Interim / Quarterly Report • Jul 21, 2022
Interim / Quarterly Report
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External revenue and expenses from operations in the UK intended for sale are reported as earnings/loss from discontinued operations. Information provided in the interim report pertains to continuing operations, unless otherwise specified.
Acquired loan portfolios3)
19%
Return on equity2)
SEK 1.66
Earnings per share continuing operations
9.60% CET1 ratio2)
| SEK m | Quarter 2 2022 |
Quarter 2 2021 |
Change, % |
Jan–Jun 2022 |
Jan–Jun 2021 |
Change, % |
Full-year 2021 |
|---|---|---|---|---|---|---|---|
| Total operating income | 734 | 470 | 56 | 1,368 | 835 | 64 | 1,903 |
| Profit/loss before tax from continuing operations | 218 | –13 | N/A | 371 | –120 | N/A | –30 |
| Cash EBITDA2) | 1,683 | 1,171 | 44 | 3,158 | 2,342 | 35 | 4,767 |
| Return on equity, %2) | 19 | –7 | 26 pp | 17 | –16 | 33 pp | –5 |
| Portfolio acquisitions3) | 2,508 | 857 | >100 | 3,819 | 1,609 | >100 | 3,558 |
| Basic and diluted earnings per share from continuing operations, SEK |
1.66 | –1.57 | N/A | 2.66 | –3.32 | N/A | –2.85 |
| SEK m | 30 Jun 2022 |
31 Dec 2021 |
Change, % |
|---|---|---|---|
| Gross 180-month ERC3) | 29,615 | 32,900 | –10 |
| Acquired loan portfolios3) | 19,680 | 21,337 | –11 |
| CET1 ratio, %2) | 9.60 | 9.56 | 0.04 pp |
1) See Definitions. 2) Including discontinued operations.
3) 2022 adjusted for discontinued operations and comparative periods including discontinued operations.
Developments 2022
Financial statements
Quarterly Notes Assurance Definitions
In the second quarter, profit before tax amounted to SEK 218m, compared to a loss of SEK –13m last year. Excluding net result from financial transactions and internal transactions derived from the discontinued UK operations profit before tax amounted to SEK 111m, compared to SEK 32m the same period last year.
Portfolio investments amounted to SEK 2.5bn in the second quarter (0.9) and SEK 3.8bn (1.6) during the first half of 2022, all-time high both for a second quarter and first half year. The total portfolio of acquired loans excluding the UK portfolio under divestment is now at SEK 19.7bn compared to SEK 21.7bn including the UK portfolio in the first quarter 2022.
The high acquisition volume has been achieved despite intensive competition. We have reviewed, but not pursued, many transactions where expected returns have been below our requirements. Overall, the general non-performing loan market volumes and expected returns are at higher levels during this year compared to a year ago. Our investments this year have higher forecasted returns than in 2021. This is mainly due to that we have deepened selective client relationships, and the number of bilateral acquisitions has increased. Furthermore, we are executing a rejuvenation program focussing on continuously strengthening our pricing, valuation and loan monitoring capabilities and on a more pro-active sourcing of new loan portfolios.
Our aim is to be a leading and active NPL asset manager in Europe. An example of this ambition is the ongoing divestment of the SEK 4bn asset in UK in the first quarter, replaced by acquisitions of other UK asset better fitting our strategy, in the second quarter.
Our collection operations have also performed well during the second quarter. Better quality of the underlying portfolios and a more efficient management is mainly behind this. Our rejuvenation program includes for example better use of data for process decisions, automation through digitalisation, optimised staffing and enhanced performance culture.
The divestment of the UK operations needs approval from the British FCA (Financial Conduct Authority) and due to delays in getting an administrator to handle the issue, we are now expecting the closing to take place during the latter part of Q3 or during Q4.
Just before the second quarter ended, the anticipated decision from the EU Commission to reduce risk weights was published. This increases our CET1 ratio by 260 basis points and releases additional capital for further portfolio acquisitions. The reduction also reverts the disadvantage we, as an FSA regulated company, have had compared to our non-FSA regulated competitors since 2018 when the increased risk weights were introduced. We also successfully issued EUR 80m Tier 2 capital at an annual coupon of 6.625 per cent during the quarter. The EUR 80m Tier 2 notes due May 2027 were redeemed in full.
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Our financial objectives include a return on equity above 15 per cent and an average earnings per share growth of 15 per cent per year at a limited risk level. These objectives were met in the second quarter, but our ambition is to reach them without profit from financial instruments by continuous improvements. The current macro-economic development will likely come with both challenges and possibilities. So far, we have not experienced any material impact of the increased inflation and interest rates. The NPL industry is also in general not counter cyclical but resilient to macroeconomic changes.
Looking forward, a challenge would be a scenario combining higher cost inflation than salary inflation with higher interest rates and increased unemployment due to recession. In this scenario our customers' ability to amortise their debt may decrease. On the other hand, that scenario would likely imply that our client banks need even more support to optimise their balance sheets, and portfolio volumes and return levels would increase. Our robust funding model, being a credit institution, may also imply a possibility to be the best NPL partner to the European banks in a challenging macro scenario.
From 1 January 2023, Harry Vranjes will take on the position as CEO of Hoist Finance. Harry, with his solid track record from the credit management industry will, together with Christian Wallentin, appointed deputy CEO in addition to CFO and a vast experience from banking, form a great leadership together with the slim and agile executive management team.
It is a cliché to talk about great clients and employees. Nevertheless, I would like to do it. We have a growing number of deepened and great client bank relationships, and the joint transaction structuring and productive problem solving are really energizing and valuable. In addition, I have amazing colleagues in 13 countries with great attitude and skills, making the journey towards our targets possible. Many thanks everyone!
Best regards, Lars Wollung CEO
Developments 2022
Financial statements
Comparative figures for developments during second quarter 2022 pertain to second quarter 2021.
Operating income from continuing operations increased during the second quarter to SEK 734m (470). Net interest income totalled SEK 530m (443). Interest income acquired loan portfolios increased twelve per cent to SEK 659m (589). Hoist Finance has seen a steady increase in loan portfolio acquisitions in recent quarters, which is now beginning to be reflected in interest income. Acquisitions during Q2 2022 were the second highest quarterly acquisitions in Hoist Finance's history. Interest expense decreased to SEK –132m (–145). The decrease is attributable to positive effects from interest expenses for interest rate hedging contracts and to lower interest expenses for deposits due to lower volumes at fixed interest rates.
Impairment gains and losses totalled SEK 50m (23). The improvement is a positive effect of the period's realised collections against active forecast, somewhat offset by negative forward-looking portfolio revaluations. Collections against active forecast totalled SEK 161m (62), of which SEK 80m (26) pertains to timing effects, with all markets in line with or exceeding forecasts. Portfolio revaluations conducted during the quarter amounted to SEK –111m (–39), of which SEK –80 (–26) is attributable to timing effects. Secured kvarvarande verksamhet verksamhet
Net result from financial transactions totalled SEK 131m (–13). The change is attributable to an increase in the market value of outstanding interest rate hedging contracts. Hoist Finance manages interest rate risk by continuously hedging the Group's interest rate exposure. Hoist Finance currently has several outstanding interest rate hedging contracts denominated in GBP, PLN and EUR under which Hoist pays fixed interest. There were significant upward shifts in GBP and PLN swap curves during the first and second quarters, resulting in an increase in the outstanding interest rate hedging contracts with a total temporary effect of SEK 118m (4). Also currency hedging contracts had a positive temporary effect in the period.
| SEK m | Quarter 2 2022 |
Quarter 2 2021 |
|---|---|---|
| Interest income acquired loan portfolios | 659 | 589 |
| Other interest income | 3 | –1 |
| Interest expense | –132 | –145 |
| Net interest income | 530 | 443 |
| Impairment gains and losses | 50 | 23 |
| of which, realised collections against active forecast | 161 | 62 |
| of which, portfolio revaluations | –111 | –39 |
| Fee and commission income | 17 | 14 |
| Net result from financial transactions | 131 | –13 |
| Other operating income | 6 | 3 |
| Total operating income | 734 | 470 |
| SEK m | Quarter 2 2022 |
Quarter 2 2021 |
|---|---|---|
| Personnel expenses | –171 | –192 |
| Collection costs | –187 | –152 |
| Other administrative expenses | –143 | –127 |
| Depreciation and amortisation | –26 | –27 |
| Total operating expenses | –527 | –498 |
| Share of profit from joint ventures | 11 | 15 |
| Profit/loss before tax | 218 | –13 |
| Income tax expense | –41 | –100 |
| Net profit for the quarter from discontinued operations | 40 | 66 |
| Net profit/loss for the quarter | 217 | –47 |
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Breakdown, Secured/Unsecured acquired loan portfolios, continuing operations
1) Other countries is United Kingdom, Netherlands, Belgium, Spain and Cyprus
Statement by the CEO
Development
2022
Financial statements
Operating expenses from continuing operations totalled SEK –527m (–498). The comparative quarter includes expenses for the CEO, which are posted under administrative expenses this year. Collection costs increased during the quarter to SEK –187m (–152), of which legal collection costs increased to SEK –85m (–62). The increase is due to the fact that courts have reopened and legal collection activities can proceed. Other collection costs also increased, driven by the large increase in portfolio volumes. Administrative expenses increased to SEK –143m (–127). The change is mainly attributable to increased costs for consulting services and securitisation development. 100 150 200 250 MSEK SEK m
Net profit/loss from continuing operations totalled SEK 177m (–113) for the quarter. Income tax expense for the quarter amounted to SEK –41m (–100). An increased tax provision was reported during the quarter for an ongoing tax audit in Germany. A corresponding amount has been reversed for previously communicated tax audits regarding Polish assets, based on reduced risk pursuant to a new proposal from the Swedish Tax Agency. The comparative quarter was negatively impacted by a large tax provision. The effective tax rate was 18.8 per cent (–789.1). This differs from the nominal tax rate due mainly to the way in which companies within the Group are structured in various jurisdictions. –50 0 2022 2021 Kv3 2021 Kv2 2021 20
Profit/loss from discontinued operations totalled SEK 40m (66). Profit/loss for discontinued operations is comprised of revenue and expenses from operations to be discontinued in the UK. Net interest income decreased during the quarter to SEK 137m (156). Operating income totalled SEK 128m (156) and operating expenses totalled SEK –95m (–91). –5 0 5
Profit/loss does not include internal balances, which need to be included to reflect the discontinued operations' actual impact on earnings for the Group. The inclusion of internal transactions would decrease profit/loss by SEK –44m (–58), producing profit/loss from discontinued operations including internal transactions of SEK –4m (8). The largest internal transactions are internal interest expenses, SEK –44m (–50), and remaining staff, SEK 20m (18). Additional details on discontinued operations are presented in Note 9.
| SEK m | Quarter 2 2022 |
Quarter 2 2021 |
|---|---|---|
| Net interest income | 137 | 156 |
| Total operating income | 128 | 156 |
| Total operating expenses | –95 | –91 |
| Profit before tax | 33 | 65 |
| Income tax | 7 | 1 |
| Net profit for the quarter from discontinued operations | 40 | 66 |
| Income from internal transactions | 4 | 2 |
| Expenses from internal transactions | –48 | –60 |
| Net profit/loss for the period attributable to discontinued operations incl internal transactions |
–4 | 8 |
Profit/loss before tax from continuing operations
Return on equity
Comparative figures for developments during Jan – Jun 2022 pertain to Jan – Jun 2021.
Operating income totalled SEK 1,368m (835) during the period. Net interest income totalled SEK 1,020m (895). The increase is mainly attributable to higher interest income due to increased portfolio volumes and to improved collections. Interest expense decreased to SEK –266m (–286). The decrease is attributable to positive effects from interest expenses for interest rate hedging contracts and to lower interest expenses for deposits due to lower volumes at fixed interest rates.
Impairment gains and losses totalled SEK 76m (–86). Collections against active forecast totalled SEK 305m (154), of which SEK 177m (82) is attributable to timing effects. Adjusted for timing effects, all markets but Belgium and France exceeded active forecast. Portfolio revaluations conducted during the period amounted to SEK –229m (–240), of which SEK –177m (–82) is attributable to timing effects. Other effects are primarily attributable to revaluations of Italian and Spanish portfolios.
Net result from financial transactions totalled SEK 229m (–10). The change is attributable to an increase in the market value of outstanding interest rate hedging contracts. Hoist Finance manages interest rate risk by continuously hedging the Group's interest rate exposure. Hoist Finance currently has several outstanding interest rate hedging contracts denominated in GBP, PLN and EUR under which Hoist pays fixed interest. There were significant upward shifts in GBP and PLN swap curves during the period quarters, resulting in an increase in the outstanding interest rate hedging contracts with a total temporary effect of SEK 222m (14).
| SEK m | Jan–Jun 2022 |
Jan–Jun 2021 |
|---|---|---|
| Interest income acquired loan portfolios | 1,282 | 1,183 |
| Other interest income | 3 | –2 |
| Interest expense | –266 | –286 |
| Net interest income | 1,020 | 895 |
| Impairment gains and losses | 76 | –86 |
| of which, realised collections against active forecast | 305 | 154 |
| of which, portfolio revaluations | –229 | –240 |
| Fee and commission income | 34 | 29 |
| Net result from financial transactions | 229 | –10 |
| Other operating income | 9 | 6 |
| Total operating income | 1,368 | 835 |
| SEK m | Jan–Jun 2022 |
Jan–Jun 2021 |
|---|---|---|
| Personnel expenses | –354 | –369 |
| Collection costs | –358 | –298 |
| Other administrative expenses | –252 | –265 |
| Depreciation and amortisation | –52 | –52 |
| Total operating expenses | –1,016 | –984 |
| Share of profit from joint ventures | 19 | 29 |
| Profit/loss before tax | 371 | –120 |
| Income tax expense | –73 | –118 |
| Net profit/loss for the period from discontinued operations | 96 | –30 |
| Net profit/loss for the period | 395 | –268 |
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Statement by the CEO
Development 2022
Financial statements Quarterly Notes Assurance Definitions
Operating expenses from continuing operations totalled SEK –1,016m (–984). The increase is attributable to higher collections, which totalled SEK–358m (–298), of which legal collection costs totalled SEK –162m (–119). Covid-19-related restrictions were lifted in several markets during the period, resulting in increased legal collection costs. Collections related to these activities are expected to contribute positively to earnings in coming quarters. Administrative expenses decreased to SEK –252m (–265). The change is mainly attributable to a reduction in IT costs. 200 300 400 MSEK
Net profit/loss from continuing operations totalled SEK 298m (–238) for the period. Income tax expense for the period amounted to SEK –73m (–118) and the effective tax rate was 19.6 per cent (–98.5). An increased tax provision was reported during the period for an ongoing tax audit in Germany. A corresponding amount has been reversed for previously communicated tax audits regarding Polish assets, based on reduced risk pursuant to a new proposal from the Swedish Tax Agency. The comparative quarter was negatively impacted by a large tax provision. The difference between the effective and nominal tax rates is due mainly to the way in which companies within the Group are structured in various jurisdictions. –200 –100 Jan-jun 2021 jan-Jun 2022
Profit/loss from discontinued operations totalled SEK 96m (–30) for the period. Profit/ loss for discontinued operations is comprised of revenue and expenses from operations to be discontinued in the UK. Net interest income decreased during the period to SEK 282m (322), due mainly to exchange rate fluctuations. Operating income totalled SEK 276m (110). The increase is attributable to a major write-down of unsecured portfolios in the UK during the comparative period. Operating expenses totalled SEK –188m (–182). –10 –5 0 5 10
Profit/loss does not include internal balances, which need to be included to reflect the discontinued operations' actual impact on earnings for the Group. The inclusion of internal transactions would decrease profit/loss by SEK –93m (–111), producing profit/ loss from discontinued operations including internal transactions of SEK 3m (–141). The largest internal transactions are internal interest expenses, SEK –90m (–99). Additional details on discontinued operations are presented in Note 9.
| SEK m | Jan–Jun 2022 |
Jan–Jun 2021 |
|---|---|---|
| Net interest income | 282 | 322 |
| Total operating income | 276 | 110 |
| Total operating expenses | –188 | –182 |
| Profit before tax | 88 | –72 |
| Income tax | 8 | 42 |
| Net profit/loss for the period from discontinued operations | 96 | –30 |
| Income form internal transactions | 6 | 3 |
| Expenses from internal transactions | –99 | –114 |
| Net profit/loss for the period attributable to discontinued operations incl internal transactions |
3 | –141 |
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Profit/loss before tax from continuing operations
Return on equity
Statement by the CEO
Development 2022
Financial statements
Comparative figures for the balance sheet pertain to
31 December 2021.
| SEK m | 30 Jun 2022 |
31 Dec 2021 |
Change, % |
|---|---|---|---|
| Cash and interest-bearing securities | 5,824 | 7,558 | –23 |
| Acquired loan portfolios | 19,680 | 21,337 | –8 |
| Other assets1) | 1,351 | 1,477 | –9 |
| Assets held for sale | 4,328 | – | N/A |
| Total assets | 31,183 | 30,372 | –12 |
| Deposits from the public | 18,255 | 18,169 | 0 |
| Debt securities issued | 5,319 | 5,059 | 5 |
| Subordinated debt | 852 | 837 | 2 |
| Total interest-bearing liabilities | 24,426 | 24,065 | 2 |
| Other liabilities1) | 1,301 | 1,366 | –5 |
| Liabilities held for sale | 250 | – | N/A |
| Equity | 5,206 | 4,941 | 5 |
| Total liabilities and equity | 31,183 | 30,372 | 3 |
1) This item does not correspond to an item of the same designation in the balance sheet, but to several corresponding items.
At the close of the period, assets and liabilities held for sale in the UK are reported as separate items in the balance sheet.
The carrying amount of acquired loan portfolios totalled SEK 19,680m (21,337). Adjusted for portfolios held for sale, the carrying amount increased SEK 2,506m. Other assets decreased SEK –126m, as a result of reporting assets held for sale separately in the balance sheet. Assets held for sale totalled SEK 4,328m. For additional information, see Note 9.
Total interest-bearing debt amounted to SEK 24,426m (24,065). In Sweden, deposits from the public amounted to SEK 7,672m (8,541), of which SEK 2,896m (3,775) is attributable to fixed term deposits of one-, two- and three-year duration. Deposits from the public in Germany totalled SEK 10,477m (9,564), of which SEK 7,202m (7,201) is attributable to fixed term deposits of one- to five-year duration.
At 30 June 2022, the outstanding bond debt totalled SEK 6,171m (5,896), of which SEK 5,319m (5,059) was comprised of senior unsecured liabilities. The change is mainly attributable to exchange rate effects and accrued interest, as well as to bonds issued in the securitisation structure. During the period Hoist Finance redeemed in full the EUR 80m Tier 2 notes due in May 2027 and issued new Tier 2 notes amounting to EUR 80m at an annual coupon of 6.625 per cent and a maturity of 10.25 years.
Other liabilities totalled SEK 1,301m (1,366). Liabilities attributable to assets held for sale during the period are reported separately, which reduces other liabilities. This is offset by an increase in collateral received for currency derivatives. Liabilities attributable to assets held for sale totalled SEK 250m. Equity totalled SEK 5,206m (4,941), attributable to net profit for the quarter and to payment of interest on Additional Tier 1 capital contributions.
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| SEK m | Jan–Jun 2022 |
Jan–Jun 2021 |
Change, % |
|---|---|---|---|
| Cash flow from operating activities |
2,774 | 1,502 | 85 |
| Cash flow from investing activities |
–3,049 | –1,669 | –83 |
| Cash flow from financing activities |
–440 | –606 | 27 |
| Cash flow for the period | –715 | –773 | 8 |
Cash flow from operating activities totalled SEK 2,774m, as compared with SEK 1,502m during Jan–Jun 2021. Amortisation of acquired loan portfolios increased over the comparative period and totalled SEK 2,466m (1,781).
Cash flow from investing activities totalled SEK –3,049m (–1,669). Portfolio acquisition activity was high during the period, totalling SEK –3,819m (–1,609).
Cash flow from financing activities totalled SEK –440m (–606). Net outflow from deposits from the public totalled SEK –341m (–552).
Total cash flow for the quarter amounted to SEK –715m, as compared with SEK –773m for Jan-Jun 2021.
Information on cash flow for assets and liabilities held for sale is presented in Note 9.
Comparative figures for capital adequacy pertain to 31 December 2021. At the close of the period the CET1 ratio was 9.60 per cent (9.56) for the Hoist Finance consolidated situation.
CET1 capital totalled SEK 3,480m (3,317). The risk-weighted exposure amount has increased to SEK 36,234m (34,710) since year-end.
The CET1 ratio has increased marginally since 31 December 2021. The inclusion of net profit in own funds is the largest contributing factor for this increase. Net profit contributed to an increase of 0.83 per cent. Portfolio amortisations lowered the credit risk and contributed to a 0.56 per cent increase in the ratio. The change in other comprehensive income had a negative impact of –0.20 per cent. Currency risk in the portfolios further reduced the CET1 ratio by –0.16 per cent. Acquisition of new portfolios increased the credit risk and lowered the CET1 ratio by –0.83 per cent.
Total capital amounted to SEK 5,439m (5,260) at the close of period and the total capital ratio was 15.01 per cent (15.16).
All capital ratios meet both internal and regulatory requirements.
Statement by the CEO
Development 2022
Financial statements
Quarterly Notes Assurance Definitions
The exposure in the UK remains included in the balance sheet to meet capital requirements and is covered through the transaction date, which is expected to take place during third or fourth quarter 2022.
For Parent Company the CET1 ratio was 10.95 per cent (11.71).
Comparative figures for the Parent Company pertain to second quarter 2021.
Net interest income for the Parent Company totalled SEK 303m (249) during the second quarter, due primarily to a higher volume of portfolio acquisitions, including a major acquisition in the UK market during the second quarter.
Net result from financial transactions totalled SEK 58m (–11). The increase is mainly attributable to a positive increase in the market value of interest rate hedging contracts.
Operating expenses were somewhat higher and amounted to SEK –321m (–309). Lower personnel expenses were mitigated by increased collection costs due to that courts have reopened, and increased other administrative expenses mainly due to CEO costs previously posted in personnel expenses and higher costs for securitisation development. An increasing portion of the Group's purchases is now being handled by Hoist Finance Procurement AB, which continues to have an impact via reduced costs in the Parent Company. Profit before credit losses totalled SEK 87m (11).
Impairment gains and losses totalled SEK 19m (–4), with the major part pertaining to the difference between projected and actual collections, portfolio revaluations and credit reserves for performing loans. During the quarter there was no write-down requirement for shares in subsidiaries (SEK –71m).
Profit/loss before tax totalled SEK 126m (–45). Tax expense totalled SEK –23m (–101) during the second quarter, with the comparative quarter negatively impacted by a large tax provision. An increased tax provision was reported during the quarter for an ongoing tax audit in Germany. A corresponding amount has been reversed for previously communicated tax audits regarding Polish assets, based on reduced risk pursuant to a new proposal from the Swedish Tax Agency. The effective tax rate was 18.3 per cent (–222.6). The difference between the effective and nominal tax rates is due mainly to non-taxable revenues from hedge accounting. Comprehensive income for the quarter amounted to SEK 103m (–146).
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 entail consolidated tax issues relating to subsidiaries in several jurisdictions. The Group is therefore exposed
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to potential tax risks arising from varying interpretations and applications of existing laws, treaties, regulations and guidance.
As previously communicated, the European Commission' action plan for non-performing loans will serve to improve Hoist Finance's capital adequacy, as the Company will be able to equalise the discount in the purchase price with a write-down when calculating risk weight. If the discount exceeds 20 per cent, the risk weight for the loan will be 100 per cent rather than the previous 150 per cent. The change, which comes into effect as from 11 July 2022, will increase the CET1 capital ratio by approximately 260 bps.
Collection performance for credit portfolios was in line with or exceeded forecasts during the quarter. In order to further diversify the Company's assets in a positive way from a risk perspective, Hoist Finance continues to assess new opportunities to acquire portfolios of non-performing secured loans.
Hoist Finance has entered into an agreement to sell its operation in the UK. The transaction, which has not yet been finalised and is pending regulatory approval, is proceeding according to plan. Our assessment is that the transaction will be concluded, after which Hoist Finance's capital position will be improved as the operation is being sold above carrying amount and the risk-weighted exposure amount will be reduced. Credit risk and regulatory risk will also be reduced. Regulatory risk will be reduced due to the fact that the UK is a tightly regulated market with country-specific requirements, and the uncertainties caused by Brexit will be removed.
In terms of the impact of the current geopolitical situation on the credit risk in Hoist Finance's NPL portfolios, the war in Ukraine has not had any significant impact to date on the credit risk in Hoist Finance's revenues from NPL portfolios. We do not operate in Russia or Ukraine. While any negative impact on the economy over the long term may affect Hoist Finance along with society at large, we have to date not seen any such impact as regards revenues from NPL portfolios. Neither has the increasing rate of inflation along with higher interest rates had an impact on revenues from NPL portfolios during the quarter. We are closely monitoring developments to analyse how a weakened economy over a long period may affect risk in the NPL credit portfolios.
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. Hoist Finance employees are gradually returning to office work. Flexible working methods, a combination of office and at-home work, are expected to continue in future. This is not deemed to affect operational risks to any significant degree. The level of operational risks is therefore deemed to be unchanged from previous quarters.
Statement by the CEO
Development 2022
Financial statements
Quarterly Notes Assurance Definitions
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 was lower during the quarter, in line with our goal to adjust the reserve somewhat, and 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).
The nature and scope of related-party transactions remain unchanged from 31 December 2021 and are described in the Annual Report.
Hoist Finance AB (publ), corporate identity number 556012-8489, is the Parent Company in the Hoist Finance Group. Hoist Finance is a Swedish publicly traded limited liability company headquartered in Stockholm, Sweden. Hoist Finance AB (publ) has been listed on NASDAQ Stockholm since March 2015.
Hoist Finance AB (publ) 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.
For a more detailed description of the Group's legal structure, please refer to the 2021 Annual Report.
No significant events occurred after the balance sheet date.
This interim report has been reviewed by the Company's auditors.
| SEK m | Quarter 2 2022 |
Quarter 1 2022 |
Quarter 4 2021 |
Quarter 3 2021 |
Quarter 2 2021 |
|---|---|---|---|---|---|
| Net interest income | 530 | 490 | 461 | 455 | 443 |
| Total operating income | 734 | 635 | 580 | 489 | 469 |
| Total operating expenses | –527 | –489 | –524 | –486 | –497 |
| Net operating profit/loss | 207 | 146 | 56 | 3 | –28 |
| Profit/loss before tax from continuing operations | 218 | 155 | 68 | 23 | –13 |
| Net profit/loss from discontinued operations | 40 | 56 | 16 | 60 | 66 |
| Net profit/loss | 217 | 179 | 77 | 75 | –48 |
| SEK m | Quarter 2 2022 |
Quarter 1 2022 |
Quarter 4 2021 |
Quarter 3 2021 |
Quarter 2 2021 |
|---|---|---|---|---|---|
| Cash EBITDA2) | 1,683 | 1,475 | 1,296 | 1,132 | 1,171 |
| C/I ratio, % | 71 | 76 | 89 | 95 | 103 |
| Return on equity, %2) | 19 | 16 | 6 | 5 | –7 |
| Portfolio acquisitions3) | 2,508 | 1,311 | 723 | 1,226 | 857 |
| Basic and diluted earnings per share from continuing operations, SEK | 1.66 | 1.00 | 0.68 | –0.20 | –1.57 |
| Items affecting comparability | – | – | – | – | –12 |
| SEK m | 30 Jun 2022 |
31 Mar 2022 |
31 Dec 2021 |
30 Sep 2021 |
30 Jun 2021 |
|---|---|---|---|---|---|
| Gross 180-month ERC3) | 29,615 | 26,904 | 32,900 | 32,643 | 32,396 |
| Acquired loan portfolios3) | 19,680 | 17,724 | 21,337 | 21,423 | 21,059 |
| Total capital ratio, %2) | 15.01 | 15.63 | 15.16 | 15.57 | 15.47 |
| CET1 ratio, %2) | 9.60 | 9.90 | 9.56 | 9.78 | 9.70 |
| Number of employees (FTEs)2) | 1,478 | 1,496 | 1,544 | 1,579 | 1,575 |
1) See Definitions and Note 9 for additional details.
2) Including discontinued operations. 3) 2022 adjusted for discontinued operations and comparative figures including discontinued operations.
For details on items affecting comparability for previous quarters, please refer to the Financial Fact Book: https://www.hoistfinance.com/investors/financial-information.
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Portfolio acquisitions
Statement by the CEO
Development 2022
Financial statements
| SEK m | Note | Quarter 2 2022 |
Quarter 2 2021 |
Jan–Jun 2022 |
Jan–Jun 2021 |
Full-year 2021 |
|---|---|---|---|---|---|---|
| Interest income acquired loan portfolios calculated using the effective interest rate method |
659 | 589 | 1,282 | 1,183 | 2,387 | |
| Other interest income 1) | 3 | –1 | 3 | –2 | –2 | |
| Interest expense | –132 | –145 | –266 | –286 | –573 | |
| Net interest income | 530 | 443 | 1,020 | 895 | 1,812 | |
| Impairment gains and losses | 4 | 50 | 23 | 76 | –86 | –69 |
| Fee and commission income | 17 | 14 | 34 | 30 | 62 | |
| Net result from financial transactions | 131 | –13 | 229 | –10 | 83 | |
| Other operating income | 6 | 3 | 9 | 6 | 15 | |
| Total operating income | 3 | 734 | 470 | 1,368 | 835 | 1,903 |
| Personnel expenses | –171 | –192 | –354 | –369 | –717 | |
| Collection costs | –187 | –152 | –358 | –298 | –640 | |
| Other administrative expenses | –143 | –127 | –252 | –265 | –519 | |
| Depreciation and amortisation of tangible and intangible assets | –26 | –27 | –52 | –52 | –118 | |
| Total operating expenses | 3 | –527 | –498 | –1,016 | –984 | –1,994 |
| Net operating profit/loss | 207 | –28 | 351 | –149 | –91 | |
| Share of profit from joint ventures | 3 | 11 | 15 | 19 | 29 | 61 |
| Profit/loss before tax from continuing operations | 3 | 218 | –13 | 371 | –120 | –30 |
| Income tax expense | –41 | –100 | –73 | –118 | –134 | |
| Net profit from discontinued operations | 9 | 40 | 66 | 96 | –30 | 47 |
| Net profit/loss | 217 | –47 | 395 | –268 | –117 | |
| Profit/loss attributable to: | ||||||
| Owners of Hoist Finance AB (publ) | 189 | –74 | 334 | –326 | –207 | |
| Additional Tier 1 capital holders | 28 | 26 | 61 | 58 | 90 | |
| Basic and diluted earnings per share continuing operations, SEK | 1.66 | –1.57 | 2.66 | –3.32 | –2.85 | |
| Basic and diluted earnings per share discontinued operations, SEK | 0.45 | 0.74 | 1.08 | –0.34 | 0.53 | |
| Basic and diluted earnings per share total, SEK | 2.11 | –0.84 | 3.74 | –3.66 | –2.32 |
1) Of which interest income calculated using the effective interest method amount to SEK 2.5m (0.1) during quarter 2, SEK 3.4m (–0.6) during Jan-Jun and SEK –0,1m during full-year 2021.
Financial statements Quarterly Notes Assurance Definitions
| SEK m | Quarter 2 2022 |
Quarter 2 2021 |
Jan–Jun 2022 |
Jan–Jun 2021 |
Full-year 2021 |
|---|---|---|---|---|---|
| NET PROFIT/LOSS FOR THE PERIOD | 217 | –47 | 395 | –268 | –117 |
| Other comprehensive income | |||||
| Items that will not be reclassified to profit or loss | |||||
| Revaluation of defined benefit pension plan | – | – | – | – | 3 |
| Tax attributable to items that will not be reclassified to profit or loss | – | – | – | – | – |
| Total items that will not be reclassified to profit or loss | – | – | – | – | 3 |
| Items that may be reclassified subsequently to profit or loss | |||||
| Translation difference, foreign operations | 32 | 21 | 30 | 20 | 17 |
| Hedging of currency risk in foreign operations | –100 | –18 | –130 | –21 | –42 |
| Transferred to the income statement during the year | 1 | 1 | 2 | 2 | 3 |
| Tax attributable to items that may be reclassified to profit or loss | 21 | 3 | 27 | 4 | 9 |
| Total items that may be reclassified subsequently to profit or loss | –46 | 7 | –71 | 5 | –13 |
| Other comprehensive income for the period | –46 | 7 | –71 | 5 | –10 |
| Total comprehensive income for the period | 171 | –40 | 324 | –264 | –127 |
| Profit/loss attributable to: | |||||
| Owners of Hoist Finance AB (publ) | 143 | –66 | 263 | –322 | –217 |
| Additional Tier 1 capital holders | 28 | 26 | 61 | 58 | 90 |
review
| SEK m | 30 Jun 2022 |
30 Jun 2021 |
31 Dec 2021 |
|---|---|---|---|
| ASSETS | |||
| Cash | 0 | 0 | 0 |
| Treasury bills and Treasury bonds | 1,045 | 2,466 | 1,576 |
| Lending to credit institutions | 2,065 | 1,730 | 2,480 |
| Lending to the public | 2 | 5 | 3 |
| Acquired loan portfolios 4 |
19,680 | 21,059 | 21,337 |
| Bonds and other securities | 2,714 | 4,118 | 3,502 |
| Shares and participations in joint ventures | 138 | 156 | 155 |
| Intangible assets | 342 | 375 | 360 |
| Tangible assets | 166 | 232 | 205 |
| Other assets | 486 | 408 | 490 |
| Deferred tax assets | 86 | 142 | 160 |
| Prepayments and accrued income | 131 | 176 | 104 |
| Assets held for sale 9 |
4,328 | – | – |
| Total assets | 31,183 | 30,867 | 30,372 |
| LIABILITIES AND EQUITY | |||
| Liabilities | |||
| Deposits from the public | 18,255 | 17,447 | 18,169 |
| Debt securities issued | 5,319 | 6,476 | 5,059 |
| Tax liabilities | 143 | 207 | 189 |
| Other liabilities | 820 | 634 | 797 |
| Deferred tax liabilities | 89 | 129 | 127 |
| Accrued expenses and deferred income | 191 | 259 | 194 |
| Provisions | 58 | 64 | 59 |
| Subordinated debts | 852 | 813 | 845 |
| Liabilities held for sale 9 |
250 | – | – |
| Total liabilities | 25,978 | 26,029 | 25,431 |
| Equity | |||
| Additional Tier 1 capital holders | 1,106 | 1,106 | 1,106 |
| Share capital | 30 | 30 | 30 |
| Other contributed equity | 2,275 | 2,275 | 2,275 |
| Reserves | –465 | –376 | –394 |
| Retained earnings including profit/loss for the period | 2,259 | 1,803 | 1,924 |
| Total equity | 5,205 | 4,838 | 4,941 |
| Total liabilities and equity | 31,183 | 30,867 | 30,372 |
Developments 2022
Financial statements Quarterly Notes Assurance Definitions
review
| 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 | 1106 | 5,205 |
1) For more information on share-based payments, see Hoist Finance Annual report 2021.
| 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 2021 | 30 | 2,275 | –443 | 62 | 2,128 | 4,052 | 1,106 | 5,158 |
| Comprehensive income for the period | ||||||||
| Profit/loss for the period | –327 | –327 | 58 | –269 | ||||
| Other comprehensive income | –15 | 20 | 5 | 5 | ||||
| Total comprehensive income for the period | –15 | 20 | –327 | –322 | 58 | –264 | ||
| Transactions reported directly in equity |
||||||||
| Interest paid on Additional Tier 1 capital | –58 | –58 | ||||||
| Share-based payments | 2 | 2 | 2 | |||||
| Total transactions reported directly in equity |
2 | 2 | –58 | –56 | ||||
| Closing balance 30 Jun 2021 | 30 | 2,275 | –458 | 82 | 1,803 | 3,732 | 1,106 | 4,838 |
| 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 2021 | 30 | 2,275 | –443 | 62 | 2,128 | 4,052 | 1,106 | 5,158 |
| Comprehensive income for the period | ||||||||
| Profit/loss for the period | –207 | –207 | 90 | –117 | ||||
| Other comprehensive income | –30 | 17 | 3 | –10 | –10 | |||
| Total comprehensive income for the period | –30 | 17 | –204 | –217 | 90 | –127 | ||
| Transactions reported directly in equity |
||||||||
| Interest paid on Additional Tier 1 capital | –90 | –90 | ||||||
| Share-based payments | 0 | 0 | 0 | |||||
| Total transactions reported directly in equity |
0 | 0 | –90 | –90 | ||||
| Closing balance 31 Dec 2021 | 30 | 2,275 | –473 | 79 | 1,924 | 3,835 | 1,106 | 4,941 |
Statement by the CEO
review
Developments 2022
Financial statements
Quarterly Notes Assurance Definitions
| SEK m | Quarter 2 2022 |
Quarter 2 2021 |
Jan–Jun 2022 |
Jan–Jun 2021 |
Full-year 2021 |
|---|---|---|---|---|---|
| Profit/loss before tax | 250 | 52 | 459 | –193 | –39 |
| – of which, paid-in interest | 789 | 742 | 1,562 | 1,501 | 3,002 |
| – of which, interest paid | –156 | –172 | –220 | –253 | –530 |
| Adjustment for other items not included in cash flow | –361 | –21 | –206 | 397 | 262 |
| Realised result from divestment of loan portfolios | – | – | – | – | –1 |
| Realised result from divestment of shares and participations in joint ventures |
–20 | –20 | –38 | –35 | –66 |
| Income tax paid/received | –16 | –22 | –36 | –52 | –100 |
| Amortisations on acquired loan portfolios | 1,341 | 924 | 2,466 | 1,781 | 3,685 |
| Increase/decrease in other assets and liabilities | –162 | 17 | 129 | –396 | –260 |
| Cash flow from operating activities | 1,032 | 930 | 2,774 | 1,502 | 3,481 |
| Acquired loan portfolios | –2,508 | –857 | –3,819 | –1,609 | –3,558 |
| Investments in bonds and other securities | 0 | –711 | –402 | –827 | –1,109 |
| Divestments of bonds and other securities | 1,025 | 409 | 1,153 | 790 | 1,691 |
| Other cash flows from investing activities | 12 | –17 | 19 | –23 | –20 |
| Cash flow from investing activities | –1,471 | –1,176 | –3,049 | –1,669 | –2,996 |
| Deposits from the public | –493 | 912 | –341 | –552 | 117 |
| Debt securities issued | 857 | 29 | 864 | 59 | 94 |
| Repurchase and repayment of Debt securities issued | –857 | –17 | –877 | –34 | –1,517 |
| Interest paid on Additional Tier 1 capital | –28 | –27 | –61 | –58 | –90 |
| Amortisation of lease liabilities | –12 | –9 | –25 | –21 | –52 |
| Cash flow from financing activities | –533 | 888 | –440 | –606 | –1,448 |
| Cash flow for the period | –972 | 642 | –715 | –773 | –963 |
| Cash at beginning of the period | 3,904 | 3,205 | 3,625 | 4,576 | 4,576 |
| Translation difference | 60 | –8 | 82 | 36 | 12 |
| Cash at end of the period2) | 2,992 | 3,839 | 2,992 | 3,839 | 3,625 |
1) Include discontinued operations
| SEK m | 30 Jun 2022 | 30 Jun 2021 | 31 Dec 2021 |
|---|---|---|---|
| Cash | 0 | 0 | 0 |
| Treasury bills and Treasury bonds | 1,045 | 2,466 | 1,576 |
| Lending to credit institutions | 2,283 | 1,730 | 2,480 |
| excl. lending to credit institutions in securitisation vehicles | –336 | –271 | –301 |
| excl. pledged bank balances | – | –86 | –130 |
| Total cash and cash equivalents in cash flow statement | 2,992 | 3,839 | 3,625 |
| SEK m | Quarter 2 2022 |
Quarter 2 2021 |
Jan–Jun 2022 |
Jan–Jun 2021 |
Full-year 2021 |
|---|---|---|---|---|---|
| Interest income | 425 | 381 | 800 | 805 | 1,528 |
| Interest expense | –121 | –131 | –243 | –259 | –518 |
| Net interest income | 304 | 250 | 557 | 546 | 1,010 |
| Dividends received | – | – | – | – | – |
| Net result from financial transactions | 58 | –11 | 125 | –8 | 68 |
| Other operating income | 47 | 82 | 97 | 151 | 276 |
| Total operating income | 409 | 321 | 779 | 689 | 1,354 |
| General administrative expenses | –320 | –298 | –576 | –605 | –1,206 |
| Depreciation and amortisation of tangible and intangible assets | –3 | –13 | –28 | –26 | –68 |
| Total operating expenses | –323 | –311 | –604 | –631 | –1,273 |
| Profit before credit losses | 86 | 10 | 175 | 58 | 81 |
| Impairment gains and losses on acquired loan portfolios | 19 | –4 | 43 | –15 | 7 |
| Amortisation of other financial fixed assets | – | –71 | –35 | –71 | –72 |
| Share of profit from joint ventures | 21 | 20 | 39 | 34 | 66 |
| Profit/loss before tax | 126 | –45 | 222 | 6 | 82 |
| Appropriations | – | – | – | – | –8 |
| Taxes | –23 | –101 | –49 | –116 | –127 |
| Net profit/loss | 103 | –146 | 173 | –110 | –53 |
| SEK m | Quarter 2 2022 |
Quarter 2 2021 |
Jan–Jun 2022 |
Jan–Jun 2021 |
Full-year 2021 |
|---|---|---|---|---|---|
| Net profit/loss | 103 | –146 | 173 | –110 | –53 |
| Other comprehensive income | |||||
| Items that may be reclassified subsequently to profit or loss | |||||
| Translation difference, foreign operations | 0 | 0 | 0 | 0 | 1 |
| Tax attributable to items that may be reclassified to profit or loss | – | 0 | – | 0 | 0 |
| Total items that may be reclassified subsequently to profit or loss | 0 | 0 | 0 | 0 | 1 |
| Other comprehensive income for the period | 0 | 0 | 0 | 0 | 1 |
| Total comprehensive income for the period | 103 | –146 | 173 | –110 | –52 |
Statement by the CEO
Developments 2022
Financial statements Quarterly Notes Assurance Definitions
review
| SEK m | 30 Jun 2022 |
30 Jun 2021 |
31 Dec 2021 |
|---|---|---|---|
| ASSETS | |||
| Cash | 2,374 | 3,360 | 3,043 |
| Acquired loan portfolios | 8,981 | 6,483 | 6,360 |
| Receivables, Group companies | 14,867 | 15,168 | 15,168 |
| Bonds and other securities | 2,714 | 4,118 | 3,502 |
| Shares in subsidiaries and joint ventures | 908 | 842 | 870 |
| Tangible and intangible fixed assets | 200 | 243 | 224 |
| Other assets | 512 | 335 | 380 |
| Total assets | 30,556 | 30,549 | 29,547 |
| LIABILITIES AND EQUITY | |||
| Liabilities | |||
| Deposits from the public | 18,255 | 17,447 | 18,169 |
| Debt securities issued | 4,827 | 6,044 | 4,605 |
| Other liabilities | 1,605 | 1,368 | 1,028 |
| Provisions | 35 | 36 | 35 |
| Subordinated debts | 852 | 813 | 837 |
| Total liabilities and provisions | 25,574 | 25,708 | 24,675 |
| Untaxed reserves | 285 | 277 | 285 |
| Equity | |||
| Restricted equity | 115 | 115 | 114 |
| Total restricted equity | 115 | 115 | 114 |
| Non-restricted equity | |||
| Additional Tier 1 capital holders | 1,106 | 1,106 | 1,106 |
| Non-restricted equity attributable to shareholders | 3,476 | 3,343 | 3,367 |
| Total unrestricted equity | 4,582 | 4,449 | 4,473 |
| Total equity | 4,697 | 4,564 | 4,587 |
| TOTAL LIABILITIES AND EQUITY | 30,556 | 30,549 | 29,547 |
Developments 2022
Financial statements Quarterly Notes Assurance Definitions
review
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.
No IFRS or IFRIC Interpretations that came into effect in 2022 had any significant impact on the Group's financial reports or capital adequacy.
For Q1 2022 Hoist Finance has classified the UK subsidiary as a disposal group available for sale, the accounting principles for which are detailed below.
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 2021 annual report.
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 2021 Annual Report.
The carrying amount of disposal group classified as held for sale will be recovered primarily through sale, not through use. A disposal group is classified as held for sale if it is available for immediate sale in its present condition and at normal terms, and when it is highly probable that such a sale will take place.
Assets of a disposal group available for sale are reported separately from other assets in the balance sheet. Liabilities of a disposal group available for sale are reported separately from other liabilities in the balance sheet.
The disposal group is reported at book value or fair value, whichever is lower, less sales costs. This may result in a write-down of the disposal group.
A discontinued operation is part of a company's operations that represents an independent business segment or a significant operation within a specific geographic area. An operation is classified as a discontinued operation when it is sold, or at an earlier point of time when the operation meets the criteria to be classified as held for sale.
Net profit/loss from discontinued operations is reported as a separate item in the consolidated statement of comprehensive income. When an operation is classified as discontinued, comparative figures for the previous year are adjusted to reflect discontinuation of the operation as from the beginning of the comparative year.
Pursuant to RFR 2, the discontinued operation is not accounted for separately in the Parent Company's financial statements; this information is presented in a note.
From 2022, Hoist Finance has merged the Secured and Performing segments to provide additional details on its operations based on the segments that Hoist Finance monitors internally. Operations are accordingly presented in two segments, Unsecured and Secured, as of the first quarter 2022. Comparative figures have been adjusted to facilitate understanding of the new classification. See Note 3 "Segment reporting" for additional information on the operating segments.
| Quarter 2 2022 |
Quarter 2 2021 |
Full-year 2021 |
|
|---|---|---|---|
| 1 EUR = SEK | |||
| Income statement (average) | 10.4750 | 10.1269 | 10.1435 |
| Balance sheet (at end of the period) | 10.6801 | 10.1249 | 10.2269 |
| 1 GBP = SEK | |||
| Income statement (average) | 12.4127 | 11.6634 | 11.7944 |
| Balance sheet (at end of the period) | 12.3500 | 11.7663 | 12.1790 |
| Quarter 2 2022 |
Quarter 2 2021 |
Full-year 2021 |
|
|---|---|---|---|
| 1 PLN = SEK | |||
| Income statement (average) | 2.2615 | 2.2328 | 2.2231 |
| Balance sheet (at end of the period) | 2.2910 | 2.2443 | 2.2279 |
| 1 RON=SEK | |||
| Income statement (average) | 2.1179 | 2.0662 | 2.0614 |
| Balance sheet (at end of the period) | 2.1592 | 2.0546 | 2.0676 |
About Hoist Finance
Statement by the CEO
Developments review
2022
Financial statements
Quarterly Notes Assurance Definitions
Segment reporting has been prepared based on the manner in which executive management monitors operations. From 1 January 2022, Hoist Finance has merged the Secured and Performing segments to more clearly present its operations based on the segments that Hoist Finance monitors internally. Comparative figures for 2021 have been restated for the adjusted business areas.
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 Group items.
Total operating expenses also follow the statutory account preparation for the Group's income statement, but are distributed between direct and indirect expenses. Direct expenses are expenses directly attributable to, while indirect expenses are expenses from central and support functions that are related to the business lines.
Group items pertains to revenue and expenses for the Group's corporate financial transactions, expenses for deposits from the public, and other operating expenses.
With respect to the balance sheet, only acquired loan portfolios are monitored. Other assets and liabilities are not monitored on a segment-by-segment basis.
| Of which discontinued |
Total | ||||
|---|---|---|---|---|---|
| SEK m | Unsecured | operations Unsecured3) |
Secured4) | Group items |
continuing operations |
| Total operating income | 594 | 128 | 95 | 173 | 734 |
| of which, interest expense | –139 | – | –27 | 34 | –132 |
| Operating expenses | |||||
| Direct expenses1) | –309 | –45 | –42 | 0 | –306 |
| Indirect expenses1) | –230 | –50 | –38 | –3 | –221 |
| Total operating expenses | –539 | –95 | –80 | –3 | –527 |
| Share of profit from joint ventures | 11 | 11 | |||
| Profit/loss before tax | 66 | 33 | 15 | 170 | 218 |
| Key ratios2) | |||||
| Direct contribution | 285 | 83 | 53 | 173 | 428 |
| Acquired loan portfolios | 18,853 | 3,885 | 4,712 | – | 19,680 |
1) Direct expenses are expenses directly attributable to the Business line. Indirect expenses are expenses related to support functions.
2) See Definitions.
3) Discontinued operation excludes internal transactions, internal interest expense for discontinued operation is SEK –5m. See Note 9.
4) Discontinued operation includes an amount of SEK –0.05 attributable to Secured pertaining to direct costs that are not broken down in the segment, but are reported in "of which, discontinued operation".
Statement by the CEO
Developments 2022
Financial statements Quarterly Notes Assurance Definitions
| SEK m | Unsecured | Of which discontinued operations Unsecured3) |
Secured4) | Group items |
Total continuing operations |
|---|---|---|---|---|---|
| Total operating income | 1,155 | 276 | 189 | 300 | 1,368 |
| of which, interest expense | –274 | – | –51 | 59 | –266 |
| Operating expenses | |||||
| Direct expenses1) | –602 | –89 | –76 | 0 | –589 |
| Indirect expenses1) | –445 | –99 | –75 | –6 | –427 |
| Total operating expenses | –1,047 | –188 | –151 | –6 | –1 016 |
| Share of profit from joint ventures | 19 | 19 | |||
| Profit/loss before tax | 127 | 88 | 38 | 294 | 371 |
| Key ratios2) | |||||
| Direct contribution | 553 | 187 | 113 | 300 | 779 |
| Acquired loan portfolios | 18,853 | 3,885 | 4,712 | – | 19,680 |
1) Direct expenses are expenses directly attributable to the Business line. Indirect expenses are expenses related to support functions.
2) See Definitions.
3) Discontinued operation excludes internal transactions, internal interest expense for discontinued operation is SEK 3m. See Note 9.
4) Discontinued operation includes an amount of SEK –0.15m attributable to Secured pertaining to direct costs that are not broken down in the segment, but are reported in "of which, discontinued operation Unsecured".
| SEK m | Unsecured | Of which discontinued operations Unsecured3) |
Secured4) | Group items |
Total continuing operations |
|---|---|---|---|---|---|
| Total operating income | 536 | 156 | 94 | –4 | 470 |
| of which, interest expense | –132 | –19 | 6 | –145 | |
| Operating expenses | |||||
| Direct expenses1) | –274 | –44 | –33 | 0 | –263 |
| Indirect expenses1) | –239 | –47 | –39 | –4 | –235 |
| Total operating expenses | –513 | –91 | –72 | –4 | –498 |
| Share of profit from joint ventures | 15 | 15 | |||
| Profit/loss before tax | 38 | 65 | 22 | –8 | –13 |
| Key ratios2) | |||||
| Direct contribution | 262 | 112 | 61 | –4 | 207 |
| Acquired loan portfolios5) | 16,923 | – | 4,136 | – | 21,059 |
1) Direct expenses are expenses directly attributable to the Business line. Indirect expenses are expenses related to support functions.
2) See Definitions.
3) Discontinued operation excludes internal transactions, internal interest expense for discontinued operation is SEK 8m. See Note 9. 4) Discontinued operation includes an amount of SEK 0.4m attributable to Secured pertaining to direct costs that are not broken down in the segment, but are reported in "of which,
discontinued operation Unsecured".
5) Acquired loan portfolios Unsecured includes portfolios attributable to assets held for sale.
| Of which discontinued operations |
Group | Total continuing |
|||
|---|---|---|---|---|---|
| SEK m | Unsecured | Unsecured3) | Secured4) | items | operations |
| Total operating income | 753 | 110 | 176 | 16 | 835 |
| of which, interest expense | –266 | – | –39 | 19 | –286 |
| Operating expenses | |||||
| Direct expenses1) | –537 | –89 | –63 | 0 | –511 |
| Indirect expenses1) | –479 | –93 | –80 | –7 | –473 |
| Total operating expenses | –1,016 | –182 | –143 | –7 | –984 |
| Share of profit from joint ventures | 29 | 0 | 0 | 29 | |
| Profit/loss before tax | –234 | –72 | 33 | 9 | –120 |
| Key ratios2) | |||||
| Direct contribution | 216 | 21 | 113 | 16 | 324 |
| Acquired loan portfolios5) | 16,923 | – | 4,136 | – | 21,059 |
1) Direct expenses are expenses directly attributable to the Business line. Indirect expenses are expenses related to support functions.
2) See Definitions. 3) Discontinued operation excludes internal transactions, internal interest expense for discontinued operation is SEK –141m. See Note 9.
4) Discontinued operation includes an amount of SEK –0.8m attributable to Secured pertaining to direct costs that are not broken down in the segment, but are reported in "of which,
discontinued operation Unsecured". 5) Acquired loan portfolios Unsecured includes portfolios attributable to assets held for sale.
| SEK m | Unsecured | Of which discontinued operations Unsecured3) |
Secured4) | Group items |
Total continuing operations |
|---|---|---|---|---|---|
| Total operating income | 1,762 | 352 | 359 | 134 | 1,903 |
| of which, interest expense | –527 | – | –82 | 34 | –575 |
| Operating expenses | |||||
| Direct expenses1) | –1,099 | –164 | –130 | 0 | –1,065 |
| Indirect expenses1) | –944 | –196 | –159 | –22 | –929 |
| Total operating expenses | –2,043 | –360 | –289 | –22 | –1,994 |
| Share of profit from joint ventures | 61 | 61 | |||
| Profit/loss before tax | –220 | –8 | 70 | 112 | –30 |
| Key ratios2) | |||||
| Direct contribution | 663 | 188 | 229 | 134 | 838 |
| Acquired loan portfolios5) | 16,802 | – | 4,535 | – | 21,337 |
1) Direct expenses are expenses directly attributable to the Business line. Indirect expenses are expenses related to support functions.
2) See Definitions.
3) Discontinued operation excludes internal transactions, internal interest expense for discontinued operation is SEK –169m. See Note 9.
4) Discontinued operation includes an amount of SEK –1.7m attributable to Secured pertaining to direct costs that are not broken down in the segment, but are reported in "of which,
discontinued operation Unsecured". 5) Acquired loan portfolios Unsecured includes portfolios attributable to assets held for sale.
| Loss allowance | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| MSEK | Gross carrying amount |
Acquired loan portfolios related to the disposal group, Gross carrying amount |
Stage 1 12MECL |
Stage 2 LECL |
Stege 3 LECL |
POCI | Acquired loan portfolios related to the disposal group, POCI |
Loss Allowance |
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 | |||||
| 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 |
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.
Financial statements
| Loss allowance | ||||||
|---|---|---|---|---|---|---|
| Gross carrying amount |
Stage 1 12MECL |
Stage 2 LECL |
Stege 3 LECL |
POCI | Loss Allowance |
Net carrying amount |
| 20,430 | –108 | –108 | 20,322 | |||
| 1,609 | 1,609 | |||||
| 1,480 | 1,480 | |||||
| –3,220 | –3,220 | |||||
| –300 | –300 | –300 | ||||
| 164 | 164 | 164 | ||||
| –464 | –464 | –464 | ||||
| 445 | –9 | –9 | –9 | |||
| 20,744 | –417 | –417 | 20,327 | |||
| 758 | –1 | 0 | –4 | –5 | 753 | |
| 25 | – | – | – | – | 25 | |
| –66 | – | – | – | – | –66 | |
| – | 0 | 0 | 0 | 0 | 0 | |
Derecognitions –1 – – – – –1 Translation differences 21 – – – – 21 Closing balance 30 Jun 2021 737 –1 0 –4 –5 732
Total closing balance 30 Jun 2021 21,481 –1 0 –4 –417 –422 21,059
| Loss allowance | ||||||||
|---|---|---|---|---|---|---|---|---|
| SEK m | Gross carrying amount |
Stage 1 12MECL |
Stage 2 LECL |
Stege 3 LECL |
POCI | Loss Allowance |
Net carrying amount |
|
| Opening balance 1 Jan 2021 | 20,430 | –108 | –108 | 20,322 | ||||
| Acquisitions | 3,558 | 3,558 | ||||||
| Interest income | 2,956 | 2,956 | ||||||
| Gross collections | –6,557 | –6,557 | ||||||
| Impairment gains and losses | –337 | –337 | –337 | |||||
| of which, realised collections against active forecast |
298 | 298 | 298 | |||||
| of which, portfolio revaluations | –635 | –635 | –635 | |||||
| Disposals | –2 | 0 | 0 | –2 | ||||
| Translation differences | 726 | –25 | –25 | 701 | ||||
| Closing balance 31 Dec 2021 | 21,111 | –470 | –470 | 20,641 | ||||
| Acquired performing loan portfolios | ||||||||
| Opening balance 1 Jan 2021 | 758 | –1 | 0 | –4 | –5 | 753 | ||
| Interest income | 51 | – | – | – | – | 51 | ||
| Amortisations and interest payments | –134 | – | – | – | – | –134 | ||
| Changes in loss allowance | – | 0 | –1 | 0 | –1 | –1 | ||
| Derecognitions | –1 | – | – | – | – | –1 | ||
| Translation differences | 28 | 0 | 0 | 0 | 0 | 28 | ||
| Closing balance 31 Dec 2021 | 702 | –1 | –1 | –4 | –6 | 696 | ||
| Total closing balance 31 Dec 2021 | 21,813 | –1 | –1 | –4 | –470 | –476 | 21,337 |
review
Financial statements
| Assets/liabilities recognised at fair value through profit or loss |
Total | |||||
|---|---|---|---|---|---|---|
| SEK m | Fair value option | Mandatorily | Hedging instruments2) |
Amortised cost |
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 |
| Acquired loan portfolios | – | – | – | 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) Financial instruments are presented excluding discontinued operations. Carrying amount of Acquired loan portfolios from discontinued operations amount to SEK 3,885m and fair value amount to SEK 3,934m.
| Assets/liabilities recognised at fair value through profit or loss |
Total | ||||||
|---|---|---|---|---|---|---|---|
| SEK m | Fair value option | Mandatorily | Hedging instruments2) |
Amortised cost |
carrying amount |
Fair value | |
| Cash | – | – | 0 | 0 | 0 | ||
| Treasury bills and treasury bonds | – | 2,466 | – | – | 2,466 | 2,466 | |
| Lending to credit institutions | – | – | – | 1,730 | 1,730 | 1,730 | |
| Lending to the public | – | – | – | 5 | 5 | 5, | |
| Acquired loan portfolios | – | – | – | 21,059 | 21,059 | 21,882 | |
| Bonds and other securities | – | 4,118 | – | – | 4,118 | 4,118 | |
| Derivatives | – | 2 | 20 | – | 22 | 22 | |
| Other financial assets | – | – | – | 355 | 355 | 355 | |
| Total | – | 6,586 | 20 | 23,149 | 29,755 | 30,578 | |
| Deposits from the public | – | – | – | 17,447 | 17,447 | 17,447 | |
| Derivatives | – | 25 | – | – | 25 | 25 | |
| Debt securities issued | – | – | – | 6,476 | 6,476 | 6,736 | |
| Subordinated debt | – | – | – | 813 | 813 | 786 | |
| Other financial debts | – | – | – | 845 | 845 | 845 | |
| Total | – | 25 | – | 25,581 | 25,606 | 25,839 |
| Assets/liabilities recognised at fair value through profit or loss |
Total | |||||
|---|---|---|---|---|---|---|
| SEK m | Fair value option | Mandatorily | Hedging instruments2) |
Amortised cost |
carrying amount |
Fair value |
| Cash | – | – | – | 0 | 0 | 0 |
| Treasury bills and treasury bonds | – | 1,576 | – | – | 1,576 | 1,576 |
| Lending to credit institutions | – | – | – | 2,480 | 2,480 | 2,480 |
| Lending to the public | – | – | – | 3 | 3 | 3 |
| Acquired loan portfolios | – | – | – | 21,337 | 21,337 | 21,769 |
| Bonds and other securities | – | 3,502 | – | – | 3,502 | 3,502 |
| Derivatives | – | 75 | 1 | – | 76 | 76 |
| Other financial assets | – | – | – | 380 | 380 | 380 |
| Total | – | 5,153 | 1 | 24,200 | 29,354 | 29,786 |
| Deposits from the public | – | – | – | 18,169 | 18,169 | 18,169 |
| Derivatives | – | 22 | 122 | – | 144 | 144 |
| Debt securities issued | – | – | – | 5,059 | 5,059 | 5,289 |
| Subordinated debt | – | – | – | 837 | 837 | 813 |
| Other financial debts | – | – | – | 808 | 808 | 808 |
| Total | – | 22 | 122 | 24,873 | 25,017 | 25,223 |
2) Derivatives recognised as hedging instruments is valued at fair value through other comprehensive income.
review
Statement by the CEO
Developments
2022
Financial statements
Quarterly Notes Assurance Definitions
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:
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.
| 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 |
| Receivables, Group companies1) | – | – | – | – |
| Derivatives | – | 301 | – | 301 |
| Total assets | 3,759 | 301 | – | 4,060 |
| Derivatives | – | 60 | – | 60 |
| Total liabilities | – | 60 | – | 60 |
1) Receivables from Group companies pertain junior notes issued by the subsidiaries Marathon SPV S.r.l and Giove SPV S.r.l valued at fair value.
| SEK m | Level 1 | Level 2 | Level 3 | Total |
|---|---|---|---|---|
| Treasury bills and Treasury bonds | 2,466 | – | – | 2,466 |
| Bonds and other securities | 4,118 | – | – | 4,118 |
| Receivables, Group companies1) | – | – | – | – |
| Derivatives | – | 22 | – | 22 |
| Total assets | 6,584 | 22 | 6,606 | |
| Derivatives | – | 25 | – | 25 |
| Total liabilities | – | 25 | – | 25 |
1) Receivables from Group companies pertain junior notes issued by the subsidiaries Marathon SPV S.r.l and Giove SPV S.r.l valued at fair value.
| SEK m | Level 1 | Level 2 | Level 3 | Total |
|---|---|---|---|---|
| Treasury bills and Treasury bonds | 1,576 | – | – | 1,576 |
| Bonds and other securities | 3,502 | – | – | 3,502 |
| Receivables, Group companies1) | – | – | – | – |
| Derivatives | – | 76 | – | 76 |
| Total assets | 5,078 | 76 | – | 5,154 |
| Derivatives | – | 144 | – | 144 |
| Total liabilities | – | 144 | – | 144 |
1) Receivables from Group companies pertain junior notes issued by the subsidiaries Marathon SPV S.r.l and Giove SPV S.r.l valued at fair value.
Financial statements About
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.
After obtaining FSA approval, Hoist Finance has decided to apply the transitional rules regarding IFRS 9 for the period 30 April 2018 through 31 December 2022. Application of these transitional rules allow the gradual phase-in of expected credit losses to capital adequacy.
The impact on capital ratios and leverage ratio is insignificant.
As per 30 June 2022 the internally assessed capital requirement was SEK 3,234m (SEK 3,340m as per 31 December 2021), of which SEK 335m (SEK 563m) was attributable to Pillar 2.
| SEK m | Q2 2022 |
Q1 2022 |
Q4 2021 |
Q3 2021 |
Q2 2021 |
|
|---|---|---|---|---|---|---|
| Available own funds (amounts) | ||||||
| 1 | Common Equity Tier 1 (CET1) capital | 3,480 | 3,391 | 3,317 | 3,265 | 3,229 |
| 2 | Tier 1 capital | 4,586 | 4,497 | 4,423 | 4,372 | 4,336 |
| 3 | Total capital | 5,439 | 5,352 | 5,260 | 5,199 | 5,148 |
| Risk-weighted exposure amounts | ||||||
| 4 | Total risk exposure amount | 36,234 | 34,236 | 34,710 | 33,390 | 33,278 |
| Capital ratios (as a percentage of risk-weighted exposure amount) | ||||||
| 5 | Common Equity Tier 1 ratio (%) | 9.6 | 9,90 | 9,56 | 9,78 | 9,70 |
| 6 | Tier 1 ratio (%) | 12.66 | 13.14 | 12.74 | 13.09 | 13.03 |
| 7 | Total capital ratio (%) | 15.01 | 15.63 | 15.16 | 15.57 | 15.47 |
| 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 (%) | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
| EU 7b | 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 7c | of which: to be made up of Tier 1 capital (percentage points) | 0.00 pp | 0.00 pp | 0.00 pp | 0.00 pp | 0.00 pp |
| EU 7d | Total SREP own funds requirements (%) | 8.00 | 8.00 | 8.00 | 8.00 | 8.00 |
| Combined buffer and overall capital requirement (as a percentage of risk-weighted exposure amount) | ||||||
| 8 | Capital conservation buffer (%) | 2.50 | 2.50 | 2.50 | 2.50 | 2.50 |
| EU 8a | Conservation buffer due to macro-prudential or systemic risk identified at the level of a Member State (%) | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
| 9 | Institution specific countercyclical capital buffer (%) | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
| EU 9a | Systemic risk buffer (%) | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
| 10 | Global Systemically Important Institution buffer (%) | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
| EU 10a | Other Systemically Important Institution buffer (%) | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
| 11 EU 11a |
Combined buffer requirement (%) Overall capital requirements (%) |
2.50 | 2.50 | 2.50 | 2.50 | 2.50 |
| 12 | CET1 available after meeting the total SREP own funds requirements (%) | 10.50 1.60 |
10.50 1.90 |
10.50 1.56 |
10.50 1.78 |
10.50 1.70 |
| Leverage ratio | ||||||
| 13 | Total exposure measure | 30,694 | 30,903 | 31,003 | 30,397 | 30,714 |
| 14 | Leverage ratio (%) | 14.94 | 14.55 | 14.27 | 14.38 | 14.12 |
| 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 (%) | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
| 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 (%) | 3.00 | 3.00 | 3.00 | 3.00 | 3.00 |
| Leverage ratio buffer and overall leverage ratio requirement (as a percentage of total exposure measure) | ||||||
| EU 14d | Leverage ratio buffer requirement (%) | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
| EU 14e | Overall leverage ratio requirement (%) | 3.00 | 3.00 | 3.00 | 3.00 | 3.00 |
| Liquidity Coverage Ratio | ||||||
| 15 | Total high-quality liquid assets (HQLA) (Weighted value -average) | 4,328 | 4,735 | 4,758 | 5,153 | 5,274 |
| EU 16a | Cash outflows – Total weighted value | 2,355 | 2,190 | 2,130 | 2,188 | 2,014 |
| EU 16b | Cash inflows – Total weighted value | 2,341 | 2,280 | 2,106 | 2,132 | 1,984 |
| 16 | Total net cash outflows (adjusted value) | 630 | 556 | 541 | 556 | 512 |
| 17 | Liquidity coverage ratio (%) | 740 | 879 | 911 | 971 | 1,041 |
| Net Stable Funding Ratio | ||||||
| 18 | Total available stable funding | 27,463 | 28,706 | 28,261 | 27,323 | 27,635 |
| 19 20 |
Total required stable funding NSFR ratio (%) |
25,427 | 23,706 | 24,463 | 23,630 | 23,638 |
| 108 | 121 | 116 | 116 | 117 |
Statement by the CEO
Developments
review
2022
Financial statements Quarterly Notes Assurance Definitions
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. 45 per cent (40) of deposits from the public are payable on demand (current account – "flex"), while 55 per cent (60) 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.
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 5,583m (7,119) as per 30 June 2022, exceeding the limit and the target level by a significant margin.
Hoist Finance's liquidity reserve, presented below pursuant to the Swedish Banker's Association's template, primarily comprises bonds issued by the Swedish government and Swedish municipalities, as well as covered bonds.
| SEK m | 30 Jun 2022 |
31 Dec 2021 |
|---|---|---|
| Cash and holdings in central banks | 0 | 0 |
| Deposits in other banks available overnight | 1,823 | 2,041 |
| Securities issued or guaranteed by sovereigns, central banks or multilateral development banks |
680 | 1,063 |
| Securities issued or guaranteed by municipalities or other public sector entities |
365 | 513 |
| Covered bonds | 2,714 | 3,502 |
| Securities issued by non-financial corporates | – | – |
| Securities issued by financial corporates | – | – |
| Other | – | – |
| Total | 5,583 | 7,119 |
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.
| Hoist Finance consolidated situation |
Hoist Finance AB (publ) |
||||
|---|---|---|---|---|---|
| SEK m | 30 Jun 2022 |
31 Dec 2021 |
30 Jun 2022 |
31 Dec 2021 |
|
| Current account deposits | 8,081 | 7,137 | 8,081 | 7,137 | |
| Fixed-term deposits | 10,174 | 11,031 | 10,174 | 11,031 | |
| Debt securities issued | 5,319 | 5,059 | 4,827 | 4,605 | |
| Convertible debt instruments | 1,106 | 1,106 | 1,106 | 1,106 | |
| Subordinated debts | 852 | 837 | 852 | 837 | |
| Equity | 4,099 | 3,835 | 3,594 | 3,483 | |
| Other | 1,209 | 1,367 | 1,924 | 1,348 | |
| Liabilities held for sale | 342 | – | – | – | |
| Balance sheet total | 31,183 | 30,373 | 30,557 | 29,547 |
review
| Group | Parent Company | ||||
|---|---|---|---|---|---|
| SEK m | 30 Jun 2022 |
31 Dec 2021 |
30 Jun 2022 |
31 Dec 2021 |
|
| Restricted bank balances | 108 | 130 | 0 | 0 | |
| Acquired portfolios in the securitisation structures |
866 | 737 | – | 0 | |
| Pledged assets | 974 | 799 | 0 | 0 | |
| Forward flow contracts | 197 | 1,368 | 197 | 1,368 | |
| Commitments | 197 | 1,368 | 197 | 1,368 |
Pledged assets in the Group pertain to restricted bank balances and a portion of the acquired loan portfolios 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.
Statement by the CEO
Developments 2022
Financial statements Quarterly Notes Assurance Definitions
Assets and liabilities in Hoist Finance's operations in the UK are comprised of assets and liabilities held for sale, and are a disposal group pursuant to IFRS 5 "Assets held for sale". The disposal group of operations in the UK is comprised of the following units:
» Hoist Finance UK Limited
» Hoist Finance UK Holding 1 Limited
| SEK m | 30 Jun 2022 |
|---|---|
| Assets | |
| Lending to credit institutions | 218 |
| Acquired loan portfolios | 3,885 |
| Intangible fixed assets | 3 |
| Tangible fixed assets | 12 |
| Other assets | 108 |
| Deferred tax assets | 71 |
| Prepaid expenses and accrued income | 31 |
| Total assets | 4,328 |
| Liabilities | |
| Tax liabilities | 17 |
| Other liabilities | 139 |
| Deferred tax liabilities | 29 |
| Accrued expenses and prepaid income | 63 |
| Provisions | 2 |
| Total liabilities | 250 |
Significant internal transactions with continuing operations, which are eliminated and excluded from the above balance sheet items*:
| Total assets | 855 |
|---|---|
| Total liabilities | 4,954 |
Valuation of each disposal group at the lower of fair value, less sales costs, or carrying value has not prompted a write-down.
| SEK m | 30 Jun 2022 |
|---|---|
| Cashflow from operating activities | –33 |
| Cashflow from investing activities | 0 |
| Cashflow from financing activities | – |
| Cashflow for the period | –33 |
» Hoist Finance UK Holding 2 Limited
| SEK m | Q 2 2022 |
Q 2 2021 |
Jan-Jun 2022 |
Jan-Jun 2021 |
Full year 2021 |
|---|---|---|---|---|---|
| Interest income acquired loan portfolios |
137 | 156 | 282 | 322 | 619 |
| Other interest income | 0 | 0 | 0 | 0 | 0 |
| Interest expense* | 0 | 0 | 0 | 0 | –1 |
| Net interest income | 137 | 156 | 282 | 322 | 619 |
| Impairment gains and losses | –9 | –2 | –6 | –214 | –269 |
| Fee and commission income | 0 | 0 | 0 | 0 | 1 |
| Net result from financial transactions |
0 | 0 | 0 | 0 | 0 |
| Other operating income | 0 | 2 | 0 | 2 | 2 |
| Total operating income | 128 | 156 | 276 | 110 | 352 |
| Personnel expenses | –41 | –34 | –80 | –77 | –149 |
| Collection expenses | –28 | –32 | –55 | –55 | –112 |
| Administrative expenses | –23 | –22 | –47 | –44 | –88 |
| Depreciation and amortisation of tangible and intangible assets |
–3 | –3 | –6 | –6 | –11 |
| Total operating expenses | –95 | –91 | –188 | –182 | –360 |
| Net operating profit | 33 | 65 | 88 | –72 | –8 |
| Profit/loss before income tax attributable to discontinued operations |
33 | 65 | 88 | –72 | –8 |
| Income tax expense | 7 | 1 | 8 | 42 | 55 |
| Net profit/loss attributable to discontinued operations |
40 | 66 | 96 | –30 | 47 |
| Significant internal transactions with continuing operations, which are eliminated and excluded from the above income statement items*: |
|||||
| Total income; | 4 | 2 | 6 | 3 | 6 |
| Total expenses; | –48 | –60 | –99 | –114 | –222 |
| Net profit/loss for the period attributable to discontinued operations incl internal transactions |
–4 | 8 | 3 | –141 | –169 |
*Only external income and expenses are included in profit/loss for continuing and discontinued operations. The discontinued operation has significant internal transactions with continuing operations, which are accordingly eliminated in the accounts. The operation in the UK is financed through internal borrowing from Group Treasury. Interest expense attributable to internal borrowing is eliminated in the accounts and is therefore not included above in net interest income.
As regards the operation in the UK, the hedging reserves and historical exchange rate effects included in the Group's equity will be realised in profit/loss upon the sale of the disposal group. As at December 2021, the amount to be realised in profit/loss from the Group's equity is SEK –232m net before tax.
In the Parent Company, shares in subsidiaries pertaining to the disposal of operations in the UK totalled SEK 335m.
Statement by the CEO
Developments 2022
Financial statements
review
Quarterly Notes Assurance Definitions
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, 20 July 2022
Bengt Edholm Chairman of the Board
Camilla Philipson Watz Christopher Rees Board member Board member
Rickard Westlund Peter Zonabend Board member Board member
Lars Wollung Interim CEO and Board member
Statement by the CEO
Developments 2022
review
Financial statements
Quarterly Notes Assurance Definitions
To the Board of Directors in Hoist Finance AB (publ), corporate identity number 556012-8489
We have reviewed the condensed interim report for Hoist Finance AB (publ) as of June 30, 2022 and for the six months 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. Our responsibility is to express a conclusion on this interim report based on our 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.
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 regarding the Group, and in accordance with the Swedish Annual Accounts Act regarding the Parent Company.
Stockholm, 20 July 2022 Ernst & Young AB
Authorized Public Accountant
Alternative performance measures (APMs) are financial measures of past or future earnings trends, financial position or cash flow that are not defined in the applicable accounting regulatory framework (IFRS), in the Capital Requirements Directive (CRD IV), or in the EU's Capital Requirement Regulation number 575/2013 (CRR). APMs are used by Hoist Finance, along with other financial measures, when relevant for monitoring and describing the financial situation and for providing additional useful information to users of the financial statements. These measures are not directly comparable with similar performance measures that are presented by other companies. 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 acquired loan portfolios. Definitions of alternative performance measures and other key figures are presented below. The financial fact book, available on hoistfinance.com/investors/financial-information, provides details on the calculation of key figures.
As from 2022, based on a review conducted in conjunction with work to clarify the Company's operations, Hoist Finance has chosen to adjust the financial measures that are presented. Accordingly, "Collection performance" is no longer monitored and greater focus is placed on "Cash EBITDA" (formerly "EBITDA, adjusted") and Return on equity to describe the financial situation.
Average number of employees during the year converted to fulltime posts (FTEs). The calculation is based on the total average number of FTEs per month divided by the year's twelve months.
Net profit for the year, adjusted for interest on capital instruments recorded in equity, divided by the weighted average number of outstanding shares.
Net profit for the year, adjusted for interest on capital instruments recorded in equity, divided by the weighted average number of outstanding shares after full dilution.
Net result for the year as a percentage of total assets at the end of the year.
Weighted number of shares outstanding plus potential dilutive effect of warrants outstanding.
An acquired loan portfolio consists of a number of defaulted consumer loans or debts and SME loans that arise from the same originator.
EBIT (operating earnings), less depreciation and amortization ("EBITDA") adjusted for net of collections and interest income from acquired loan portfolios.
Total operating expenses in relation to Total operating income and Share of profit from joint ventures.
Direct contribution is the sum of total operating income minus direct costs directly attributable to each business line.
Fees for providing debt management services to third parties.
"Estimated Remaining Collections" – the company's estimate of the gross amount that can be collected on the loan portfolios currently owned by the company. The assessment is based on estimates for each loan portfolio and extends from the following month through the coming 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.
The internal funding cost is determined per portfolio applying the following monthly interest rate: (1+annual interest)^(1/12)–1.
Items that interfere with comparison due to the irregularity of their occurrence and/or size as compared with other items.
Legal collections relate to the cash received following the initiation of Hoist Finance's litigation process. This process assesses customers' solvency and follows regulatory and legal requirements.
Acquired loan portfolios during the period that consists of defaulted and non-defaulted consumer loans and SME loans.
Changes in the portfolio value based on revised estimated remaining collections for the portfolio.
Net profit for the period adjusted for accrued unpaid interest on AT1 capital calculated on annualized basis, divided by equity adjusted for AT1 capital reported in equity, calculated as an average for the year based on a quarterly basis.
Statement by the CEO
Developments 2022
Financial statements
review
Quarterly Notes Assurance Definitions
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.
Minimum capital requirements for credit risk, market risk and operational risk.
Capital requirements beyond those stipulated in Pillar 1.
Capital instruments and associated share premium reserves that fulfil the requirements of Regulation (EU) 575/2013 of the European Parliament and the Council, and other equity items that may be included in CET1 capital, less regulatory dividend deduction and deductions for items such as goodwill and deferred tax assets.
Common Equity Tier 1 in relation to total risk exposure amount.
An institution's total exposure measure in relation to Tier 1 capital.
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.
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.
Measures an institution's amount of available stable funding to cover its required stable funding under normal and stressed conditions in a one-year perspective.
Sum of Tier 1 capital and Tier 2 capital.
The risk weight of each exposure multiplied by the exposure amount.
The sum of CET1 capital and AT1 capital.
Tier 1 capital as a percentage of the total risk exposure amount.
Capital instruments and associated share premium reserves that the requirements of Regulation (EU) 575/2013 of the European Parliament and the Council and that may accordingly be included in the funds.
Own funds as a percentage of the total risk exposure amount.
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 at the end of the period converted to fulltime posts (FTEs).
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.
Developments 2022
Financial statements
Hoist Finance is a trusted debt resolution partner to individuals, companies and banks in eleven European countries. With more than 1,500 dedicated colleagues, smart digital solutions and a deep understanding of individual financial circumstances, we help over six million customers keep their commitments. This is achieved by agreeing on sustainable repayment plans so that everyone is included within the financial ecosystem. Hoist Finance has a diverse portfolio of asset classes and our online savings platform in Sweden, Germany and the UK enables our unique funding model. Hoist Finance was founded in 1994 and is today a public company listed on Nasdaq Stockholm.
For more information, please visit hoistfinance.com.
| Interim report Q3 2022 | 26 October 2022 |
|---|---|
| Year-end report 2022 | 8 February 2023 |
A combined presentation and teleconference will be held on 21 July at 10:30 AM (CEST). The presentation will be held in English and broadcast live at: https://tv.streamfabriken.com/hoist-finance-q2-2022.
Dial-in numbers for the conference call: SE: +46850516386 UK: +442031984884 US: + 14123176300 Pin code: 3448790#
Additional financial information and pillar 3 disclosures are available in Hoist Finance Fact Book which is published quarterly on https://www.hoistfinance.com/investors/
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.
review
Head of Communications and IR Ingrid Östhols Email: [email protected] Ph: +46 (0)721 810 867
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 by Ingrid Östhols for publication on 21 July 2022, kl 07.30 CET.
Statement by the CEO
Developments
2022
Financial statements
Quarterly Notes Assurance Definitions
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