital.
The share of gross collections that will be used for amortising the carrying value of acquired loan portfolios.
Change in carrying value of acquired loans over the last twelve months.
Changes in the portfolio value based on revised estimated remaining collections for the portfolio.
An originator's loan is non-performing as at the balance sheet date if it is past due or will be due shortly.
Number of employees at the end of the period converted to full-time posts (FTEs).
EBIT (operating profit) for the period calculated on annualised basis, exclusive of Central Functions operating expenses, divided by average carrying value of acquired loan portfolios. In the financial statements, calculation of average carrying value is based on opening amount at the beginning of the year and closing amount at the end of the year.
Net profit for the period adjusted for accrued unpaid interest on AT1 capital calculated on annualised basis, divided by equity adjusted for AT1 capital reported in equity, calculated as an average for the year based on a quarterly basis.
The risk weight of each exposure multiplied by the exposure amount.
A company that employs fewer than 250 people and has either annual turnover of EUR 50million or less or a balance sheet total of EUR 43 million or less.
The sum of CET1 capital and AT1 capital.
Tier 1 capital as a percentage of the total risk exposure amount.
Capital instruments and associated share premium reserves that the requirements of Regulation (EU) 575/2013 of the European Parliament and the Council and that may accordingly be included in the funds.
Own funds as a percentage of the total risk exposure amount.
Total of net revenue from acquired loan, fee and commission income, profit or loss from joint ventures and other income.
of diluted shares Weighted number of outstanding shares plus potential dilutive effect of outstanding warrants.
Hoist Finance's business model is designed to ensure continuity and to deliver both growth and long-term strategic initiatives. Our model is hallmarked by solution-oriented settlements with respect, confidence and trust in everything we do.
Hoist Finance is a trusted debt restructuring partner to international banks and financial institutions. We specialise in purchasing portfolios of non-performing loans.
To become the leading debt restructuring partner to international banks and financial institutions.
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.
Strategic objectives
| Preferred by customers | Be customer-centric, with a focus on amicable and fair settlements. |
|---|---|
| Preferred partner | Be trustworthy with unparalleled funding capacity. |
| Attractive to investors | Redefine industry standards with our disciplined approach & ambitious targets. |
| Best place to work | Build an extraordinary company with extraordinary people. |
| CSR | Integrate CSR into everything we do and continue to build trust with all our stakeholders. |
| 13 February 2018 |
|---|
| 11 April 2018 |
| 15 May 2018 |
| 27 July 2018 |
| 25 October 2018 |
Investor Relations Michel Jonsson 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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