Interim report Q2 2023

Key highlights

» Profit before tax amounted to SEK 178m and adjusted for rejuvenation costs of SEK 75m, totalled at SEK 253m growing over 100 per cent year over year1)
» Return on equity of 10 per cent with normalised return on equity of 19 per cent, reflecting underlying business performance2)
» Investments in new portfolios of SEK 1.1bn in the second quarter, with SEK 1.3bn signed after quarter closing with continued healthy pipeline
» Strong collection performance of 108 per cent
» Funding base continues to remain stable and increasingly competitive in an uncertain and volatile macro environment
» Robust capital and liquidity positions, materially above regulatory requirements with a CET1 ratio of 14.75 per cent
» Continued execution of the rejuvenation program with reorganisation of our IT, Data and central operations functions leading to annualised savings of SEK 85m in indirect cost. The programme will be finalised during the third quarter
» The Executive Management Team expanded to include all Market Heads and core Group Functions
» Divestment of French unsecured legacy portfolio at a premium. France remains a prioritised market

1) To illustrate underlying business performance, the comparative quarter in 2022 on page 6 & 9 is adjusted for the divested UK operations and aligned with the hedge accounting introduced 1 July 2022. 2) See page 6 & 9.

Key ratios1)

SEK m	Quarter 2 2023	Quarter 2 2022	Change, %	Jan-Jun 2023	Jan-Jun 2022	Change, %	Full-year 2022
Total operating income	903	734	23	1,669	1,368	22	2,613
Profit/loss before tax	178	218	–19	322	371	–13	490
Adjusted profit/loss before tax2)	253	116	>100	415	190	118	N/A
Profit/loss for the period	161	217	–26	254	395	–36	801
Return on equity, %	10	19	–9 pp	7	17	–10 pp	17
Normalised return on equity, %2)	19	6	13 pp	13	5	8 pp	N/A
Portfolio acquisitions	1,139	2,508	–55	3,049	3,819	–20	6,928
Basic and diluted earnings per share, SEK	1.45	1.66	–13	4.18	5.29	–21	3.55

SEK m	30 Jun 2023	30 Jun 2022	Change, %	31 Dec 2022
Gross 180-month ERC	36,847	29,615	24	32,946
Portfolio book value	23,797	19,680	21	21,624
CET1 ratio, %	14.75	9.60	5.15 pp	15.85

Quarterly

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

SEK 23,797m

Portfolio book value

10% Return on equity

SEK 1.45

Earnings per share

14.75% CET1 ratio

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Statement by the CEO

Dear Shareholders,

The second quarter was a strong quarter for Hoist Finance, characterised by a high level of activity in the market, solid collection performance, and execution of the rejuvenation programme. Profit before tax adjusted for Rejuvenation cost, amounted to SEK 253m (SEK 116m), corresponding to over 100 per cent year over year growth. Return on Equity (RoE) increased to 10 per cent with a normalised RoE of 19 per cent for the second quarter. We are progressing well towards reaching our 15 per cent RoE run-rate target.

Hoist Finance invested SEK 1.1bn during second quarter, with an additional SEK 1.3bn signed post quarter closing. We are currently engaged in many dialogues with primary as well as secondary sellers, and the pipeline is healthy. Growing the total portfolio to a book value of SEK 36bn by the end of 2026, at attractive returns, is a priority, and we continue to make steady progress towards that goal.

Investment management

The market, both primary and secondary, was active during the second quarter. The primary market (where the originating banks sell portfolios) is picking up again, and the volumes coming to market across Europe have been high. The increased cost of financing has reduced the number of bidders, and we see a general re-pricing of the market. There is however still intense competition on select portfolio transactions. We continue to be disciplined in our investments – returns are more important than volumes.

In the secondary market, the activity also continues to be high as industry peers review their strategies following increased financing cost. With the lowest cost of funding in the industry, Hoist Finance is in a favourable position to further seize opportunities provided by a changing industry. As a part of our investment strategy, we have continued to increase our share of secured non-performing loans, with more than half of the acquisitions in the quarter being of that asset class.

As part of a more active approach to portfolio management, we replaced our full unsecured portfolio in France by first investing in a fresh portfolio in the first quarter, and then selling our legacy portfolio at a premium during the second quarter. France continues to be a prioritised market for Hoist Finance.

Rejuvenation

During the quarter, we reorganised our Executive Management Team (EMT). The new team contains all the Market Heads and our core Group Functions. All are measured on Return on Equity, and, in accordance with our financial targets, this needs to exceed 15 per cent for the Group as a whole. As a Credit Market institution regulated by the Swedish FSA, compliance is key to us. In order to further emphasise our efforts in this area on all markets as well as all functions, we have brought in the Risk and Compliance roles into the EMT.

As part of the Rejuvenation Programme, we re-organised our central IT, Data and Operations functions to align to our new decentralised

Quarterly

operating model. The outcome is a reduction of about 75 FTEs on Group level and about 20 contractors, reducing our indirect costs per annum by SEK 85m. We have booked costs of SEK 75m for this restructuring in the second quarter. The principle behind the reorganisation is simple: An increased profit/loss responsibility within the buiness units also means that improvements of the operational performance is managed locally.

We will finalise the Rejuvenation programme during the third quarter and move to a continuous improvement way of working from quarter four onwards.

Loan Management

During the second quarter, we generated a collection performance of 108 per cent, meaning that we collected on average 8 per cent more than forecasted on our portfolios. Despite the challenging macrooutlook, collections are coming in strong across the markets. In Spain, we still had negative impact from the court strike that started in the first quarter and ended in May. The impact is gradually diminishing, and our collection performance is picking up. As in previous quarters, we carefully monitor the macro situation and any potential impact.

Within the loan management units, we have simplified the reporting lines and put clearer focus on profit/loss responsibility across Hoist Finance, and this is showing early positive signs.

Developments 2023

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As a further step on our strategic journey toward becoming a leading European non-performing loan asset manager, we have signed new collaboration agreements for Loan Management with additional reputable collection servicers in Europe.

Capital and Funding

Hoist Finance has a strong capital and liquidity position. At the end of the second quarter, our CET1 ratio was 14.75 per cent, and our liquidity buffer amounted to SEK 6.4bn. This provides us the opportunity to invest SEK 15bn before reaching our internal limits (which are set well above the regulatory limits). However, we will only invest if the return is accretive to our 15 per cent RoE target for the Group as a whole.

We have over 80,000 deposit customers in Sweden, Germany and the United Kingdom. We are in the process of opening a deposit platform in Poland to increase our European deposit base and ensure we are match funded in all our currencies. As interest rates increase, so do the interest rates we pay our deposit customers. At the same time, the yield on our Liquidity Portfolio has also increased. Overall, we maintain or even extend our competitive advantage in funding cost.

During the second quarter, Hoist Finance issued a new AT1 instrument of SEK 700m. Considering the challenging market conditions, we believe this to be a real sign of strength and reflective of strong confidence in Hoist Finance. The outstanding EUR 30m AT1 instrument was redeemed in full on its first call date in June, and in July, Hoist Finance gave notice of early redemption of the EUR 40m AT1 instrument on its first call date on September 1st.

Regulatory update

During the quarter, the EU co-legislators have been wrapping up the latest Banking Package amendments, launched in October 2021. The recent political agreement included provisions aimed at helping ensure a deep and liquid market for non-performing loans, by allowing regulated specialist banks to help de-risk systemic bank balance sheets by purchasing their non-performing exposures. It is still too soon to tell what the exact outcome of the regulatory process will be; however we are monitoring the developments closely and believe the agreed approach is a constructive step toward ensuring a robustly functioning secondary market for non-performing loans in the EU that fully meets the needs of both the originating banks and consumers.

Outlook

2023 is a crucial year in the development of Hoist Finance. Several actions taken during the last two years have put us in a strong position. We have a highly competitive business model and a robust capital base. The market is there, and the dynamics in the competitive landscape are favourable to us. It is now up to us to deliver.

I would like to extend a sincere thank you to our investors for their continued support and to our clients and partners for putting their confidence in our ability to work with their customers. And last, but certainly not least, a huge thank you to the team at Hoist Finance! The first half of the year has been very intense both internally and externally, and hopefully most of you are on well-deserved holidays when this report arrives in the mailbox.

Wishing you all a great summer!

Regards, Harry Vranjes CEO

Developments 2023

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Developments during the quarter, Group

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

Operating income

Operating income totalled SEK 903m (734) during the period. Interest income from acquired loan portfolios increased to SEK 829m (659) mainly as a result of the 21% increase in book value in continuing operations. The increase in interest expense to SEK –177m (–132) was driven by deposit interest rate increases with other interest income positively impacted by returns on the liquidity portfolio due to higher interest rate levels, total SEK 43m (3).

Collections against projections amounted to SEK 212m (161). Portfolio revaluations amounted to SEK –88m (–111), of which timing effects1) accounted for SEK –85m (–80). Adjusting for timing effects1), underlying net collection performance was 108% (105%) during the quarter.

Net result from financial transactions totalled SEK –12m (131). The change is attributable to that Hoist Finance did not apply hedge accounting for interest rate hedging contracts during the comparative period, during which outstanding interest rate hedging contracts were positively driven by an increase in market value. Other operating income amounted to SEK 55m (6) during the period, caused mainly by the premium on the disposal of legacy unsecured portfolios in France.

1) See Definitions.

SEK m	Quarter 2 2023	Quarter 2 2022
Interest income acquired loan portfolios	829	659
Other interest income	43	3
Interest expense	–177	–132
Net interest income	695	530
Impairment gains and losses	124	50
of which, realised collections against active forecast	212	161
of which, portfolio revaluations	–88	–111
Fee and commission income	41	17
Net result from financial transactions	–12	131
Other operating income	55	6
Total operating income	903	734

Breakdown, secured/unsecured portfolio book value

Breakdown, total carrying amount of portfolio book value

1) Other countries are United Kingdom, Sweden, the Netherlands, Belgium, Spain and Cyprus.

Operating expenses

Operating expenses totalled SEK –743m (–527). Of the SEK 216m increase, SEK 75m (0) is attributable to rejuvenation costs, IAC's, taken for employee exits (75 permanent roles and 20 contractors), and SEK 21m relates to group staff, previously accounted for in the divested UK legal entity. The remaining SEK 120m is driven by direct collections costs due to the increase in book value, by one time set up costs for our secured business in Spain (SEK 16m) and an increase in legal fees (SEK 19m). The total increase of operating expenses includes SEK –49m currency movements.

Personnel expenses totalled SEK –275m (–171) with SEK 49m attributed to one-time rejuvenation costs, and the remainder relates to exchange rate fluctuations and inflation impact on salary cost.

Collection costs totalled SEK –261m (–188), of which legal collection costs totalled SEK –104m (–85). The overall increase in collection costs are mainly relating to the increase in book value. Administrative expenses amount to SEK –181m (–143), of which SEK 29m relate to the rejuvenation program and impairment of previously capitalised costs.

Net profit for the quarter

Net profit totalled SEK 161m (217). Income tax expense for the period totalled SEK –17m (–41). The effective tax rate for the period was 10 per cent (19). The change in the effective tax rate was driven by a negative currency translation of shares in subsidiaries related to currency hedging that resulted in a positive tax adjustment.

SEK m	Quarter 2 2023	Quarter 2 2022
Personnel expenses	–275	–171
Collection costs	–262	–187
Other administrative expenses	–181	–143
Depreciation and amortisation	–25	–26
Total operating expenses	–743	–527
Share of profit from joint ventures	18	11
Profit before tax	178	218
Income tax expense	–17	–41
Net profit for the quarter from discontinued operations	–	40
Net profit for the quarter	161	217

Profit/loss after tax from continuing operations, SEK m

Return on equity,%

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

Adjusted comparative figures of the underlying business

In addition to the ordinary financial statements, an illustrative adjusted income statement and normalised return on equity are provided to facilitate the comparison of the underlying business performance.

Total operating income grew 38% driven primarily by the growth in the book, a strong collection performance of 108%, and a premium from the divestment of the French unsecured legacy back book. The French legacy assets will continue to be serviced by Hoist Finance for a limited period, and this income is reflected within Other income. Associated with this growth in income and the book, there is a 22% increase in direct costs. In part, these are one time set up costs in Spain and an increase legal fees with the remainder attributed to increased collections and currency movements. Profit before tax (adjusted for rejuvenation cost of SEK 75m) grew 118%, from SEK 116m to SEK 253m. Normalised return on equity increased from 6% to 19%.

Items affecting comparability

Items affecting comparability totalled SEK 75m (0) for quarter 2, distributed between personnel and administrative expenses, and is a part of Hoist Finance rejuvenation programme where central IT, Data and Operations functions has been re-organised to align to the new decentralised operating model. The programme is expected to reduce the indirect costs per annum by SEK 85m and will be finalised during quarter 3 2023.

The rejuvenation programme, characterised by larger and substantial changes, is being implemented with the aim of giving the capability for Hoist Finance to meet their financial objectives in the longer term.

Items affecting comparability	Quarter 2 2023	Quarter 2 2022	Full year 2022
Personnel expenses	48	–	–
Administrative expenses	27	–	–
Total	75	–	–

SEK m	Quarter 2 2023	Quarter 2 2022	Quarter 2 2022 Adjusted for comparison	Change vs Adjusted, %
Interest income	829	659	659	26
Other interest income	43	3	3	>100
Interest expense1)	–177	–132	–95	86
Net interest income	695	530	567	23
Other income (incl Impair ment gains and losses	220	73	73	>100
Net result from financial transactions2)	–12	131	13	>-100
Total operating income	903	734	653	38
Total operating expenses3)	–668	–527	–548	22
Share of profit from joint ventures	18	11	11	64
Profit before rejuvenation	253	218	116	>100
Rejuvenation cost	–75	–	–	N/A
Profit before tax	178	218	116	53
Net profit for the quarter from discontinued operations4)	–	40	–	N/A
Net profit/loss for the quarter	161	217	92	75

Key ratios	Quarter 2 2023	Quarter 2 2022	Quarter 2 2022 Adjusted for comparison	Change vs Adjusted, %
Return on equity, %	10	19	N/A	N/A
Normalised return on equity, %	19	N/A	6	13 pp
Portfolio acquisitions	1,139	2,508	2,508	–55
Portfolio book value	23,797	19,680	19,680	21

1) Second quarter 2022 interest expenses adjusted by SEK 37m pertaining to the funding of the divested UK operations.

2) Second quarter 2022 net result from financial transaction adjusted for SEK 118m un-

realised changes in value aligned with the hedge accounting introduced 1 July 2022. 3) Second quarter 2022 operating expenses adjusted by SEK –21m for retained UK Group

staff, previously accounted for in the divested UK legal entity. 4) Second quarter 2022 adjusted to not include net profit from discontinued operations.

A normalised return on equity is shown to illustrate the return on equity adjusted for rejuvenation costs/ IACs and normalised capitalisation levels. Normalised capitalisation represents capitalisation in line with the financial target regarding capital structure, i.e. in the middle of the target range of the CET1 ratio 2.3–3.3 percentage points above overall CET1 requirements specified by the Swedish Financial Supervisory Authority.

The normalised return on equity for comparative periods is adjusted for the Income Statement impact of the divested UK operations and as if hedge accounting for all interest rate swaps would have been implemented in comparative periods. The capitalisation levels remain as reported in the comparative periods for ease of comparison.

Statement by the CEO

Developments 2023

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Developments during January – June, Group

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

Operating income

Operating income totalled SEK 1,669m (1,368) during the period. Net interest income increased to SEK 1,365m (1,020). The change is mainly attributable to a 21% larger portfolio. Interest income from acquired loan portfolios totalled SEK 1,628m (1,282) and interest expense amounted to SEK –348m (–266). Other interest income, which was positively impacted by returns on the liquidity portfolio due to higher interest rate levels, totalled SEK 85m (3). Collections against projections amounted to SEK 367m (305). Portfolio revaluations conducted during the period amounted to SEK –177m (–229), of which timing effects1) accounted for SEK –161m (–177). Adjusting for timing effects1), underlying net collection performance was 106% for the period.

Net result from financial transactions totalled SEK –6m (229). The change is attributable to that Hoist Finance did not apply hedge accounting for interest rate hedging contracts during the comparative period, during which outstanding interest rate hedging contracts were positively driven by an increase in market value. Other operating income amounted to SEK 63m (9) during the period, due to Hoist Finance's disposal of unsecured portfolios in France and Poland.

1) See Definitions.

SEK m	Jan–Jun 2023	Jan–Jun 2022
Interest income acquired loan portfolios	1,628	1,282
Other interest income	85	3
Interest expense	–348	–266
Net interest income	1,365	1,020
Impairment gains and losses	188	76
of which, realised collections against active forecast	365	305
of which, portfolio revaluations	–177	–229
Fee and commission income	59	34
Net result from financial transactions	–6	229
Other operating income	63	9
Total operating income	1,669	1,368

Statement by the CEO

Operating expenses

Operating expenses totalled SEK –1,376m (–1,016). This includes SEK 93m for one time rejuvenation costs. The remainder of the increase is mainly attributable to the larger total portfolio book, which increased costs as well as income. The total increase of operating expenses also includes SEK –78m in currency movements.

Personnel expenses totalled SEK –500m (–354). The increase attributable to one time rejuvenation costs (SEK 67m), retained UK Group staff (SEK 39m) accounted for in the divested UK legal entity during the comparative period, inflation-adjusted pay increases and exchange rate fluctuations.

The increase in book value during the period is the main driver for the increase in collection costs which totalled SEK –496m (–359), of which legal collection costs totalled SEK –196m (–162). Collections related to these activities are expected to contribute positively to earnings in coming quarters. Administrative expenses increased during the period to SEK –330m (–252) due to exchange rate fluctuations, impairment of previously capitalised costs and to higher IT costs.

Net profit for the period

Net profit totalled SEK 254m (395). Income tax expense for the period totalled SEK –68m (–73). The effective tax rate for the period was 21 per cent (20).

SEK m	Jan–Jun 2023	Jan–Jun 2022
Personnel expenses	–500	–354
Collection costs	–496	–358
Other administrative expenses	–330	–252
Depreciation and amortisation	–50	–52
Total operating expenses	–1,376	–1,016
Share of profit from joint ventures	29	19
Profit before tax	322	371
Income tax expense	–68	–73
Net profit for the period from discontinued operations	–	96
Net profit for the period	254	395

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

Return on equity,%

Adjusted comparative figures of the underlying business

Total operating income grew 36% driven primarily by a 21% growth in the book, a strong collection performance of 106%, and a premium from the divestment of the French unsecured legacy back book. The French legacy assets will continue to be serviced by Hoist Finance for a limited period, and this income is reflected within other income. Associated with this growth in income and the book, there is a 22% increase in direct costs. The majority is attributed to increased collections, currency movements, one-time set-up costs in Spain, as well as inflation and increased legal collection fees. Profit before tax (adjusted for rejuvenation cost of SEK 93m) grew 118%, from SEK 190m to SEK 415m. Normalised return on equity increased 8 pp to 12%.

Items affecting comparability

Items affecting comparability totalled SEK 93m (0) for quarter 1, distributed between personnel and administrative expenses, and is a part of Hoist Finance rejuvenation programme where central IT, Data and Operations functions has been re-organised to align to the new decentralised operating model. The programme is expected to reduce the indirect costs per annum by SEK 85m and will be finalised during quarter 3 2023.

Items affecting comparability	Jan–Jun 2023	Jan–Jun 2022	Full year 2022
Personnel expenses	56	–	–
Administrative expenses	37	–	–
Total	93	–	–

SEK m	Jan–Jun 2023	Jan–Jun 2022	Jan–Jun 2022 Adjusted for comparison	Change vs Adjusted, %
Interest income	1,628	1,282	1,282	27
Other interest income	85	3	3	>100
Interest expense1)	–348	–266	–189	84
Net interest income	1,365	1,020	1,096	25
Other income (incl Impair ment gains and losses	310	119	119	>100
Net result from financial transactions2)	–6	229	8	>-100
Total operating income	1,669	1,368	1,223	36
Total operating expenses3)	–1,283	–1,016	–1,052	22
Share of profit from joint ventures	29	19	19	53
Profit before rejuvenation	415	371	190	>100
Rejuvenation cost	–93	–	–	N/A
Profit before tax	322	371	190	69
Net profit for the period from discontinued operations4)	–	96	–	N/A
Net profit/loss for the period	254	395	151	68

Key ratios	Jan–Jun 2023	Jan–Jun 2022	Jan–Jun 2022 Adjusted for comparison	Change vs Adjusted, %
Return on equity, %	7	17	N/A	N/A
Normalised return on equity, %	13	N/A	5	8 pp
Portfolio acquisitions	3,049	3,819	3,819	–20
Portfolio book value	23,797	19,680	19,680	21

1) Jan-Jun 2022 interest expenses adjusted by SEK 76m pertaining to the funding of the divested UK operations.

2) Jan-Jun 2022 net result from financial transaction adjusted for SEK 221m un-

realised changes in value aligned with the hedge accounting introduced 1 July 2022. 3) Jan-Jun 2022 operating expenses adjusted by SEK –36m for retained UK Group staff, previously accounted for in the divested UK legal entity.

4) Jan-Jun 2022 adjusted to not include net profit from discontinued operations.

Statement by the CEO

Developments 2023

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Other information

Balance sheet

Comparative figures for the balance sheet pertain to 31 December 2022. Total assets, virtually unchanged from 31 December 2022, totalled SEK 32,258m (32,499). Cash and cash equivalents and interest-bearing securities decreased SEK 2,499m, while the portfolio carrying amount increased SEK 2,173m to SEK 23,797m (21,624). Other assets remain virtually unchanged.

SEK m	31 Jun 2023	31 Dec 2022	Change, %
Cash and interest-bearing securities	6,742	9,241	–27
Portfolio book value	23,797	21,624	10
Value change of interest-hedged items in portfolio hedging	75	9	>100
Other assets1)	1,644	1,625	1
Total assets	32,258	32,499	–1
Deposits from the public	18,905	18,581	2
Debt securities issued	3,901	5,545	–30
Subordinated debt	988	903	9
Total interest-bearing liabilities	23,794	25,029	5
Other liabilities1)	2,057	1,726	19
Equity	6,407	5,744	12
Total liabilities and equity	32,258	32,499	–1

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

Total interest-bearing debt amounted to SEK 23,794m (25,029). In Sweden, deposits from the public amounted to SEK 6,125, (6,687), of which SEK 2,496m (2,771) is attributable to fixed term deposits of oneto three-year duration. Deposits from the public in Germany totalled SEK 11,352m (10,854), of which SEK 8,344m (7,926) is attributable to fixed term deposits of one- to five-year duration.

At 30 June 2023, the outstanding bond debt totalled SEK 4,889m (6,448), of which SEK 3,901m (5,545) was comprised of senior unsecured liabilities.

Other liabilities totalled SEK 2,057m (1,726). Equity totalled SEK 6,407m (5,744).

Cash flow

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

SEK m	Jan–Jun 2023	Jan–Jun 2022	Change, %
Cash flow from operating activities	1,828	2,774	–34
Cash flow from investing activities	–363	–3,049	-88
Cash flow from financing activities	–1,834	–440	>100
Cash flow for the period	–369	–715	–48

Cash flow from operating activities totalled SEK 1,828m, as compared with SEK 2,774m during the 2022 comparative period. The amortisation of acquired loan portfolios totalled SEK 2,080m (2,466). The lower level of amortisation was caused mainly by currency movements. In addition, changes in other assets and liabilities amounted to SEK –505m (129), attributable primarily to other liabilities and to pledged assets in the risk management of interest rate and currency risk.

Cash flow from investing activities totalled SEK –363m (–3,049), with portfolio acquisition activity totalling SEK –3,049m (–3,819). Portions of the liquidity portfolio were also sold during the period, corresponding to SEK 2,085m (1,153).

Cash flow from financing activities totalled SEK –1,834m (–440). Net outflow from deposits from the public totalled SEK –495m (–341). Cash flow from additional Tier 1 capital totalled SEK 337m. Hoist Finance also repaid three senior unsecured bonds during the second quarter, corresponding to a total cash flow of SEK 2,535m.

Total cash flow for the period amounted to SEK –369m, as compared with SEK –715m for the 2022 comparative period.

Capital adequacy

Comparative figures for capital adequacy pertain to 31 December 2022. At the close of the quarter the CET1 ratio was 14.75 per cent (15.85) for the Hoist Finance consolidated situation. CET1 capital totalled SEK 4,157m (4,172). The risk-weighted exposure amount has increased to SEK 28,178m (26,313) since the turn of the year.

The decrease in the CET1 ratio since the turn of the year was due mainly to new portfolio acquisitions which reduced the ratio by –1.81%, while collections on existing NPL portfolios during the first half of the year contributed to an increase of 0.90%.

The Group's positive result for the quarter, recognised in own funds, increased the CET1 ratio by 0.67%. Exchange rate revaluations in NPL portfolios reduced the ratio by –0.57%. The NPL backstop also had an impact of –0.18% on the CET1 ratio through deductions in own funds. The sale of the French portfolios, which included unsecured loans, reduced the Company's risk exposure by 0.24%.

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

Total capital amounts to SEK 6,255m (6,181) and the total capital ratio is 22.20 per cent (23.49).

For Parent Company the CET1 ratio was 11.97 per cent (14.62).

Parent Company

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

Net interest income for the Parent Company totalled SEK 313m (304) during the second quarter which, as during the previous quarter, is attributable primarily to a larger share of portfolio acquisitions in combination with rising interest levels. Net result from financial transactions totalled SEK –4m (58), attributable primarily to a change in the market value of bonds and interest rate and FX hedging contracts.

Other operating income, which was slightly higher during the second quarter, amounted to SEK 66m (47) and was comprised primarily of group-wide services. Operating expenses were also somewhat higher and amounted to SEK –471m (–323), with the increase in expenses due mainly to higher costs for consultant fees and IT. Profit before credit losses totalled SEK –96m (86).

Statement by the CEO

Developments Quarterly Utveckling 2023 Developments

2023

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statements Notes Definitions About

Impairment gains totalled SEK 46m (19), attributable mainly to positive portfolio revaluations and credit reserves for performing loans. During the quarter there was no write-down requirement for shares in subsidiaries.

Earnings before tax totalled SEK –31m (126) and tax expense during the quarter amounted to SEK 84m (–23), attributable to a negative currency translation of shares in subsidiaries that resulted in a positive tax adjustment. Comprehensive income for the Parent Company totalled SEK 53m (103).

Risks and uncertainties

Hoist Finance's broad geographic presence diversifies credit exposure and reduces overall risk, but also involves a complex regulatory landscape. 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 cross-border operations in various currencies entail exposure to exchange rate risks. Hoist Finance is also exposed to interest rate risks, due primarily to differences in maturities of interestbearing assets and liabilities. In addition, Hoist Finance is exposed to operational risks, a broad and extensive risk area that includes potential process disruptions, regulatory compliance, fraud, etc. A final risk area is liquidity risk; for example, a sudden and unexpected net outflow of deposits.

Geopolitical tensions, mainly surrounding the situation in Ukraine, are the strongest uncertainty factor and are driving the development of risks, directly and indirectly. This creates uncertainty about macroeconomic development and companies' and households' financial situation. For Hoist Finance, this may result in reduced collections as well as an increased supply of non-performing loans.

Development of risks

All risk exposures have been managed within risk appetite and associated limits during the quarter. The risk situation has been relatively stable during the quarter, despite the continued overall uncertainty due to geopolitical and macroeconomic factors. The temporary increase in uncertainty in the financial sector, due to events including the collapse of Silicon Valley Bank, has subsided.

The major part of the French portfolio was divested during the quarter, which temporarily reduced the total exposure. Overall, collection performance for credit portfolios exceeded forecast 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. Hoist Finance has an internal framework for follow-up and oversight of the Group's operational risks. The Group is committed to continuously improving the quality of its internal procedures to minimise operational risks. The level of operational risks is deemed to be unchanged from previous quarters.

Market risks remain low, as Hoist Finance continuously hedges interest rate and FX risks in the short and medium term. Additional information on developments during the quarter is provided in the Net Profit section. Liquidity risk is deemed to continue to be low. The securitisation of asset portfolios is an effective method of managing the regulatory changes introduced in December 2018 (the NPL prudential backstop regulation).

Related-party transactions

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

Group structure

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

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

Other disclosures

A subsidiary, Corelsa ReoCo S.L., was established in Spain during second quarter 2023. For a more detailed description of the Group's legal structure, please refer to the 2022 Annual Report.

Subsequent events

No significant events have taken place after the balance sheet date.

Review

This interim report has been reviewed by the Company's auditors.

Developments 2023 Developments review Assurance Financial

Quarterly Review

Condensed income statement

SEK m	Quarter 2 2023	Quarter 1 2023	Quarter 4 2022	Quarter 3 2022	Quarter 2 2022
Net interest income	695	670	586	560	530
Total operating income	903	766	652	595	734
Total operating expenses	–743	–633	–676	–522	–527
Net operating profit/loss	160	133	–24	73	207
Profit/loss before tax	178	144	5	116	218
Net profit/loss from discontinued operations	–	–	237	56	40
Net profit/loss	161	93	255	153	217

Key ratios1)

SEK m	Quarter 2 2023	Quarter 1 2023	Quarter 4 2022	Quarter 3 2022	Quarter 2 2022
Cash EBITDA	1,508	1,315	1,420	1,528	1,683
C/I ratio, %	81	81	99	82	71
Return on equity, %	10	6	20	12	19
Portfolio acquisitions	1,139	1,909	2,767	342	2,508
Basic and diluted earnings per share from continuing operations, SEK	1.45	0.66	0.19	0.70	1.66

SEK m	30 Jun 2023	31 Mar 2023	31 Dec 2022	30 Sep 2022	30 Jun 2022
Gross 180-month ERC	36,847	35,452	32,946	28,846	29,615
Portfolio book value	23,797	22,892	21,624	19,370	19,680
Total capital ratio, %	22.20	22.37	23.49	19.20	15.01
CET1 ratio, %	14.75	15.01	15.85	12.23	9.60
Number of employees (FTEs)	1,319	1,323	1,304	1,455	1,478

1) See Definitions

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

Statement by the CEO

Developments 2023

review Assurance Financial

Quarterly

statements Notes Definitions About

Financial statements

Consolidated income statement

SEK m	Note	Quarter 2 2023	Quarter 2 2022	Jan-Jun 2023	Jan-Jun 2022	Full-year 2022
Interest income acquired loan portfolios calculated using the
effective interest rate method		829	659	1,628	1,282	2,678
Other interest income 1)		43	3	85	3	50
Interest expense		–177	–132	–348	–266	–562
Net interest income		695	530	1,365	1,020	2,166
Impairment gains and losses	4	124	50	188	76	53
Fee and commission income		41	17	59	34	66
Net result from financial transactions		–12	131	–6	229	309
Derecognition gains and losses		49	–	45	–	–
Other operating income		6	6	18	9	20
Total operating income	3	903	734	1,669	1,368	2,613
Personnel expenses		–275	–171	–500	–354	–766
Collection costs		–262	–187	–496	–358	–764
Other administrative expenses		–181	–143	–330	–252	–575
Depreciation and amortisation of tangible and intangible assets		–25	–26	–50	–52	–109
Total operating expenses	3	–743	–527	–1,376	–1,016	–2,214
Net operating profit/loss		160	207	293	351	399
Share of profit from joint ventures	3	18	11	29	19	91
Profit/loss before tax	3	178	218	322	371	490
Income tax expense		–17	–41	–68	–73	–79
Net profit from discontinued operations		–	40	0	96	389
Net profit/loss		161	217	254	395	801
Profit/loss attributable to:
Owners of Hoist Finance AB (publ)		130	189	189	334	706
Additional Tier 1 capital holders		31	28	65	61	95

Basic and diluted earnings per share continuing operations, SEK		1.45	1.66	4.18	5.29	3.55
Basic and diluted earnings per share discontinued operations, SEK		–	0.45	–	2.15	4.36
Basic and diluted earnings per share total, SEK		1.45	2.11	4.18	7.44	7.91

1) Of which interest income calculated using the effective interest method amount to SEK 14.7m (2.5) during quarter 2, SEK 20.6m (3.4) during Jan-Jun and SEK 16m during full-year 2022.

Condensed consolidated statement of comprehensive income

SEK m	Quarter 2 2023	Quarter 2 2022	Jan-Jun 2023	Jan-Jun 2022	Full-year 2022
Net profit/loss for the period	161	217	254	395	801
Other comprehensive income
Items that will not be reclassified to profit or loss
Revaluation of defined benefit pension plan	–	–	–	–	13
Tax attributable to items that will not be reclassified to profit or loss	–	–	–	–	–
Total items that will not be reclassified to profit or loss	–	–	–	–	13
Items that may be reclassified subsequently to profit or loss
Translation difference, foreign operations	527	32	617	30	247
Hedging of currency risk in foreign operations	–494	–100	–619	–130	–475
Transferred to the income statement during the year 1)	4	1	5	2	210
Tax attributable to items that may be reclassified to profit or loss	102	21	128	27	98
Total items that may be reclassified subsequently to profit or loss	139	–46	131	–71	80
Other comprehensive income for the period	139	–46	131	–71	93
Total comprehensive income for the period	300	171	385	324	894

Profit/loss attributable to:
Owners of Hoist Finance AB (publ)	269	143	320	263	799
Additional Tier 1 capital holders	31	28	65	61	95

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

the CEO

Consolidated balance sheet

SEK m Note	30 Jun 2023	30 Jun 2022	31 Dec 2022
ASSETS

Cash	0	0	0
Treasury bills and Treasury bonds 5	2,218	1,045	2,789
Lending to credit institutions 5	2,499	2,065	2,358
Lending to the public 5	1	2	1
Portfolio book value 3,4	23,797	19.680	21,624
Value change of interest-hedged items in portfolio hedging	75	–	9
Bonds and other securities 5	2,025	2,714	4,094
Shares and participations in joint ventures	204	138	188
Intangible assets	277	342	297
Tangible assets	197	166	221
Other assets	636	486	694
Deferred tax assets	226	86	116
Prepayments and accrued income	103	131	108
Assets held for sale	–	4,328	–
TOTAL ASSETS	32,258	31,183	32,499
LIABILITIES AND EQUITY
Liabilities
Deposits from the public 5	18,905	18,255	18,581
Debt securities issued 5	3,901	5,319	5,545
Tax liabilities	116	143	107
Other liabilities	1,479	820	1,158
Deferred tax liabilities	84	89	85
Accrued expenses and deferred income	319	191	329
Provisions	59	58	47
Subordinated debts	988	852	903
Liabilities held for sale	–	250	–
Total liabilities	25,851	25,978	26,755
Equity
Additional Tier 1 capital holders	1,514	1,106	1,106
Share capital	30	30	30
Other contributed equity	2,275	2,275	2,275
Reserves	–183	–465	–314
Retained earnings including profit/loss for the period	2,771	2,259	2,647
Total equity	6,407	5,205	5,744
TOTAL LIABILITIES AND EQUITY	32,258	31,183	32,499

the CEO

Developments 2023

Räkenskaper Statement by review Assurance Financial

Quarterly

statements Notes Definitions About

Consolidated statement of changes in equity

	Equity attributable to shareholders of Hoist Finance AB (publ)
			Reserves
SEK m	Share capital	Other contributed equity	Hedge reserve	Translation reserve	Retained earnings including profit/loss for the period	Total	Additional Tier 1 capital holders	Total equity
Opening balance 1 Jan 2023	30	2,275	–687	373	2,647	4,638	1,106	5,744
Comprehensive income for the period
Profit/loss for the period					189	189	65	254
Other comprehensive income			–486	617	0	131		131
Total comprehensive income for the period			–486	617	189	320	65	385
Transactions reported directly in equity
Additional Tier 1 capital instrument 1)					–63	–63	409	346
Transaction cost Tier 1 capital instrument					–8	–8	–1	–9
Interest paid on capital contribution							–65	–65
Reclassification		0			0	0		0
Acquisition agreement for treasury shares2)					8	8		8
Tax effect on items reported directly in equity					2	2	0	2
Share based payments3)					–4	–4		–4
Total transactions reported directly in equity		0			–65	–65	343	278
Closing balance 30 Jun 2023	30	2,275	–1,173	990	2,771	4,893	1,514	6,407

1) Issued amount of SEK 700m, called amount of EUR 30m with a FX-effect of SEK 63m.

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

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

Equity attributable to shareholders of Hoist Finance AB (publ)

			Reserves
SEK m	Share capital	Other contributed equity	Hedge reserve	Translation reserve	Retained earnings including profit/loss for the period	Total	Additional Tier 1 capital holders	Total equity
Opening balance 1 Jan 2022	30	2,275	–473	79	1,924	3,835	1,106	4,941
Comprehensive income for the period
Profit/loss for the period					334	334	61	395
Other comprehensive income			–101	30	0	–71		–71
Total comprehensive income for the period			–101	30	334	263	61	324
Transactions reported directly in equity
Interest paid on Additional Tier 1 capital							–61	–61
Share-based payments1)					1	1
Total transactions reported directly in equity					1	1	–61	–60
Closing balance 30 Jun 2022	30	2,275	–574	109	2,259	4,099	1,106	5,205

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

the CEO

Developments 2023

Räkenskaper Statement by review Assurance Financial

Quarterly

Consolidated statement of changes in equity

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

1) Net profit for the period includes reclassifications of hedging reserves and historical exchange rate effects that were realised in profit/loss upon the sale of the disposal group of

operations in the UK, amounting to SEK –206m net after tax. 2) For more information on share-based payments, see Hoist Finance Annual report 2022.

Condensed consolidated cash flow statement

SEK m	Quarter 2 2023	Quarter 2 2022	Jan-Jun 2023	Jan-Jun 2022	Full-year 2022
Profit/loss before tax	178	250	322	459	490
of which, paid-in interest	873	789	1,713	1,562	2,727
of which, interest paid	–188	–156	–248	–220	–562
Adjustment for other items not included in cash flow	–159	–361	–29	–206	30
Realised result from divestment of shares and participations in joint ventures	0	–20	1	–38	3
Net profit/loss for the period attributable to discontinued operations	–	–	–	–	164
Income tax paid/received	–21	–16	–41	–36	–113
Amortisations on acquired loan portfolios	1,103	1,341	2,080	2,466	4,588
Increase/decrease in other assets and liabilities	204	–162	–505	129	–1,318
Cash flow from operating activities	1,305	1,032	1,828	2,774	3,844
Acquired loan portfolios	–1,139	–2,508	–3,049	–3,819	–6,928
Disposed loan portfolios	549	–	574	–	–
Investments in bonds and other securities	–	0	–	–402	–1,878
Divestments of bonds and other securities	96	1,025	2,085	1,153	1,254
Divested subsidiaries	–	–	–	–	500
Other cash flows from investing activities	17	12	27	19	–77
Cash flow from investing activities	–477	–1,471	–363	–3,049	–7,129
Deposits from the public	387	–493	–495	–341	–452
Net lending attributable to discontinued operations	–	–	–	–	4,965
Debt securities issued	–	857	995	864	880
Repurchase and repayment of Debt securities issued	–2,557	–857	–2,581	–877	–918
Additional Tier 1 capital	337	–	337	–	–
Interest paid on Additional Tier 1 capital	–31	–28	–65	–61	–95
Amortisation of lease liabilities	–12	–12	–25	–25	–50
Cash flow from financing activities	–1,876	–533	–1,834	–440	4,330
Cash flow for the period	–1,048	–972	–369	–715	1,045
Cash at beginning of the period	5,515	3,904	4,809	3,625	3,625
Translation difference	–62	60	–35	82	139
Cash at end of the period3)	4,405	2,992	4,405	2,992	4,809

3) Cash and cash equivalents in cash flow statement

SEK m	30 Jun 2023	30 Jun 2022	31 Dec 2022
Cash	0	0	0
Treasury bills and Treasury bonds	2,218	1,045	2,789
Lending to credit institutions	2,499	2,283	2,358
Excl. lending to credit institutions in securitisation vehicles	–312	–336	–338
Total cash and cash equivalents in cash flow statement	4,405	2,992	4,809

the CEO

Developments 2023

Quarterly

Räkenskaper Statement by review Assurance Financial

statements Notes Definitions About

Parent Company

Parent Company condensed income statement

SEK m	Quarter 2 2023	Quarter 2 2022	Jan-Jun 2023	Jan-Jun 2022	Full-year 2022
Interest income	476	425	937	800	1,661
Interest expense	–163	–121	–319	–243	–513
Net interest income	313	304	618	557	1,148
Net result from financial transactions	–4	58	–116	125	42
Other operating income	66	47	117	97	260
Total operating income	375	409	619	779	1,450
General administrative expenses	–459	–320	–834	–576	–1,307
Depreciation and amortisation of tangible and intangible assets	–12	–3	–24	–28	–55
Total operating expenses	–471	–323	–858	–604	–1,362
Profit before credit losses	–96	86	–239	175	88
Impairment gains and losses on acquired loan portfolios	46	19	99	43	54
Amortisation of other financial fixed assets	–	–	–	–35	–36
Share of profit from joint ventures	19	21	31	39	65
Profit/loss before tax	–31	126	–109	222	171
Appropriations	–	–	–	–	60
Taxes	84	–23	75	–49	14
Net profit/loss	53	103	–34	173	245

Parent company condensed statement of comprehensive income

SEK m	Quarter 2 2023	Quarter 2 2022	Jan-Jun 2023	Jan-Jun 2022	Full-year 2022
Net profit/loss	53	103	–34	173	245
Other comprehensive income
Items that may be reclassified subsequently to profit or loss
Translation difference, foreign operations	0	0	0	0	0
Tax attributable to items that may be reclassified to profit or loss	–	–	–	–	–
Total items that may be reclassified subsequently to profit or loss	0	0	0	0	0
Other comprehensive income for the period	0	0	0	0	0
Total comprehensive income for the period	53	103	–34	173	245

Parent Company condensed balance sheet

SEK m	30 Jun 2023	30 Jun 2022	31 Dec 2022
ASSETS
Cash	3,811	2,374	4,236
Portfolio book value	10,224	8,981	9,107
Value change of interest-hedged items in portfolio hedging	–3	–	–
Receivables, Group companies	7,479	14,867	7,456
Bonds and other securities	2,025	2,714	4,094
Shares in subsidiaries and joint ventures	5,739	908	4,840
Tangible and intangible fixed assets	113	200	145
Other assets	642	512	692
TOTAL ASSETS	30,030	30,556	30,570
LIABILITIES AND EQUITY
Liabilities
Deposits from the public	18,905	18,255	18,581
Debt securities issued	3,401	4,827	5,053
Other liabilities	1,472	1,605	1,030
Provisions	48	35	36
Subordinated debts	988	852	903
Total liabilities and provisions	24,814	25,574	25,603
Untaxed reserves	225	285	225
Equity
Restricted equity	49	115	52
Total restricted equity	49	115	52
Non-restricted equity
Additional Tier 1 capital holders	1,515	1,106	1,106
Non-restricted equity attributable to shareholders	3,427	3,476	3,584
Total unrestricted equity	4,942	4,582	4,690
Total equity	4,991	4,697	4,742
TOTAL LIABILITIES AND EQUITY	30,030	30,556	30,570

Räkenskaper Statement by review Assurance Financial

Quarterly

Notes

Note 1 Accounting principles

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

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

Change in accounting principles 2023

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

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

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

Critical estimates and judgements

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

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

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

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

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

Note 2 Exchange rates

	Quarter 2 2023	Quarter 2 2022	Full-year 2022		Quarter 2 2023	Quarter 2 2022	Full-year 2022
1 EUR = SEK				1 PLN = SEK
Income statement (average)	11.3247	10.4750	10.6232	Income statement (average)	2.4481	2.2615	2.2684
Balance sheet (at end of the period)	11.7917	10.6801	11.1283	Balance sheet (at end of the period)	2.6534	2.2910	2.3741
1 GBP = SEK				1 RON=SEK
Income statement (average)	12.9181	12.4127	12.4639	Income statement (average)	2.2952	2.1179	2.1541
Balance sheet (at end of the period)	13.7202	12.3500	12.5811	Balance sheet (at end of the period)	2.3760	2.1592	2.2484

Statement by the CEO

Developments 2023

review Assurance Financial statements Notes Definitions About

Quarterly

Note 3 Segment reporting

Operating segments

Segment reporting has been prepared based on the manner in which executive management monitors operations. From Quarter 2 2023, Hoist Finance has chosen to further clarify the allocation of indirect costs in different segments that Hoist Finance monitors internally.

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

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

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

Total operating expenses also follow the statutory account preparation for the Group's income statement, but are distributed between direct and indirect expenses. Direct expenses are expenses directly attributable to, while indirect expenses are expenses from central and support functions that are related to the business lines. From Quarter 2 2023 Hoist Finance has divided these indirect costs in three categories to furher illustrate the allocation;

Platforms, which is the cost of the operations within the markets themselves.

Asset management, which is the cost of our team which actively seeks to both acquire and divest portfolios.

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

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

Income statement, Quarter 2, 2023

SEK m	Unsecured	Secured	Platforms	Asset management	Central functions	Group continuing operations
Operating Income	764	97			42	903
of which Interest expenses	–138	–45			6	–177
Direct costs 1)	–341	–62				–403
Personnel expenses	–99	–17				–116
Other collection expenses	–145	–10				–155
Legal collection expenses	–78	–26				–104
IT expenses	–5	–3				–8
Other administrative expenses	–14	–5				–19
Depreciation and amortisation of tangible and intangible assets	–1	0				–1
Indirect costs 2)			–92	–22	–227	–341
of which Items Affecting Comparability			–4		–71	–75
Personnel expenses			–40	–20	–98	–158
Other collection expenses			–2	–	0	–2
Legal collection expenses			0	–	0	0
IT expenses			–6	0	–67	–73
Other administrative expenses			–30	–2	–50	–82
Depreciation and amortisation of tangible and intangible assets			–13	0	–12	–25
Total operating expenses	–341	–61	–92	–22	–227	–743
Share of profit from joint ventures	18					18
Profit/loss before tax	441	36	–92	–22	–185	178

Key ratios 2)	Unsecured	Secured	Platforms	Asset management	Central functions	Group continuing operations
Portfolio book value	17,166	6,631				23,797
Gross Collections	1,518	382				1,900

1) Direct expenses are expenses directly attributable to the Business line. Indirect expenses are expenses related to support functions. 2) See Definitions

Statement by the CEO	Developments 2023	Quarterly review	Financial	Noter	Assurance

Income statement, Quarter 2, 2022

SEK m	Unsecured	Secured	Platforms	Asset management	Central functions	Group continuing operations
Operating Income	466	95			173	734
of which Interest expenses	–139	–27			34	–132
Direct costs 1)	–267	–38				–305
Personnel expenses	–81	–12				–93
Other collection expenses	–99	–2				–101
Legal collection expenses	–65	–20				–85
IT expenses	–3	–1				–4
Other administrative expenses	–19	–3				–22
Depreciation and amortisation of tangible and intangible assets	0	0				0
Indirect costs 2)			–61	–13	–147	–222
of which Items Affecting Comparability						–
Personnel expenses			–15	–11	–52	–78
Other collection expenses			–1	0	–1	–2
Legal collection expenses			0	0	0	0
IT expenses			–13	0	–54	–67
Other administrative expenses			–18	–2	–29	–49
Depreciation and amortisation of tangible and intangible assets			–14	0	–11	–25
Total operating expenses	–267	–38	–61	–13	–147	–527
Share of profit from joint ventures	11					11
Profit/loss before tax	210	57	–61	–13	26	218

Key ratios 2)	Unsecured	Secured	Platforms	Asset management	Central functions	Group continuing operations
Portfolio book value	14,968	4,712				19,680
Gross Collections	1,313	476				1,789

1) Direct expenses are expenses directly attributable to the Business line. Indirect expenses are expenses related to support functions.

2) See Definitions

Income statement, Jan-Jun, 2023

SEK m	Unsecured	Secured	Platforms	Asset management	Central functions	Group continuing operations
Operating Income	1,331	243			95	1,669
of which Interest expenses	–260	–86			–2	–348
Direct costs 1)	–662	–108				–770
Personnel expenses	–193	–33				–226
Other collection expenses	–278	–18				–296
Legal collection expenses	–153	–43				–196
IT expenses	–9	–6				–15
Other administrative expenses	–28	–8				–36
Depreciation and amortisation of tangible and intangible assets	–1	0				–1
Indirect costs 2)			–187	–38	–382	–607
of which Items Affecting Comparability						–
Personnel expenses			–84	–33	–158	–275
Other collection expenses			–3	0	–1	–4
Legal collection expenses			0	0	0	0
IT expenses			–13	–1	–129	–143
Other administrative expenses			–61	–4	–71	–136
Depreciation and amortisation of tangible and intangible assets			–26	0	–23	–49
Total operating expenses	–662	–108	–187	–38	–382	–1,376
Share of profit from joint ventures	29					29
Profit/loss before tax	698	135	–187	–38	–287	322

Key ratios 2)	Unsecured	Secured	Platforms	Asset management	Central functions	Group continuing operations
Portfolio book value	17,166	6,631				23,797
Gross Collections	2,914	718				3,632

1) Direct expenses are expenses directly attributable to the Business line. Indirect expenses are expenses related to support functions.

2) See Definitions

Income statement, Jan-Jun, 2022

SEK m	Unsecured	Secured	Platforms	Asset management	Central functions	Group continuing operations
Operating Income	879	189			300	1,368
of which Interest expenses	–274	–51			59	–266
Direct costs 1)	–520	–71				–591
Personnel expenses	–167	–23				–191
Other collection expenses	–187	–4				–191
Legal collection expenses	–125	–38				–163
IT expenses	–5	–0				–5
Other administrative expenses	–35	–6				–41
Depreciation and amortisation of tangible and intangible assets	–1	0				–1
Indirect costs 2)			–121	–28	–276	–425
of which Items Affecting Comparability						–
Personnel expenses			–33	–22	–108	–164
Other collection expenses			–1	0	–5	–6
Legal collection expenses			1	0	0	1
IT expenses			–24	–1	–103	–128
Other administrative expenses			–35	–4	–38	–78
Depreciation and amortisation of tangible and intangible assets			–29	0	–22	–51
Total operating expenses	–520	–71	–121	–28	–276	–1,016
Share of profit from joint ventures	19					19
Profit/loss before tax	378	118	–121	–28	25	371

Key ratios 2)	Unsecured	Secured	Platforms	Asset management	Central functions	Group continuing operations
Portfolio book value	14,968	4,712				19,680
Gross Collections	2,388	916				3,304

1) Direct expenses are expenses directly attributable to the Business line. Indirect expenses are expenses related to support functions.

2) See Definitions

Income statement, full-year, 2022

SEK m	Unsecured	Secured	Platforms	Asset management	Central functions	Group continuing operations
Operating Income	1,803	354			458	2,613
of which Interest expenses	–529	–112			78	–562
Direct costs 1)	–1,120	–151				–1,271
Personnel expenses	–337	–47				–384
Other collection expenses	–425	–11				–436
Legal collection expenses	–247	–76				–323
IT expenses	–12	–1				–13
Other administrative expenses	–98	–15				–113
Depreciation and amortisation of tangible and intangible assets	–2	0				–2
Indirect costs 2)			–281	–58	–603	–943
of which Items Affecting Comparability						–
Personnel expenses			–109	–48	–225	–382
Other collection expenses			–1	0	–6	–7
Legal collection expenses			0	0	0	1
IT expenses			–38	–1	–234	–274
Other administrative expenses			–74	–9	–92	–174
Depreciation and amortisation of tangible and intangible assets			–59	0	–47	–106
Total operating expenses	–1,120	–151	–281	–58	–603	–2,214
Share of profit from joint ventures	91					91
Profit/loss before tax	775	203	–281	–58	–145	490

Key ratios 2)	Unsecured	Secured	Platforms	Asset management	Central functions	Group continuing operations
Portfolio book value	15,285	6,338				21,624
Gross Collections	5,004	1,571				6,575

1) Direct expenses are expenses directly attributable to the Business line. Indirect expenses are expenses related to support functions.

2) See Definitions

Note 4 Portfolio book value

Portfolio book value, 30 Jun 2023

Acquired credit-impaired loan portfolios

				Loss allowance
SEK m	Gross carrying amount	Stage 1 12MECL	Stage 2 LECL	Stage 3 LECL	POCI	Loss Allowance	Net carrying amount
Opening balance 1 Jan 2023	20,989				1	1	20,990
Acquisitions	3,049						3,049
Interest income	1,595						1,595
Gross collections	–3,632						–3,632
Impairment gains and losses					188	188	188
of which, realised collections against active forecast					366	366	366
of which, portfolio revaluations					–177	–177	–177
Disposals	–528						–528
Translation differences	1,451				35	35	1,486
Closing balance 30 June 2023	22,924				224	224	23,148
Acquired performing loan portfolios
Opening balance 1 Jan 2023	640	–1	–1	–4		–6	634
Interest income	33						33
Amortisations and interest payments	–76						–76
Changes in loss allowance	–	0	0	–1		–1	–1
Derecognitions	0	0	0	–		0	0
Translation differences	60	0	0	–1		–1	59
Closing balance 30 June 2023	657	–1	–1	–6		–8	649
Total closing balance 30 Jun 2023	23,581	–1	–1	–6	224	216	23,797

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

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

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

Developments 2023

Noter Statement by review Assurance Financial

Note 4 Portfolio book value, cont

Portfolio book value, 30 June 2022

Acquired credit-impaired loan portfolios

	Loss allowance
SEK m	Gross carrying amount	Portfolio book value related to the disposal group, Gross carrying amount	Stage 1 12MECL	Stage 2 LECL	Stage 3 LECL	POCI	Portfolio book value related to the disposal group, POCI)	Loss Allowance, continuing operations	Net carrying amount, continuing operations
Opening balance 1 Jan 2022	21,111	–4,587				–470	423	–47	16,477
Acquisitions	3,819	0							3,819
Interest income	1,533	–282							1,251
Gross collections	–3,948	644							–3,304
Impairment gains and losses						71	6	77	77
of which, realised collections against active forecast						296	9	305	305
of which, portfolio revaluations						–225	–3	–228	–228
Disposals
Translation differences	800	–98				–12	9	–3	699
Closing balance 30 Jun 2022	23,315	–4,323				–411	438	27	19,019
Acquired performing loan portfolios
Opening balance 1 Jan 2022	702		–1	–1	–4			–6	696
Interest income	31		–	–	–			–	31
Amortisations and interest payments	–83		–	–	–			–	–83
Changes in loss allowance	0		0	0	–1			–1	–1
Translation differences	18		0	0	0			0	18
Closing balance 30 Jun 2022	668		–1	–1	–5			–7	661
Total closing balance 30 Jun 2022	23,983	–4,323	–1	–1	–5	–411	438	20	19,680

Portfolio book value, 31 Dec 2022

Acquired credit-impaired loan portfolios

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

31 Dec 2022 21,629 0 –1 –1 –4 1 0 –5 21,624

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

the CEO

Total closing balance

Developments 2023

Noter Statement by review Assurance Financial

Note 5 Financial instruments

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

SEK m	Assets/liabilities recognised at fair value through profit or loss	Hedging instruments	Amortised cost	Total carrying amount	Fair value
Cash	–	–	0	0	0
Treasury bills and treasury bonds	2,218	–	–	2,218	2,218
Lending to credit institutions	–	–	2,499	2,499	2,499
Lending to the public	–	–	1	1	1
Portfolio book value	–	–	23,797	23,797	23,874
Bonds and other securities	2,025	–	–	2,025	2,025
Derivatives	7	127	–	134	134
Other financial assets	–	–	–	467	467
Total	4,250	127	26,764	31,141	31,218
Deposits from the public	–	–	18,905	18,095	18,690
Derivatives	14	133	–	147	147
Debt securities issued	–	–	3,901	3,901	4,514
Subordinated debt	–	–	988	988	920
Other financial debts	–	–	1,624	1,624	1,624
Total	14	133	25,418	25,565	25,895

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

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

SEK m	Assets/liabilities recognised at fair value through profit or loss	Hedging instruments	Amortised cost	Total carrying amount	Fair value
Cash	–	–	0	0	0
Treasury bills and treasury bonds	1 045	–	–	1,045	1,045
Lending to credit institutions	–	–	2,065	2,065	2,065
Lending to the public	–	–	2	2	2
Portfolio book value	–	–	19,680	19,680	20,447
Bonds and other securities	2 714	–	–	2,714	2,714
Derivatives	301	0	–	301	301
Other financial assets	–	–	168	168	168
Total	4 060	0	21,915	25,975	26,742
Deposits from the public	–	–	18,255	18,255	18,255
Derivatives	5	55	–	60	60
Debt securities issued	–	–	5,319	5,319	5,333
Subordinated debt	–	–	852	852	809
Other financial debts	–	–	929	929	929
Total	5	55	25,365	25,415	25,386

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

the CEO

Developments 2023

Noter Statement by review Assurance Financial

Note 5 Financial instruments, cont

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

SEK m	Assets/liabilities recognised at fair value through profit or loss	Hedging instruments	Amortised cost	Total carrying amount	Fair value
Cash	–	–	0	0	0
Treasury bills and treasury bonds	2,789	–	–	2,789	2,789
Lending to credit institutions	–	–	2,358	2,358	2,358
Lending to the public	–	–	1	1	1
Portfolio book value	–	–	21,624	21,624	24,261
Bonds and other securities	4,094	–	–	4,094	4,094
Derivatives	32	134	–	165	165
Other financial assets	–	–	504	504	504
Total	6,915	134	24,487	31,536	34,172
Deposits from the public	–	–	18,581	18,581	18,332
Derivatives	23	151	–	174	174
Debt securities issued	–	–	5,545	5,545	5,372
Subordinated debt	–	–	903	903	845
Other financial debts	–	–	1,253	1,253	1,253
Total	23	151	26,282	26,456	25,976

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

Fair value measurement

Group

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

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

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

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

Fair value measurements, 30 Jun 2023

SEK m	Level 1	Level 2	Level 3	Total
Treasury bills and Treasury bonds	2,218	–	–	2,218
Bonds and other securities	2,025	–	–	2,025
Derivatives	–	134	–	134
Total assets	4,243	134	–	4,377
Derivatives	–	147	–	147
Total liabilities	–	147	–	147

Fair value measurements, 31 Dec 2022

SEK m	Level 1	Level 2	Level 3	Total
Treasury bills and Treasury bonds	2,789	–	–	2,789
Bonds and other securities	4,094	–	–	4,094
Derivatives	–	165	–	165
Total assets	6,883	165	–	7,048
Derivatives	–	174	–	174
Total liabilities	–	174	–	174

Fair value measurements, 30 Jun 2022

SEK m	Level 1	Level 2	Level 3	Total
Treasury bills and Treasury bonds	1,045	–	–	1,045
Bonds and other securities	2,714	–	–	2,714
Derivatives	–	301	–	301
Total assets	3,759	301	–	4,060
Derivatives	–	60	–	60
Total liabilities	–	60	–	60

the CEO

Developments 2023

Noter Statement by review Assurance Financial statements Notes Definitions About

Quarterly

Note 6 Capital adequacy

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

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

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

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

Internally assessed capital requirement

As per 30 June 2023 the internally assessed capital requirement was SEK 2,603m (SEK 2,569m per 31 December 2022), of which SEK 348m (464) was attributable to Pillar 2. For more information regarding Pillar 2 risks, see Hoist Finance's Pillar 3 report.

SEK m		Quarter 2 2023	Quarter 1 2023	Quarter 4 2022	Quarter 3 2022	Quarter 2 2022
	Available own funds (amounts)
1	Common Equity Tier 1 (CET1) capital	4,157	4,156	4,172	3,471	3,480
2	Tier 1 capital	5,267	5,263	5,278	4,578	4,586
3	Total capital	6,255	6,193	6,181	5,449	5,439
	Risk-weighted exposure amounts
4	Total risk exposure amount	28,178	27,686	26,313	28,376	36,234
	Capital ratios (as a percentage of risk-weighted exposure amount)
5	Common Equity Tier 1 ratio (%)	14.75	15.01	15.85	12.23	9.6
6	Tier 1 ratio (%)	18.69	19.01	20.06	16.13	12.66
7	Total capital ratio (%)	22.20	22.37	23.49	19.20	15.01
Additional own funds requirements to address risks other than the risk of excessive leverage (as a percentage of risk-weighted exposure amount)
	EU 7a Additional own funds requirements to address risks other than the risk of excessive leverage (%)	–	–	–	–	–
	EU 7b of which: to be made up of CET1 capital (percentage points)	–	–	–	–	–
	EU 7c of which: to be made up of Tier 1 capital (percentage points)	–	–	–	–	–
	EU 7d Total SREP own funds requirements (%)	8	8	8	8	8
Combined buffer and overall capital requirement (as a percentage of risk-weighted exposure amount)
8	Capital conservation buffer (%)	2.5	2.5	2.5	2.5	2.5
	EU 8a Conservation buffer due to macro-prudential or systemic risk identified at the level of a Member State (%)	0	0	0	0	0
9	Institution specific countercyclical capital buffer (%)	0.38	0.23	0.10	0.03	0
	EU 9a Systemic risk buffer (%)	0	0	0	0	0
10	Global Systemically Important Institution buffer (%)	0	0	0	0	0
	EU 10a Other Systemically Important Institution buffer (%)	0	0	0	0	0
11	Combined buffer requirement (%)	2.88	2.73	2.60	2.53	2.50
	EU 11a Overall capital requirements (%)		10.73	10.60	10.53	10.50
12	CET1 available after meeting the total SREP own funds requirements (%)	6.75	7.01	7.85	4.23	1.60

the CEO

Developments 2023

Quarterly

Noter Statement by review Assurance Financial

statements Notes Definitions About

Note 6 Capital adequacy, cont

SEK m		Quarter 2 2023	Quarter 1 2023	Quarter 4 2022	Quarter 3 2022	Quarter 2 2022
	Leverage ratio
13	Total exposure measure	31.176	31,277	31,433	31,671	30,694
14	Leverage ratio (%)	16.90	16.83	16.79	14.45	14.94
	Additional own funds requirements to address the risk of excessive leverage (as a percentage of total exposure measure)
	EU 14a Additional own funds requirements to address the risk of excessive leverage (%)	0	0	0	0	0
	EU 14b of which: to be made up of CET1 capital (percentage points)	0.00 pp	0.00 pp	0.00 pp	0.00 pp	0.00 pp
	EU 14c Total SREP leverage ratio requirements (%)	3	3	3	3	3
	Leverage ratio buffer and overall leverage ratio requirement (as a percentage of total exposure measure)
	EU 14d Leverage ratio buffer requirement (%)	0	0	0	0	0
	EU 14e Overall leverage ratio requirement (%)	3	3	3	3	3
	Liquidity Coverage Ratio
15	Total high-quality liquid assets (HQLA) (Weighted value -average)	4,586	4,760	4,963	4,314	4,328
	EU 16a Cash outflows – Total weighted value	2,210	2,241	2,252	2,216	2,355
	EU 16b Cash inflows – Total weighted value	2,907	2,759	2,526	2,221	2,341
16	Total net cash outflows (adjusted value)	553	601	604	595	630
17	Liquidity coverage ratio (%)	844	844	879	767	740
	Net Stable Funding Ratio
18	Total available stable funding	29,607	27,585	27,094	27,588	27,463
19	Total required stable funding	26,161	25,046	23,356	24,770	25,427
20	NSFR ratio (%)	113	110	116	111	108

Note 7 Liquidity risk

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

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

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

Funding is mainly raised in the form of deposits from the public and through the capital markets through the issuance of senior unsecured debts, own funds instruments and equity. 42 per cent (42) of deposits from the public are payable on demand (current account – "flex"), while 58 per cent (58) of the Group's deposits from the public are locked into longer maturities (fixed-term deposits) ranging from one to five years. About 99 per cent of deposits are is fully covered by the Swedish state deposit guarantee.

Funding

	Hoist Finance consolidated situation		Hoist Finance AB (publ)
SEK m	30 Jun 2023	31 Dec 2022	30 Jun 2023	31 Dec 2022
Current account deposits	7,948	7,810	7,948	7,810
Fixed-term deposits	10,958	10,772	10,958	10,772
Debt securities issued	3,901	5,545	3,401	5,053
Convertible debt instruments	1,515	1,106	1,515	1,106
Subordinated debts	988	903	988	903
Equity	4,892	4,639	3,476	3,637
Other	2,056	1,724	1,744	1,289
Balance sheet total	32,258	32,499	30,030	30,570

Developments 2023

Note 7 Liquidity risk, cont

The Group's Treasury Policy specifies a limit and a target level for the amount of available liquidity and its nature. Available liquidity totalled SEK 6,428m (8,897) as per 30 June 2023, exceeding the limit and the target level by a significant margin.

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

Liquidity reserve, Hoist Finance consolidated situation

SEK m	30 Jun 2023	31 Dec 2022
Cash and holdings in central banks	0	0
Deposits in other banks available overnight	2,185	2,014
Securities issued or guaranteed by sovereigns, central banks or multilateral development banks	1,601	1,644
Securities issued or guaranteed by municipalities or other public sector entities	617	1,145
Covered bonds	2,025	4,094
Securities issued by non-financial corporates	–	–
Securities issued by financial corporates	–	–
Other	–	–
Total	6,428	8,897

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

Note 8 Pledges, contingent liabilities and commitments

	Group		Parent Company
SEK m	30 Jun 2023	31 Dec 2022	30 Jun 2023	31 Dec 2022
Restricted bank balances	2	2	–	–
Acquired portfolios in the securitisation structures	892	949	–	–
Pledged assets	894	952	0	0
Contingent liabilities	105	105	105	105
Forward flow contracts	527	79	527	79
Signed but not settled acquisitions	–	–		–
Commitments	527	79	527	79

Pledged assets in the Group pertain to restricted bank balances and a portion of the portfolio book value in the Marathon SPV S.r.l. and Giove SPV S.r.l. securitisation structures pledged as security for bonds held by external investors.

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

The Group's contingent liability originates from two separate VAT cases. The Swedish Tax Agency has issued its decision in one case, and Hoist Finance expects it may take up to 3–5 years before the issue is finally settled in court. We have received a first instance judgment in the other case, and Hoist Finance expects it may take approximately 2–3 years before the issue is finally resolved.

For both cases, Hoist Finance considers it more likely that Hoist Finance will prevail in court and, accordingly, no provision has been made.

Developments 2023

review Assurance Financial

Assurance

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

Stockholm July 27 2023

Lars Wollung Chairman of the Board

Bengt Edholm Board member Camilla Philipson Watz Board member

Christopher Rees Board member

Rickard Westlund Board member

Peter Zonabend Board member

Harry Vranjes Chief Executive Officer

Developments 2023

review Assurance Financial

Quarterly

Notes

statements Definitions About

Review report

To the Board of Directors of Hoist Finance AB (publ), corporate identity number 556012-8489

Introduction

We have reviewed the condensed interim report ("the interim report") for Hoist Finance AB (publ) and Hoist Finance Group as at June 30, 2023 and for the six-month period then ended. The Board of Directors and the Managing Director are responsible for the preparation and presentation of this interim report in accordance with IAS 34 and the Swedish Annual Accounts Act for Credit Institutions and Securities Companies. Our responsibility is to express a conclusion on this interim report based on our review.

Scope of review

We conducted our review in accordance with the International Standard on Review Engagements, ISRE 2410 Review of Interim Financial Statements Performed by the Independent Auditor of the Entity. A review consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing and other generally accepted auditing standards in Sweden. The procedures performed in a review do not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the interim report is not prepared, in all material respects, in accordance with IAS 34 and the Swedish Annual Accounts Act for Credit Institutions and Securities Companies regarding the Group, and in accordance with the Swedish Annual Accounts Act for Credit Institutions and Securities Companies regarding the Parent Company.

Stockholm, the date of our electronic signature Ernst & Young AB

Daniel Eriksson Authorized Public Accountant

Quarterly review

Definitions – including Alternative Performance Measures

Alternative performance measures

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

Performance measures according to IFRS and other legislation

Average number of employees

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

Basic earnings per share

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

Diluted earnings per share

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

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

Weighted average number of shares outstanding

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

Alternative Performance Measures

Adjusted profit before tax

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

Cash EBITDA

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

C/I ratio

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

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

Direct contribution

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

Fee and commission income

Fees for providing debt management services to third parties.

Gross 180-months ERC

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

Internal funding

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

Items affecting comparability

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

Legal collection

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

Normalised return on equity

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

Portfolio acquisitions

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

Portfolio book value

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

Statement by the CEO

Developments 2023

review Assurance Financial statements Definitions About

Quarterly

Notes

Portfolio revaluation

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

Return on equity

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

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

Additional Tier 1 capital

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

Capital requirements – Pillar 1

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

Capital requirements – Pillar 2

Capital requirements beyond those stipulated in Pillar 1.

Common Equity Tier 1

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

Common Equity Tier 1 ratio

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

Leverage ratio

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

Liquidity coverage ratio (LCR)

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

Liquidity reserve

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

Net stable funding ratio (NSFR)

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

Own funds

Sum of Tier 1 capital and Tier 2 capital.

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

Tier 1 capital

Risk-weighted exposure amount

The sum of CET1 capital and AT1 capital.

Tier 1 capital ratio

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

Tier 2 capital

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

Total capital ratio

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

Non-Financial Definitions

Non-performing loans (NPLs)

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

Number of employees (FTEs)

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

SME

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

Timing effect

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

Developments 2023

review Assurance Financial

Quarterly

Notes

About Hoist Finance

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

Presentation

A combined presentation and teleconference will be held on 28 July at 09:30 AM (CEST). If you wish to participate via webcast please use the link below. https://ir.financialhearings.com/hoist-finance-q2-2023

If you wish to participate via teleconference, please register on the link below. After registration you will be provided a phone number and a conference ID to access the conference. You can ask questions verbally via the teleconference. https://conference.financialhearings.com/teleconference/?id=200898

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

Financial calendar

Interim report Q3 2023	November 1 2023
Year-end report 2023	February 7 2024

Contact

Christian Wallentin, CFO & deputy CEO Email: [email protected] Ph: +46 8 55 51 77 90

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

Hoist Finance AB (publ) (the "Company" or the "Parent") is the parent company of the Hoist Finance group of companies ("Hoist Finance"). The company is a regulated credit market company. Hence, Hoist Finance produces financial statements in accordance with the Swedish Annual Accounts Act for Credit Institutions and Securities Companies.

The information in this interim report has been published by Hoist Finance AB (publ) pursuant to the EU Market Abuse Regulation and the Securities Market Act. This information was submitted for publication through the agency of the contact person set out above, on 28 July 2023, 07.30 AM (CEST).

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

Om Hoist Finance CEO comments Developments 2023 Quarterly Review Assurance Financial statements Notes Definitions About

AI Terminal

Hoist Finance

3058_ir_2023-07-28_5d04a53e-10e4-4f35-a730-5a18d18c01f6.pdf

Interim report Q2 2023

Key highlights

Key ratios1)

SEK 23,797m

Statement by the CEO

Dear Shareholders,

Investment management

Rejuvenation

Loan Management

Capital and Funding

Regulatory update

Outlook

Developments during the quarter, Group

Operating income

Breakdown, total carrying amount of portfolio book value

Operating expenses

Net profit for the quarter

Profit/loss after tax from continuing operations, SEK m

Return on equity,%

Adjusted comparative figures of the underlying business

Items affecting comparability

Developments during January – June, Group

Operating income

Operating expenses

Net profit for the period

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

Return on equity,%

Adjusted comparative figures of the underlying business

Items affecting comparability

Other information

Balance sheet

Cash flow

Capital adequacy

Parent Company

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

Risks and uncertainties

Development of risks

Related-party transactions

Group structure

Other disclosures

Subsequent events

Review

Quarterly Review

Condensed income statement

Key ratios1)

Financial statements

Consolidated income statement

Condensed consolidated statement of comprehensive income

Consolidated balance sheet

Consolidated statement of changes in equity

Equity attributable to shareholders of Hoist Finance AB (publ)

Consolidated statement of changes in equity

Condensed consolidated cash flow statement

3) Cash and cash equivalents in cash flow statement

Parent Company

Parent Company condensed income statement

Parent company condensed statement of comprehensive income

Parent Company condensed balance sheet

Notes

Note 1 Accounting principles

Change in accounting principles 2023

Critical estimates and judgements

Note 2 Exchange rates

Note 3 Segment reporting

Operating segments

Income statement, Quarter 2, 2023

Income statement, Quarter 2, 2022

Income statement, Jan-Jun, 2023

Income statement, Jan-Jun, 2022

Income statement, full-year, 2022

Portfolio book value, 30 Jun 2023

Note 4 Portfolio book value, cont

Portfolio book value, 30 June 2022

Portfolio book value, 31 Dec 2022

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

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

Note 5 Financial instruments, cont