Good morning, everyone. Welcome to Arctic's Annual Debt Collection Webinar 2026. It's the 10th annual consecutive year we've hosted this event. We're broadcasting to you live from our studio in Oslo. Thank you very much for joining us. My name is Kyle Coca, and I'll be today's moderator. I work on the research team at Arctic. I cover the debt collection sector with a focus on the credit perspective. Arctic has a long history covering the financial industry and debt collection sector with a broad network, excellent corporate finance capabilities, and a strong track record of placing power in recent years. For this year's seminar, we once again have a very strong lineup of C-level management presenters. I think this year's lineup is actually probably the best we've ever had.
In just a single morning, you'll hear from eight industry leaders about their companies and how they're positioning themselves into 2026. We're very thankful for today's presenters. We'd like to wish them a warm welcome, looking forward to hearing their presentations. Today's format is going to be about 15 minutes of presentation with about five minutes or so of short question-and-answer after. Just as last year, we encourage everyone to submit their questions through the question-and-answer chat function. I'll be sorting through those as they're speaking and before, et cetera. I'll pick out the ones that are relevant and ask the management those questions on your behalf. The chat function is now open. Please already submit any questions you have. With that, we can kick it off. Today, to start, we have Linus Singelman, Chief Executive Officer of Alektum Group, as well as Chief Investment Officer, Arian Falck Raoof .
Alektum joined the seminar last year for the first time. We're super happy to have them back. Welcome, Linus. Welcome, Arian. We're very glad to have you in the studio with us again. The floor is yours.
Thank you very much.
Thank you.
Great to be back, I would say. Let's go ahead. Like I said, Linus Singelman, Chief Executive of Alektum, been with the company for roughly two years. This is Arian, my Chief Investment Officer.
Yep, Chief Investment Officer. Have had the pleasure to be with Alektum Group for seven years by now.
Excellent. Okay, let's kick it off then. First of all, we will be talking about our journey towards a more investment-driven strategy, transitioning into an SDR and banking license during Q1 2026. Let's start with the overview. First of all, 2024, we kind of refocused our business onto profitability and efficiency. We've gone from 750 employees- 480 employees. That's roughly 30% reduction. We have changed our geographical footprint from 16 markets down to 10 markets in order to put more effort into the market we believe in. We have divested Belgium and the Netherlands from the servicing perspective and replaced that with a partnership for servicing. Very important to note that we're remaining in the market as a pure investor, supporting our clients going forward. Really proud about the progress that we've been doing the last couple of years.
We have a growing cash EBITDA, despite a fairly limited CapEx during 2024 and 2025. We're expecting to close 2025 at a cash EBITDA margin of 58%. Going over our turnover distribution, one can note that now, 2025, Poland is actually our largest market, followed by Sweden, which is our heritage and where we started out. In terms of segments, the financial services segment is the major segment corresponding to roughly 50%. The e-commerce segment is where we have our roots from, is roughly 31% today. The financial services segment is what is growing. This is where we do more credit cards and consumer lending products. That's part of our strategy to grow that segment. Focus for 2026, very much about achieving our SDR status, yet again, increasing CapEx during 2026. With that said, let's go over to the investment overview. Arian.
Thank you, Linus. Today, we wanted to focus a bit more on the investment business and provide you with an investment overview. We'll start off from left on this slide, moving to the right, starting off with our profile as of today. Today, our back book has 100% exposure towards unsecured loans. We are exposed towards lower and medium ticket sizes, something we're looking at adjusting going forward, and broadening the exposure towards larger tickets as well. We have a long history on the NPL market. That means that we have a lot of data and experience available to use when we assess new portfolio investment opportunities. We did our first investment already in 2001. A majority part of the CapEx, at least for the last few years, is deployed on a forward flow basis. A lot of contractual agreements that are in place.
We focus on markets with strong and functioning legal enforcement systems. The last point, we have during 2024, focused on establishing a hybrid model with internal and external DCAs. This last point is especially important for us because what it means is basically flexibility. This together with our package of return metrics that we use, presents two key components in how we approach our assignment to generate the long-term value for our owners and to our stakeholders. We have an overall group goal to generate 15% return on equity. This is something that we have aligned our investment business with as well.
Using these two components that I just mentioned, the internal and the external DCA hybrid model, together with our package of return metrics, and together with discipline when doing our investment, this is what enables us to navigate in an efficient and accurate way on the NPL market. This also provides us with flexibility and clarity not to get carried away with temporary mispricings that quite often occur in our industry. Over to some numbers and the starting point in 2026. Post the Rediem Capital acquisition, we have an estimated remaining collection of SEK 12 billion in our back book. It's valued at roughly SEK 7 billion. During 2025, when we're looking at the investments that we did, we deployed SEK 1 billion, and it means that we were somewhat limited during 2025 in our capital deployment.
We are very pleased to see the results, and we have an expected return level in that back book that is at 30%+ gross IRR. 98% of the 2025 deployment was also deployed within contracted purchase agreements. Let's round off with some trends that we're watching out for in 2026. First of all, we have the regulatory pressure. It's both on a European level, it's also on local levels, like for example, the abolished interest tax deduction for unsecured loans in Sweden that we expect to have slight impact on the pricing. We also keep an eye out for the larger need that we have observed within NPL, within niche banks. We can see that there is a large need to offload NPL balances. That's something we're looking out for, and we have a lot of interesting dialogues in place regarding new partnerships.
Last of all, we can observe that there is a fragmented buy side. Basically what this means is that we have a lot of inefficiency in pricing on the market. We can see in some cases increased competition, but in other places, there is also a lack of competition and we are looking to take advantage of opportunities that pop up due to this. What do you say, Linus? Should we talk a bit about our journey?
Let's go to the journey. Sounds great. Okay. First of all, Alektum has been around for quite some time, approaching now 35 years. I think we've been growing steadily. We've been continuously increasing investment space during since 2013 and forward when we established the investment structure, basically. 2018 to 2023, continued scaling portfolio investments, but also very much of a geographical expansion. Into 2024 and 2025, it's been more of a transition phase. Like I said, right-sizing of organization, reduction of footprint. We've set a three-year strategy and plan in place. We have made an acquisition, 49.9% of Rediem Capital already end of 2024 to leverage the SDR framework. 2025 has been very much focused on getting the whole group basically adapted to the banking regulation framework and SDR.
One other important aspect I'd like to mention is the fact that we have split our business into two strong business areas, both having clear P&L responsibility, servicing versus investment. Both are key for us going forward in achieving our strategy. We're basically into 2026. We are only days from achieving the SDR framework. Rediem Capital need to submit their Q4 report, we will be classified as SDR, meaning that we'll take 100% ownership in the company, and obviously we'll go into deposit funding. Why is the deposit funding important for us? First of all, yes, it's a lower cost of fund. Even though we are calculating a surplus liquidity, even with that cost, we are significantly lower funding costs going forward. Secondly, I think offering fixed rate deposits makes us able to match our funding towards the ERC curves. That's really important.
Meaning that when we do an investment, we will know the funding cost for the next 10 years. Obviously, the structure also allows for much higher leverage than we currently have today. We are transitioning into banking regulated business. We are taking deposits from the general public. Today or in the past, we have three banks that is supplying us with an RCF. We were quite early in 2024 identifying the SDR framework as something that would be better than having the RCF in place. I think we were one of the first movers to attack this new regulation and see what benefits it could give. Starting point January 2026, end of January, Rediem Capital have now successfully sourced SEK 10 billion of deposit in order to fund our total NPL asset balance of roughly SEK 7 billion.
I think that's a huge achievement, and the company has been compliant with the SDR framework the whole 2025, meaning the whole previous financial year. We feel comfortable in getting into a new structure by the end of January. To kind of mark this as a new transition for the group, I think we will be uniting under one strong brand, both Alektum, Rediem, and CreditVisor will align under one unified new name, creating clarity and a really solid foundation for the future. This new brand carries our purpose, to help and inspire people to live a life they can afford. The addition of adding savings accounts further, I would say, help our ability to help people in their daily financial life. 9:14, I think we're getting to the end.
With that said, I think we are now in a fantastic position to take the next step as a regulated business with a lot stronger funding capabilities and a significant value creation potential. Thank you very much.
Wonderful. I'd like to remind everyone that you can submit question-and-answer through the chat function here. I'll kick us off. What I planned to ask you, I guess, was when you expect to be formally recognized as an SDR. It sounds like from your comments here that that is likely to be at the end of January. You confirm that?
Yes.
You also mentioned that you started this process a little bit earlier than a lot of others. 2024, you were kind of one of the first into this. This is something that some others have maybe talked about, rumored, potentially could explore.
I think for me, the first time I heard about the new regulatory framework was in Q1 2024. That's when we started digging, reading, and seeing what does this actually mean. We started initiating dialogues with potential targets for acquisition already in Q2 2024. We were fairly fast to move on this opportunity.
Has this process been more complex or time-consuming than initially anticipated? For others from the outside, has there been any unforeseen challenges or learnings throughout this last year?
I think the simple answer is yes. It's been fairly more complex than we thought from the initial start. It's a new regulation. It took some time before the regulators knew how to kind of assess the regulatory framework, how to interpret certain things, and that has been clearer and clearer throughout the 2025. Now I think everybody agrees on what does this actually mean. Now we're in a good position. Yes, it's been a complex journey, I would say.
You mentioned in the presentation that you sold Belgium and the Netherlands in the servicing side of things.
Yeah.
Is this maybe a first step toward a pure investor model? Should we take this as a sign of that? If so, how do you view the long-term strategic role of your servicing business?
I think it's not a step towards becoming a pure investor role. Yes, we have an investment-driven strategy. That is what is key for us going forward. We simply divested the markets where we didn't see the growth potential that we want to see in the markets. Not spreading ourselves too thin, trying to do too much in too many areas at the same time. I think we found a more efficient way to run the business in Belgium and the Netherlands, and servicing is still really important for us and also from Arian's, from the investment perspective, but we are introducing, like we said, benchmarking because we want to make sure that we are best in class in doing the servicing.
Yeah. Arian, during some of your comments, you'd mentioned inefficient pricing, some rising competition.
Yeah
The requirement for investment discipline, basically.
Yeah.
You also said there were some opportunities. Can you elaborate a little bit further on what geographies, asset classes you're seeing some of that intense competition and where the opportunities are right now?
I'm not that keen to go into details, to be honest with you. I can say that we have a quite broad exposure. We are working with the entire geographic footprint that we have. I would say that there are opportunities in all markets, and there are constantly movements that we are trying to take advantage of. Some segments are not that attractive at the moment. We're looking into other segments, and it's part of the day-to-day navigation that we always try to work with.
Okay. You'll keep the industry secrets.
Yes
For your development right now.
I'm afraid so.
Okay. In terms of the majority of your investments, so they're through forward flow agreements.
Yep.
Are you seeing any structural changes in client behavior toward outsourcing collections versus selling these portfolios via forward flows? Any change over the last year in that dynamic?
I would say what we see is a shift towards larger one-off transactions. I would say that there are lots of shifts and lot of movements happening, but one thing that we have observed is that when we're looking at the niche banks that we have under observation currently, we see that they tend to do transactions in larger one-off transactions, not on forward flow basis. That's something we're looking at also.
Could that be related also, maybe you mentioned that you're trying to maybe go up a bit in ticket size as well.
Yep.
That's maybe kind of hand in hand with the kind of.
That has to do with the segment navigation I told you about earlier.
Yep. One for you here. The business, at least like you said, you're moving into something maybe a little different, but in the past it's focused on high volumes of small balance claims. It would seem like they're pretty good AI case for automation, et cetera.
Yep.
How has the AI-driven automation change in your operating model in 2026 versus what we saw a year or a year and a half ago? How is the operating model different today with that AI?
I think if you take a look at the small ticket space versus larger tickets, yes, I would say that the AI or self-service solutions has a greater impact because there are so many inquiries from debtors. I think that has a significant impact. We have significantly, I think, improved our self-service channels, not just talking about the AI, because there's a lot of other things we can do to make it easier for the debtor to pay and come into contact with us in a very efficient way. We also have AI tools such as the chatbot already implemented, but I think it's still fairly new and it's learning and it's improving. Over time we will get more and more benefit out of that.
Great. Taking one from the line here. Can you comment on the collection outperformance of the industry reported by most or all players over the past years? Are you seeing the same in your portfolios, and can you comment as to where this is coming from?
As a general outperformance, I think we've been steadily at like 105%. Why is that? That's a question for you, Arian. What do you think?
Well, it's a mixture of operational efficiency and then the ability to predict in an accurate way, I would say. It's a mix of those things in our case. For the rest, I really can't say what that depends on. For us at least, it's a mix of operational efficiency and prediction accuracy.
We'll take the last quick question here. We kind of already talked about AI here, but is there any metrics that investors should look for? What should people be looking for to see if this AI is working? Is that cost efficiency to collect or how do we track this?
I think we track revenue per FTE. We track cost to collect. That's two very important metrics for us in the servicing business. I would say cost to collect is the most central one.
Yeah. Along with a number of other factors that are not just the AI tools obviously.
Yeah. Correct.
Hard to maybe parse out and the rest. Well, with that, thank you so much, especially for being here in person with us. It was really nice to have you. Very grateful for that. We can slowly move on to our next presentation.
Thank you for having us.
Yeah.
Thank you very much.
Yeah. Of course. Once again, thank you everyone for being here. Next we're moving on to B2 Impact. B2 is a prominent player in the European debt purchasing market. 2025 has been an active year for the group, marked by portfolio optimization, very strong cash generation, and several funding initiatives, including a new bond issuance. It's a pleasure to have Chief Financial Officer André Adolfsen with us today to share B2 Impact's priorities and his perspective for the outlook into 2026. André , are you with us and ready here? Sorry, we-
Yes, I am
We put you in a minute early.
No worries. Can you hear me fine?
We can hear you great. The floor is yours.
Very good. Thanks for the introduction and of course, thanks for having us.
Thank you.
I'll just try to share the presentation for you. No? All right. Just give me a minute.
No stress. We put you on a couple of minutes early, so
Thanks for that.
Yeah.
It says I'm sharing, but do you see the presentation?
We do. All is well. Yep.
Very good. Thank you. I thought it was good to start the presentation by actually going back to the question-and-answer last year. The last question your colleague asked us last year was, can you actually do everything? By that, can you grow the business, can you maintain low leverage and pay dividends at the same time? Our clear answer was yes. It was yes because we are in a unique position at the moment where we're able to do this. I wanted to touch on that before I go through the presentation, because the presentation today is hopefully to help you understand how we're able to do this, the value drivers and the levers we have to get in this position and how we're going to utilize that position going forward to grow the business and take the next steps.
Just very briefly on what B2 Impact is. We are predominantly a debt purchaser. Around 90% of our revenues is coming from portfolio investments and collecting on our own behalf. We also do some third-party collection in some of the markets which make up probably 8%-9% of revenues as of today. We are in quite many markets. It's 19 countries as of today. We've been very vocal that we currently invest only in 12 of these markets. The remaining markets we are running off the books and obviously adjusting the cost base accordingly. ERC split, we have it on the slide. We came from some years ago, a split where we had unsecured around 70%. Today we are at around 90%, reflecting the investment strategy we've had for some years to focus our investments mainly into unsecured portfolios.
We have today just over 10% left of the secure book. We've been, again, quite vocal in our strategy to monetize this and to reinvest into unsecured portfolios. In terms of the financials, obviously this is Q3, we don't have any new numbers for you today. To just go through the high-level takeaways that we've seen over the last 12 months, very strong cash flow. Leverage is probably on the low end, around 2x cash EBITDA. We have seen double-digit growth over the last 12 months in collections. At the same time, we see a notably higher growth on the bottom line. I'll come back to that on the next slide. Sorry, actually on the next slide after this on value drivers. Going back to 2025 so far, we're getting close to Q4, we're obviously looking forward to presenting those numbers.
As of today, we see that 2025 has been probably even slightly better than what we expected at the beginning of the year. Very strong collection performance. We've seen investment growth and consequently also more than double-digit growth in our estimated remaining collections. This development in collection performance obviously translates into a significant upside in our book value and estimated remaining collections. This is reflected in our numbers, but it will also be reflected probably even more in the numbers in the years to come. During the year, we increased our investment target. We had a target of NOK 3 billion for 2025. We increased that in the middle of the year to NOK 3.5 billion-NOK 4 billion.
The main reason we did that is because we saw that we were able to monetize our secured claims and REO quicker than initially anticipated, which allows us to invest more and obviously that will positively impact EPS growth in the coming periods. On the funding side, B2 has over the last two years or so, we have refinanced more or less all of our outstanding debt. We have done so by also taking down the cost of debt by more than 30%. This is up until today as of Q3. On top of that, as you mentioned in the introduction, we've also issued a new bond at the lowest margin in the company history, which improves that position even further by taking down interest cost by around NOK 40 million per year in the next 12 months.
All in all, we've seen a very strong performance on the bottom line, I will cover a bit more on the details on how we have been able to do this on the next slide. Just very briefly on our expectations going forward. It's more or less a continuation of where we are today. We are in a position where we want to grow and will grow the top line. Obviously focus on growing the bottom line more than the top line. We will focus our investments mainly in unsecured. Cost control is key for us. Automation, AI, all of these buzzwords, yes, it's key for us, but it's always been key for the business, and you will see that in the coming slides. Leverage ratio will be maintained low, and we focus on growing dividends in the coming periods.
Going over to the key value drivers, we also presented this back in the Q3 presentation, I would like to reiterate this message because it's key to why we are in the position we are today. First of all, I think we've been told as a company quite many times that we don't invest enough over the last years. We've been trying to communicate that we have been investing disciplined and smart. The growth we see in unsecured collections reflects that. We're seeing more than double-digit growth in unsecured collections, despite investment levels being viewed as moderate. The investments that we have done have been very accretive to our existing back book. Collection performance has improved every year, and I'll come back to some details on that actually on the next slide as well. We're seeing continuous improvements in efficiency across all our markets.
I'm quite certain everyone wants to know what happens in the industry in terms of using AI. If you go back three, four, five years, there's been a lot of focus on self-service, robotics, chatbots, all of these things have been implemented over the last years across our markets. We're starting to see only a small impact of that. Going forward, we do expect to continue that development and probably see an escalation with the new tools that we have at hand. The collection performance also is, as I said earlier, it's reflecting a notable upside in our estimated remaining collections and book value. We expect that to continue in the coming years, and we've already guided the market that we expect at least between NOK 150 million- NOK 200 million per year of write-ups with the trend that we're seeing in collection.
Another important factor is, of course, that our costs have been flat or come down. In the same period, we have delivered double-digit growth. This clearly demonstrates the improved scalability on our cost base and use of tools to automate processes across the group. A simplification of this is basically you can say that all new investments that we have done over the last two years, the gross IRR have basically trickled down to the bottom line because of the cost initiatives we have done. Interest cost, I touched upon that. It's more than 30% down year-over-year as of Q3. As I said, we've also done further initiatives to improve this for 2026. The last thing I wanted to say here is that our investment level has increased with an increased target for the year.
This will, of course, be very positive for further EPS growth going into 2026. On the collection performance, we've added a slide where you can see the trend over time of the last four or five years. It's a clear trend. It's driven by many factors. It's obviously efficiency improvements and automation, smarter decisions, and improvements across all our markets. We're also seeing from an external perspective, we're seeing higher ability to pay and increased minimum salaries, et cetera, across the market, supporting also an improved collection performance. I want to highlight that this performance increase is there despite us having write-ups of the unsecured book every year over the last four years.
In terms of the position that we are in today, we believe we are in a very unique position where we are able to be self-sustained on operational cash flow while at the same time grow the business double-digit, maintain a low leverage, and have high distributions to our shareholders. As you can see on the left-hand side on this slide, and this is for the last 12 months as of the third quarter, the operational cash flow, more or less the cash EBITDA, covers the last 12 months of investments, all interest expenses, which will come further down into next year, and puts us in a position to pay 100% of net profit in dividends, meaning NOK 1.5 per share for 2024, and keep a leverage of 2x as of the third quarter.
We are clearly trying to build on that position to grow investments and grow the business, while at the same time keeping leverage below the 2.5x threshold where we can pay dividend of, or 100% of net profit in dividends. We have communicated earlier this year that we expect to pay at least NOK 1.7 in dividends for 2025. Of course, depending on investment level, we might be able to go above this as well. We are very comfortable with the current funding position that we are in. We have spent, as I mentioned, two, three years now, completely refinancing all our outstanding facilities. We've taken down cost of debt by more than 30%.
You can see from on the right-hand side that we have no short-term maturities, we've also hedged around 70% of our outstanding net debt, meaning we have locked in three to five years of very favorable cost of debt and a good position to be in to drive EPS growth in the coming years. In terms of financial targets and expectations, of course, this is old news. This is what we presented in Q3. I just want to touch upon the financial targets because we increased the investment target mid-year, we expect to be delivering NOK 3.5 billion- NOK 4 billion for this year, combined with a dividend of at least NOK 1.7 billion. As I mentioned, dividends may go higher. That's the reason why we say at least, but it depends on the investment level.
If we invest more or in the high range, this will of course drive more growth in the coming years, we have to balance this. It's a good position to be in. Of course we look forward to our Q4 presentation, which is on February 12th, where we will present new longer term targets to the market. Coming back to where I started the presentation, hopefully you have a slightly better view of why we're able to be in the unique position we are in today. Hopefully that also gives you a good picture of how we can utilize that position to grow the business further in the coming years. We will continue to invest to grow the business.
We will continue to focus on growing the bottom line more than the top line by taking advantage of the scalability of our cost base, the low cost of debt we have, and the increased efficiency on collections. This translates of course into very solid distributions to our shareholders. As we communicated back also in the Q2 presentation, this is something we expect to grow in the coming years. Very good. I think that was what I wanted to say.
Amazing.
Hopefully it was clear.
Loud and clear. Thank you very much for the presentation.
Sure.
A couple of questions here, and follow-ups, I guess. You mentioned during your presentation that there had been a faster potentially than anticipated acceleration of REO sales recently. Those have been very high. That's been an effective tool for deleveraging and reinvestment. Potentially that's part of your overall strategy to increase that unsecured portion. Has this primarily been a timing driven decision to recycle capital faster, or do you see structural value creation in accelerating the REO exits versus holding onto them for a longer period of time?
Yeah. Hopefully this is not a too long answer, but if you go back some years, we had the leverage way below 3x , right? The company wanted to maximize the value of our assets or actually the secured claims that we had. We have done repossessions based on the claims that we owned. We have never bought any REOs outright. It's just a strategy to maximize the cash flow related to the claim. In a period where the leverage was high, it was key to maximize the cash flow to get leverage down. At the moment, we are in a very different position. We have a leverage around 2x.
It makes much more sense for us to, of course, not leave any money on the table, but where we can try to accelerate cash flow so that we can reinvest in unsecured portfolios in the market that today we see as very attractive.
Great. Thank you for that answer. Question here regarding hedging. Given that interest expense is a significant piece of your value creation, can you elaborate on hedging beyond the three-year duration and how you navigate interest rate risk in today's environment?
I can try to do that without answering too long answer. For us, yes, we want to hedge. My head of treasury probably wants to hedge even more. We try to find a good balance, and currently we are around 70%. I think that's fair in the current environment. It gives us transparency, and we don't want to take too much risk in having a macro view on interest. I think where we are today, we are quite well-balanced in terms of our hedging strategy.
Great. You mentioned a couple of times driving home this message of being able to do both, maybe keeping leverage down, paying some dividends, and investing, this kind of trifecta of things you're trying to balance here. Should we think about that 2.5x Dividend policy as sort of a soft target of where you're comfortable with leverage throughout the cycle?
For us, it's key part of our current strategy is to deliver high distributions to our shareholders. To be able to do that, we need to keep the leverage below 2.5. Of course, there's always an opportunity to increase it to have more growth in a period where you see a lot of opportunities. In the current market environment, we've been very clear we want to keep the leverage below this level. It keeps the credit risk low. It keeps the, hopefully, equity investors happy with high distributions. The way we see this, we are in this unique position because the way we see it, this is the position where the industry is strong. The cash flow is very transparent. It's very recurring.
As long as you don't have reinvestment needs that goes beyond how you can invest sustainably over time, you can keep this position over time. We intend to utilize that.
Thank you very much. We're going to slip in one final very quick, maybe yes or no style question here. Final question. Would you consider a benchmark size EUR issue in your debt stack?
We're always open to new opportunities. I guess that's what I can say on funding. I also want to add that we have quite a low funding cost today, with the recent performance that we've seen, financial performance, should be possible to go lower than this, we always look to find opportunities to improve.
Wonderful. Thank you very much for being with us here today. Really great to have you.
Sure. Thanks for having me.
Great. Moving on, we're going to be joined by Axactor. Axactor is a well-known name in the Nordic and European investment market. The company is listed in Oslo, where the equity has delivered a strong performance, up over 100% over the last year. In addition to its equity listing, Axactor has both EUR and NOK-based denominated bonds outstanding. Our next speaker is Axactor's Chief Executive Officer, Johnny Tsolis, who will discuss the company strategy and how the actions during 2025 have positioned Axactor for the 2026 ahead. Welcome, Johnny. As a practical point, we are going to be flipping your slides, so just let us know when we need to change those.
Perfect. Thank you so much for that introduction, Kyle, and good morning to all of you. I would like to start by giving a short introduction to Axactor and who we are. You could already now slip to the next slide, please. Axactor was established 10 years ago with our headquarter based here in Oslo. We started off being quite aggressive in terms of company acquisitions, and within a couple of years, we had established a pan-European presence through seven acquisitions in six countries. We are still in the same six countries today, which are Norway, Sweden, Finland, Germany, Spain, and Italy. The business model is quite traditional for a collection company. We offer both third-party collection, so-called 3PC, and NPL portfolio acquisitions. Today, we are approximately 1,200 FTEs.
The company was also very active in the NPL market in the first years, which was important to establish scale. To date, we have acquired around 220 portfolios with approximately EUR 2.3 billion in ERC. We could go to the next page please. Our product offering is covering the full range from pre-collection to debt collection, including legal collection and surveillance. Reminder service, that is the communication with the debtor before the account is sent to debt collection, and the debt collection covers all activities from the first day of default to the account has been either repaid, sold, or closed down for some other reason. Our pre-collection and collection services are mainly done at unsecured debts. This part of the business accounts for approximately 25% of our revenue. The remaining 75% is related to our portfolio acquisition business.
In this part of the business, we purchase non-performing loans, either is in a one-off transaction or as a forward flow. The vast majority, 90%, is also here unsecured claims. In Spain, we have established a significant business covering also secured claims. The types of claims that we are handling are mostly credit cards, consumer loans, and car leasing. We can move to the next page, please. An important part of our strategy has, from day one, been to standardize our operational platform. This was done to ensure a scalable and cost-efficient operation. This is particularly true for the IT platform. All our countries are operating on the same IT infrastructure using the same ERP system for financial reporting. We have one common dialer system, one CRM system, one business intelligence system, one HR system, et cetera.
To ensure not only scalable and cost efficiency, but also this offers a unique opportunity, I would say, for business control. Next page, please. The only systems that are individual per country are the core collection systems. The reason for this is that the core collection systems, they need to be tailored for local regulations and collection practices. They are, however, industry-standard systems with high scalability, and they are fully integrated with the rest of our system environment, of course. Next page. Thank you. It is a fact that in a business as operational as a collection company, there will always be ongoing operational improvement projects. Still, I think 2025 for Axactor did stand out as a year of transformation due to some very large projects, and I would like to highlight a few of them.
During the year, we did complete our site consolidation project in Italy, where we were moving our Italian headquarters from high-cost area in the north to Grosseto in Tuscany, and all NPL activities were consolidated to low-cost area in Sicily. We moved all our IT infrastructure to Advania, taking down the infrastructure costs substantially. We have an ongoing migration into new dialer system, Genesys, in all countries. This is an omnichannel system with embedded automation and AI services. Within a few weeks, we'll have all countries on the same solution. Lastly, we have strengthened our management in Germany substantially with a much more, I would say, stronger operational competence. They've already seen radical improvement in 3PC benchmark and operational quality. We will continue, I think, to see positive effects from all these four projects into 2026 and onwards. We can move on to the next slide.
To sum up the introduction of Axactor, I would like to highlight our key competitive advantages. I think, firstly, we have a pan-European presence with deal access. All markets have strong growth potential, and we are uniquely positioned with solid relationships and the possibility to invest heavily across different asset classes. Secondly, cost leadership. We have an industry-leading cost position, making it possible to win attractive 3PC contracts and perform portfolio acquisitions with high profitability. We have a highly standardized technology-driven platform, as I just went through, and we have a solid balance sheet with satisfying liquidity. Our balance sheet consists of some 90% NPL portfolios and cash, and it's only 5% goodwill on our balance sheet. We could move on to next.
Due to the timing of the seminar, just a few weeks ahead of the Q4 launch, I can only present Q3 numbers, so I will keep it short. In Q3, we did deliver double-digit revenue growth with solid contribution from both the segments. Gross revenue grew by 11% year-over-year, and total revenue was up 12%. Also positive to see that the contribution margin increased by two percentage points. These numbers are adjusted for the divested portfolios in Spain and some positive one-off effects that we had in Q3 2024. EBITDA ended at EUR 33 million, up from EUR 27 million the year before. The 23% EBITDA growth is driven by increased revenue in combination with the strict cost control.
We saw annualized return on equity to shareholders at 11%, and we now see the positive effects from the changes in the IBOR interest rate levels and also reduced net debt, resulting in a 23% year-over-year reduction in financial expenses. Next page, please. Q3 ended on the soft side, I would say, regarding collections. Both July and September were good months, but August was a bit slower than expected. The collection performance landed at 98% for the quarter, and we were at 100% collection performance year to date at end Q3. Going forward, we expect collection performance to be in line with the forecast. We can move to the next slide, and I will give some more comments on the 3PC development. The 3PC segment continued to deliver impressive results. NPL is still the largest part of our business, but 3PC is a very important part of Axactor's business model.
3PC, which is a capital-light model, offers low risk, generates strong cash flows, and at a healthy margin. In Q3, we saw revenue growth ended at 19% year-over-year. We saw growth in all markets, but still it is Norway and Spain that we can observe the strongest trends. We see also that in Spain, the growth is fueled by a successful partnership with a major investment fund. We see a clear trend that customers are more willing to pay for high-quality collection services, and the growing pipeline with solid prospects gives a very positive foundation for further growth and margin expansion, I would say for 3PC, not only in Norway, but for the group in total. Next page, please.
If we move on to look at the return on equity, the annualized return on equity for the first nine months reached double digits, coming in at 10%, increasing to 11% when we are excluding NRIs. This result was mainly achieved through improvements in total revenue and lower financial expenses. With lower interest rates, improved NPL collection performance, strong 3PC growth, and continued focus on cost, we expect to maintain a healthy return on equity going forward. Let's move on to the next slide. I guess our financial targets might be well known, but I will take the opportunity to repeat them anyway. If we start with portfolio investments, we expect to invest between EUR 100 million- EUR 200 million annually.
The reason for the relatively wide range is that Axactor's price discipline overrides investment ambition, hence, we will only invest in the case that we believe that the risk-weighted expected returns are attractive. That's why the wide range. We expect to achieve a return on equity of minimum 12% in 2026. Further, Axactor has put in place a dividend policy aiming for a payout ratio of 20%-50% annually. The leverage ratio, which being defined as net interest-bearing debt over pro forma adjusted cash EBITDA, shall not exceed 3.5x. Let's move on to the next topic, refinancing. 2025 was a year where Axactor focused a lot on the balance sheet. The RCF was extended and will now mature mid-2028. Given normal circumstances and the long-lasting relationship we have with our RCF banks, renewal processes are doable at fair terms.
In Q2, we placed our last bond, ACRO five, and we did so at more than three percentage points lower, better total investment rate than the previous bond. As mentioned earlier, we can use our RCF to refinance the remaining part of ACRO three, which gives us full flexibility regarding to the refinancing of the last EUR 65 million outstanding in ACRO three. This means that we don't have any substantial maturities before towards the end of Q3 2027. We are continuing to work on our maturity profile, and the target is still to have a more frequent and smaller bond placements than what we have had historically. Next slide, please. Last quarter, we did announce the sale of two smaller-sized portfolios in Germany and Spain. The total proceeds were approximately EUR 50 million, and the transaction was done to a premium to book value.
The largest part of the portfolio sale was the sale of a paying book in Germany. In Spain, the portfolio was one of the oldest vintages we had left, after the large portfolio sale that we did in Q4 2024. These sales, I would say, represent a renewal of the book, as we had already increased the value over several years using our operational platform. We will now use the proceeds to buy new and younger portfolios where we can contribute with value-adding activities. Of course, a positive by effect is that our balance sheet was strengthened by the transaction as well. Next slide, please. It is positive to see that all the refinancing activities that was done throughout last year has given a positive effect on our bond spreads.
All our bonds are trading above par, but hopefully, we still have a potential for future tightening of the bond spreads. We also note that S&P rating was revised from negative to stable, as they also see short-term refinancing risk has been substantially decreased. Although we don't need to address the bond market in 2026, we will definitely pay close attention to the market sentiment in general and the development in our bond spreads to see if we should address it or not. You can move on to the next slide. Thank you so much. I would like to leave time for answering questions as well, so I will wrap this up. 10 years after inception, we are ready to leverage our optimized platform to grow profitable scale.
We will aim to grow in existing markets, both on the 3PC side and the NPL business area, we will try to improve our capital allocation between markets, we will continue to renew our NPL book. With that, I will open up for questions.
Thank you, Johnny. Thanks for the insightful presentation. First one for you here. You brought up in the presentation, you talked about this sale in December, EUR 15 million. You also gave us a little color on what that was, Germany and Spain, mentioning that it was some of the oldest portfolios in there.
Correct.
You also mentioned that it was at a premium of more than 20% to book.
Can you elaborate on what drove that pricing for the older vintages, and whether this transaction also increases your confidence in the valuation and curve assumptions on the remaining portfolio?
I think it's fair to say that this is a separate transaction. I don't think you could use this as a proxy for the valuation of the rest of the book. This was two very specific transactions, a paying book, an all-paying book. Most of the profits or the book value was coming from the German part of the transaction. These were the books that we got when we acquired the company in Germany back in 2016, and we did so at a relatively nice price. I think this is more like a one-off effect, not to be used as a proxy for the rest of the book.
Thank you. It was also, and it's been topical, that you have a new large 3PC agreement in Norway contributing, I guess it started already October 1st.
Yeah.
Will contribute to the fourth quarter financials. Looking ahead, do you see Norway as the primary driver for further 3PC growth? Or are there other markets where you find the opportunity set even more compelling?
Like I said, we see double-digit growth in all markets, or at least we saw that during last year. To be honest, Norway is the market where we are growing the most. Of course, due to this milestone agreement that we announced last year. We are also winning other substantial contracts. Looking at the pipeline, there will be also other large banks coming out with tender offers on 3PC during this year. I think that in 2026, Norway will still be the market where we see the highest growth in 3PC, but we will see growth in all markets. We're also expanding the business area of cooperating with the investment funds like we have done in Spain, where we are sourcing the deals together with the fund, and we are getting the 3PC business out of it.
This is something that we could also expand into other markets, not just Spain.
Thanks. We have a question in the chat here with regard to collection performance. We understand that there was a period of underperformance earlier, 2024 and such, and then there was a bit of a cleanup.
That the last year, as you mentioned, it's been at 100% on average, on better footing over the last four quarters.
Can you talk a little bit about, and remind people, what led to that historical potential underperformance and how you're potentially back on track over the last four quarters? What's leading to that change from what we were seeing in 2024 versus 2025?
Yeah. Going back to the negative revaluation, it was mainly driven by revaluations on portfolios that was acquired in the period 2016 to 2020, when the market was very aggressively on pricing, and we were just establishing the company and were buying at too high prices, just to be honest on that. That was the driver behind the large reval. When it comes to collection performance going forward, we said that at the end of Q3 that we expect collection performance to be around 100%. I'm not going to guide on Q4. We have to wait until February 7th. I can say that we haven't seen any large shifts in the market right now that should change that. I feel fairly confident, at least in the short run.
I also said during last year, through all the quarterly presentations, that we are taking macroeconomic assumptions that needs to fall in place in order for us to reach the curves going forward. There will always be risk in the curves, but right now I'm saying that we are expecting 100% on collection performance.
Super clear. Thank you so much, Johnny. Thanks for your time.
Sure. Thank you for having me.
Absolutely. Next up, we're joined by KRUK Group, headquartered in Poland and active across several European markets, with a strong reputation for its consumer-focused approach to debt management. Representing KRUK today is Chief Financial Officer Michał Zasępa, who will share his perspective on the key opportunities and challenges looking ahead to 2026. Michał, welcome, and over to you.
Thank you very much. Good morning. Thank you for inviting KRUK once again to this seminar.
Pleasure to have you.
Can you see my presentation?
Yeah, we see it great.
Okay, great. A short introduction of myself. I'm Michał Zasępa. I'm a Chief Financial Officer at KRUK, and it's my privilege to tell you about the company. One thing that I think is a privilege is, I often remind this to investors, we are a company and a team that is running it that remembers when we founded this 27 years ago, and it's still the same founder, the same Chief Executive Officer, and mostly the same team that is managing the business. We're all significant shareholders for our ability. That is, it has been a very important factor in our success, in our stability, in also how sure our bondholders, the bank lending us money, were that we'll always pay on time, and we always have. I have this privilege of being in that business since 2005, in capacity of the management board member from 2010.
This journey continues. 2025, most likely, looking at the trends, at the three quarters results, was a good market for the group. If you look at this slide, you can see it's a business that is focused on big consumer economies in Europe. Today, KRUK is about four countries, where we think we have a leadership position in buying and recovering consumer unsecured debt. That would be true if you took the past five years, possibly we'll be number one in buying consumer unsecured portfolios in Poland, Romania, Italy, and Spain. In all of those countries, we have strong local operating teams, which are supported by strong teams in headquarter, driving out synergies and trying to work with the local people how to best improve the process going further. The debt purchasing has been the dominant business in the group, which represents over 90%.
Out of that great majority, 90% of this 90% is consumer unsecured, but we also run 3PC operations and consumer lending, separate business for Poland and for Romania. This is a growth story, a growth story which is well thought through, which calls for contained leverage. Still, we think it's possible for us to grow double digits. It's a story for dividend repayments. We've been paying dividends for over 10 years, and the current policy says at least 30% of the profit will be dividended each year.
It's a contained leverage, as I said, which, as of end of Q3, was about 2.6x . It's a story of even greater focus as we've been exiting the markets with lower potential for us. It's Czech, Slovakia, and Germany. Opening up countries with big potential, which is France, and in the longer term, possibly eyeing some bigger markets, namely U.K. and the U.S.
That's a potential which is not yet fully discovered. Looking at 2025 and the history, you can see the trajectory of growing and stable recoveries, 2025 is no different in this regard. Overall, after three quarters, we were, in total, on plan in our recoveries, with very strong recoveries in Poland and Romania, possibly being supported by strong macro trends. Being right on plan in Italy and being somewhat below plan in Spain. The situation that was already stabilizing in Q3.
In terms of new investments, we told the market at the beginning of 2025 that 2025 will be a year where our budget for investments will be lower than in 2024 and 2023, which were record high market shares, possibly unsustainable to such levels in 2025. We are realizing this plan, keeping the investment discipline, keeping the IRRs at what we would like them to be. Q3 should be a good quarter for investments, and unfortunately, I cannot share this information yet, but later today, we will share with the market information about the coverage and investments for Q4. Overall, the 2025 was a stable year for the business. Very good in three large markets I mentioned. Somewhat weaker in 2025 in Spain.
For that reasons, we also remained more cautious in investing in Spain, being concentrated on the relatively large book of portfolios that we already own in that countries. On that slide, you see, I think, quite attractive trajectory of returns. The ROE in that business has usually been quite well above 20%. Of course, the market is increasingly competitive, so those returns are slowly going, converging down, converging to about 20%, and we see potential to keep them at similar level, like you see for 2025. KRUK is one of the most experienced debt buyers in Europe. If you look at these numbers, we already invested close to EUR 4.5 billion in buying portfolios and buying a few thousands of them. This experience is concentrating among those few economies, and we believe that gives us a very solid ground to continue and grow in that market. What's ahead?
It's an continuation of the strategy that we publicly announced at the beginning of 2025, which calls for further work on keeping or strengthening our position in those markets where we are present. Poland, Romania, Italy, and Spain. Also further expansions to France in consumer unsecured. As you see, 9% of our book is in consumer unsecured. It should be a similar share in the future with this upside potential that these other asset classes give us. We will always say the most important goal for the company is to think how to improve collection process through technology, but also through other managerial tools and means. We've had a very good track record of doing that over the past 20 years.
We are in the process of significant investment in technology that should result in replacement of our old technology stack with a much more flexible, modern, and efficient infrastructure sometime by the end of 2029. We enter into critical moment of producing minimum viable product for the Polish market this year, so we are quite advanced in the stage, and we'll see some tangible results of the work that we've been doing with technology development over the past year already this year. The full effects for the growth will only be visible in a few years time. That will open up, we think, the possibility of much wider use of AI, but also other automation tools, and possibly it's a big opportunity to see the increase of productivity for the business in this mid-term. In the meantime, we will keep our strategy of contained leverage.
We are saying it out loud. The group's policy is to issue new debt without intention to refinance it. At all times, we are in a position where our plan says we will be able to refinance every bond with the ERC that already sits on our book, and that should give additional comfort to our bondholders, to the bank funding us, that this will remain a solid and reliable partner. We will be looking at other asset classes, but they will always be at some much smaller level compared to consumer unsecured. If you look at the table below this graph, you can see that, yes, we're investing in mortgage, we're invested in corporate SME in some of the markets. Still, consumer unsecured will remain our main focus. 2026 will likely be a year where we will invest somewhat more than in 2025 without disclosing the numbers.
Just to remind you, the five-year strategy for group calls for PLN 15 billion investment, which is roughly PLN 3 billion every year, which translates into about EUR 700 million investments a year. This should be our targets for 2027, 2028, 2029. Not necessarily so much for 2026, but let's see how competitive situation evolves here. Overall, we are at a situation where we invested quite a lot over the past four years. Those are usually banking portfolios or big consumer finance portfolios, which takes us years to process, where we heavily rely on legal process as well, which means the profitability of these portfolios is still ahead. The first quarters of processing are usually intensive, and we can process only later significant legal cost, which are fully expensed in the P&L.
From that point of view, we don't have strong necessity to say every year should be a growth year in terms of investments. We could continue to grow profits also, having somewhat slower investments profile for 2025, and maybe even 2026. Having said that, we would be very open, of course, to grow if the right opportunities appear on the market. The market, from where we look, is good. The market offers stable supply of portfolios. As some of my colleague competitor says, opportunities arise in some situations. The competition is strong. In some situation, the competition is weaker. We need to be cautious. We need to see all of these opportunities and make right decisions about the deployments.
In terms of funding, some of you may know, we've issued one time a Nordic bond a few years ago, and since then, we relied only on the domestic funding from Poland, from the banks mostly, but also from the Polish bondholders, institutionals, and retail bondholders. That gave us access to most effective cost of funding, and likely the situation will continue in 2026. However, the bond that we issued a few years ago on the Nordic market will be ready now to be called back by us. We have an opportunity to make a decision whether we would like to refinance this bond, and we'll make it in due time. In the mid to longer term, I believe it's quite likely we'll come back to the Nordic bond market looking at this perspective of growing investments that we plan that come from our strategy.
The cash flow profile, the liquidity profile for the business is quite strong. You can see the bonds that are falling due in the next couple of years. We feel quite comfortable with that. Also, I believe we have a very good position in terms of diversified access to that funding, being funded by the majority of the banks in Poland, and also from three distinct sources of bond investors, Polish institutional, Polish retail, and Nordic investors. Overall, we look with optimism at 2026, and we expect an evolution, growth on the bottom line, and growth on the investments, but moderate growth, and we enjoy currently quite good, comfortable access to that funding. Thank you very much for listening, and I'm very happy to take your questions.
Thank you very much for a great presentation there. You talked a bit about the investment expectations. Sounds like those might plan to accelerate, not in 2026, but like you said, maybe 2027, 2028. Could you talk a little bit about the competitive environment in some specific geographies? You also touched on the fact that Spain was having a few issues, that you basically haven't deployed there in the last couple of quarters. Could you go into your expectations for the competitive environment on pricing in 2026 and potentially even further forward?
We look with the knowledge of our history, from 2023, 2024, with our market shares were really high in all of the markets where we were. Compared to those two years, 2025 was a bit more competitive year, but I would say for the right reasons. Our competitors came back after some reorganizations, and also interest rates decreased, which meant we and our investors had to rebalance our return expectations. Relatively to 2024, 2025, I would say it's a more competitive market. For example, Poland, our key market, was visibly more competitive for us in 2025 than in 2024 or 2023. I would say it's still within this reasonable competition level, and it's something one should expect. Looking at 2025, we deployed quite a lot in Italy, so relatively it was easier for us to buy there.
We deployed a lot in Romania, we deployed a lot in Poland, but less than maybe we wished. We were cautious in Spain because our recoveries on some of the portfolios were weaker for our internal reasons, for also the possible effect of some reorganization among the Spanish courts. We had less exposures to that market. I would expect that competitive situation rather to continue in 2026. I think, again, if the interest rate will drop in EUR or in PLN, that will, of course, drive the returns somewhat lower. I would say, everybody would wish we could invest more at higher returns. Overall, it's a good environment, and I see much more rational behavior from the market participants than in times where five years, 10 years ago, the pricing was really high, and it was difficult to make reasonable investments.
Thank you very much. We have a question in the chat here regarding consolidation in the industry and your views on M&A more broadly. Is there a need for consolidation and scale, to produce scale in the industry?
My experience at KRUK is that you need to be a very efficient local organization, and M&A may help you with that if you are at the beginning of this build-up process, but not necessarily always it will help you if you're a very big player or a sizable player and then you merge with somebody else. The complexity of merger and merging operations is quite big in my view. KRUK's strategy is rather, we're quite open, of course, to look at every opportunity that comes from M&A and some disposals our competitors may make, but we are very happy to think about buying a company when we enter the market. We're less happy to integrate a big organization into our organization, and that's why we would be more opportunistically looking at the assets.
For example, in Poland, we usually would look at the assets alone and not at the idea of consolidating a competitor's organization, because we believe that we don't need that complexity. Having said that, I think consolidation is something natural for that industry in the future, because if this market is mature, probably there is a place for three, five, six, but not 10 sizable players in a given market. I think it will be always a local play, as I think many of us found out, there is not so much synergies between countries. The systems are somewhat different. You need to create a local player, which is very effective for the Polish or for the Spanish or for the Italian environment.
Understood. Thank you so much for being with us here today. Much appreciated.
Thank you very much.
Next, we turn to Intrum. The past couple of years have been very active for the company, including an emergence from restructuring and the recent appointment of a new management team, bringing fresh perspective to the business. Intrum has indicated that it'll present the outcome of its strategic review together with updated financial targets in conjunction with its fourth quarter results. Some topics may naturally be addressed in more detail at that point later on in January.
However, we're still very pleased to have the Chief Financial Officer of Intrum, Masih Yazdi, with us today. Masih joined the company back in September. Masih, welcome. We're delighted to have you with us, and we look forward to hearing your presentation and thoughts.
It's good to be with you. Thanks for having me. Let's see. I'm trying to share here.
Yep, I'll let you know when we can see it.
It says, "Sharing is paused. You'll need to go back to the window you were sharing to resume." It working now?
Yeah. I can see it on the screen, and maybe you want to just make it full screen, and we can kick it off.
How is it now?
Control L. Awesome. Here we are.
I'll kick off. I thought I'd talk a bit about history, a bit about where we are today, and then a bit about the future. As you mentioned in your intro, we're doing a strategic review right now, and we'll present it in conjunction with our Q4 results on the January 29th. I'll give you a peak view of that already today. Obviously, nothing controversial. Talk about that a bit in the end. If I just start with how we look today, we are the largest debt collector in Europe. We have presence in 20 European countries, of which 17 countries are servicing countries. We're only doing investments in three of the Eastern European countries.
Our market share in the 20 different countries, or 17 countries where we have servicing, varies between 3%, around 3% in Germany, up to 45% in Switzerland, and then we're around 20% in Nordic countries, and overall, pretty diversified. As you can see here, you can see the cash EBITDA we generated year to date in Q3, the income, the book value of investment book, which has come down significantly over the last couple of years. We're a very large player, and we need to make sure that this scale we have comes into better effect in the future. Just a recap of Q3. We continue to have a good underlying performance in the business, with especially servicing improving. We saw top line growth within our servicing business for the first time in three years. 3% annualized growth in local currencies.
As you mentioned in your intro, I came in as a new Chief Financial Officer in September, and typically when that happens, you try to look at the balance sheet, and you clean up things that you feel need to be cleaned up. We did that in Q3 to a large extent, and mainly through a goodwill write-down of NOK 1.6 billion. We had other intangible write-downs as well during the quarter. We are investing clearly less than we have historically. We did invest about NOK 300 million in Q3, almost NOK 1 billion year to date. Obviously the reason for this is, to some extent, to do with our elevated funding cost at the moment, which means that we need to target higher yields on the investments we see, and therefore that decreases the volumes we can target.
If we dig a bit into servicing, as I said before, we saw top line growth for the first time in three years in Q3, 3% in local currencies. We have done a massive repricing effort in the last couple of years. The margin has now gone up to the target we set two years ago. It's around 25%. Obviously when you do this mass amount of repricing, it's difficult to increase volumes. At the same time now, when margins are pretty much where we want them to be, hopefully going forward, it's going to be easier to see top line growth in this business. We're also hiring a large amount of sales people around the jurisdictions where we operate, and we hope and think that with this new effort, we'll see better growth going forward.
The best traction we've had over the last couple of years is on the cost base. We were running at almost NOK 15 billion of annualized cost just a couple of years ago. That number was down to NOK 12.5 billion in Q3. It's been a significant FTE reduction in the company, just at 1,000 people over the last 12 months. Prior to that, about 1,000 people between Q2 2024 and Q3. Sorry, about 2,000 people from the peak down to the current level. There is still scope for significant cost improvements going forward. I'll come back to that in a couple of minutes. If I look at the main developments we've had as a company during Q4, we've bought back bonds, two different tranches of doing that.
We've targeted mainly the second lien 2027 maturities that we've had, which means that the normal amount that was about NOK 6 billion in Q3 has now been reduced to NOK 4 billion. This has also led to the bonds trading up from around 90 to almost 95 currently. We're also seeing an improvement on the longer duration bonds have also traded up somewhat, despite the fact that we've had some events affecting peers during Q4. This also means that we've used all the proceeds from the new money notes that were issued when we did the recapitalization, so that money has now been utilized to buy back bonds. We also announced in December that we did a goodwill and impairment write-down of NOK 3.4 billion in total. That was mainly in the Spanish business that we have, but also some write-downs in France and Germany.
This basically means that the calculations we use now in the goodwill calculations are more aligned with the recent growth and profitability trends we are seeing, whereas the old numbers were based on the targets that were set in 2023. I don't think this is a signal of anything deteriorating from the current level. It's more just aligning the calculations with the current trends and being more conservative. If I move on to what we are focusing on in the strategic review we're doing that will be presented on the January 29th. I think there are three main issues that we're focusing on. The first one and most important one is how we intend to delever and de-risk Intrum's business. We believe that the best value we can create for all stakeholders from the current state is to delever our balance sheet.
We need to reduce the nominal amount of debt. We need to make sure that that leads to rating upgrades and that our cost of funding comes down, which will obviously improve the net profit of the company, but also mean that we get more flexibility as a company to do the necessary investments, both in our business, but also to be able to do more portfolio investments as our funding costs come down. We're also looking at de-risking the business, which basically means that we focus more on the servicing side of our business and make sure that becomes a larger share of the revenues we generate. That part of the business has no credit risk in it is more recurrent, and it's easier to forecast the development of it.
De-leveraging and de-risking is the main priority we have as a company, and we will come back on exactly how that will be done, how we will deal with the upcoming maturities, and how we intend to generally take the debt level down, both nominally but also relative to our earnings. The second main priority is our servicing business. As I said, a big part of de-risking our business is to grow servicing. We have done significant cost improvements in the last couple of years, but there is much more to be done. We still have a lot of manual processes in our collections. We have almost 7,000 people working in collections, and a lot of the process there is still manual.
There are significant improvements to be made in terms of using automation, self-service, process improvements, data tech in general, but especially AI, to make sure that that process becomes more automated and more efficient and will lead to a clearly lower FTE count going forward and a lower cost base. This will in turn obviously improve the profitability but also enable us to grow our servicing business much more as the cost of servicing will come down, will be more competitive, both in the existing market and take market shares, but also obviously opening up new verticals with smaller servicing tickets to be outsourced from in-house servicing today to something that we can help companies with as our process is better than the in-house process that some companies, mainly within telecom and utilities, are working with today.
The third part of the strategy review will be about how we utilize our best-in-class deal flow and underwriting capabilities within NPL investments. In the short term, as I said before, we have elevated funding costs, which means that we cannot and will not invest as much as we have done historically. We think it's prudent to be disciplined on price and make sure that the yield uplift we get when we invest is sufficient to obviously be higher than our funding costs, but obviously have a good margin versus that, too. But at the same time, we can use the deal flow we have to invest together with partners and make sure that we are still active in the market. They get the competitive advantage we have with the deal flow and underwriting capabilities, and we get to service those portfolios.
We can do that, and then over time, as our funding cost comes down with the de-leveraging efforts we're doing, then we can invest more on our own balance sheet as well. But I think overall, it's about being disciplined on price and making sure that we get as much benefit as possible with investments we do, i.e., making sure that we, as logically as possible, are a servicer on the investments we do together with partners. I look forward to coming back on all of these three topics together with presenting the new financial targets we're setting in three weeks' time. This will be a cliffhanger until then. For now, I'll just open up for question-and-answer.
Yeah. Thank you very much for the presentation. You sort of addressed the fact that the high cost of capital is largely limiting the investment capacity thus far in 2025, and that you're going to be disciplined. Is that a suggestion also that the current competitive dynamics are very intense, or are you super limited to the types of things you're looking at and can purchase?
I think competition has been pretty intense in 2025. We'll see how that develops in 2026. I think one of the reasons for competition to be as fierce as it has been is that some competitors obviously getting SDR status, and that's taken down funding costs, and that's been sort of proactively assumed it's going to happen, which means that some competitors have been willing to invest at lower yields than they've done historically, taking into account the lowering of funding costs going forward. Obviously, we will not target a certain volume. I think that's generally risky to do. It could force you to do investments you shouldn't be doing. We will, as a company, be disciplined on price and make sure that we still have the strong underwriting capabilities we've had and utilize them.
Given that your funding cost is going to be relatively consistent over the next little bit into 2026, and potentially that SDR trend you mentioned will fuel some competition, et cetera. It sounds like maybe we should be expecting a bit lighter, or more disciplined approach, even into the next couple of years. Is that an accurate way to describe it?
I think at least for 2026, you should assume that we'll invest less than what we did a few years ago. If you look at 2025, as I showed before, we've done almost EUR 1 billion investments with an average IRR of 18%. I think that's a solid and good yield on the investments we've done. There's definitely a market to do those kind of volumes at those yields. If you want to move volumes up significantly, then you have to push yields down quite significantly, because the larger deals, we're talking about low double-digit IRRs on those. If you want to take part of those, then you have to push yourself down, and we won't logically do that. Obviously, we have a partner with Cerberus doing it together with them. If we do that, then we get a big kicker from our servicing business.
The effective yield we're getting is 3 percentage points or 4 percentage points above the IRR on the portfolio. We might be able to do that because the yield is sufficiently good. As a standalone investment with the funding costs we have today, it doesn't really make sense for us.
You brought up, we're talking a bit about SDR, et cetera. In December, it was announced that the co-investment agreement with Cerberus, between Cerberus and Intrum, was transferred to the Cerberus-owned entity, Brocc. Brocc is currently pursuing SDR status. Are there any practical implications of that change for Intrum? Should we think about this relationship between Brocc and Intrum and the co-investment as a way to gain exposure to the benefits of SDR and this SDR trend without pursuing it yourselves?
I think the immediate impact is that our partner will be more willing to invest at lower IRRs, given the lower funding costs they'll have. To the extent that co-investments have been restricted by them to some degree, having too high return requirements versus what we've had, then obviously the partnership will work better, and we'll be able to do more investments. For us to get the benefit, obviously, would be if we, for some reason, take a minority stake in that SDR, then we'll get that exposure and benefit from the lower funding cost. We have to look at to what extent do we then control the cash flows from the SDR.
Given where we are as a company, we need the cash flows to delever, and it's not clear that that's going to be the intention of that SDR to pay out dividends, for example, to a minority holder. Those are the type of things we need to consider. Obviously, as any other company, we are looking at SDRs as well, whether we can create one ourself or whether we should be a minority owner. It has to be with the right partners so that the things we are looking for, we can live up to them. This is something we will address with the strategic review as well, obviously, how the path looks like for us, and we're looking for if we join an SDR or create one ourselves.
Yeah. In that dynamic you described where potentially some things might be green-lit via the SDR, where it didn't make sense for Cerberus prior, right? For your portion, it would be still the same sort of dynamic. Is the focus? Obviously, you always maybe want to invest in a lower percentage if you're still able to retain the servicing economics. Is that sort of the goal is maybe to push that model less from 30% co-investment to something like 20% or even less in the future under those dynamics?
Yeah. That could be reasonable. The less we invest, we still want skin in the game, and so does our partner want us to have skin in the game. The kicker you get from the servicing business obviously becomes larger and larger the less you invest at lower yields. It could make sense that if we see that their appetite for investments is clearly higher than ours, that we can lower our share and still get the servicing business and therefore still see a big benefit despite the yields right now being lower than what we would have gone for had we just done the investment without getting the servicing business.
Yeah, great. Thanks. Question, moving to what you mentioned in terms of the cleanup process that you've done since coming in, some of the writedowns, et cetera. For the most recent one in Spain, France, and Germany, you mentioned it was conservative assumptions and reflected into the current market dynamic. Can you walk us through whether those are primarily growth, profitability, or if there's a balance between the two that caused this the change of assumptions in the modern climate?
It's mainly growth. If you look back at the restructuring we did and the assumptions and the financial targets that were set back then, I think one of the financial targets was to grow the servicing top line by around 10% annually. That obviously was now, with benefit of hindsight, way too optimistic. Some of those assumptions were used in the goodwill calculations, which now we've adjusted to a more reasonable level and more in line with current trends. I think it's about growth in terms of profitability. Cost development has actually been better than we have assumed a couple of years ago. That part really didn't change much in the calculations. It's more the top line.
Great. Thank you, Masih, so much for joining us here today, especially with your strategic review coming up, et cetera. We're really appreciative of your time and your responses here. We greatly look forward to that event at the end of January.
Thank you very much.
Thanks. Moving on here, we are joined by Harry Vranjes, Chief Executive Officer of Hoist Finance. Hoist is currently progressing very well on their journey toward SDR. They've differentiated themselves this year with strong investment pace throughout 2025. Welcome, Harry. We're very much looking forward to hearing your presentation.
Thank you very much, Kyle. Can you hear me okay?
Yeah, we hear you great.
Fantastic. I'm in a hotel room here in Copenhagen, I hope the technical setup will work out, and not too many people will jump into the room while we speak.
All looks good.
Great. Well, thank you for inviting Hoist yet again to this webinar. Thank you all for your interest in listening to what we have to say about Hoist. Now I need to switch the screen like this. Yes. Hoist Finance is an investor and manager of NPLs around Europe. We've been around for about 30 years. We are primarily Western Europe-focused, and of course, but one of our largest markets is also Poland. We're about 1,000 FTEs. Currently, or by the end of Q3, I should say, our portfolio was about SEK 32 billion. We invested SEK 2.4 billion in Q3. Obviously, we will be presenting our Q4 numbers on the February 6th. Yeah, in a few weeks for more updates on what's happened in Q4.
We are Moody's-rated investment grade in the mid-range of the investment grade with positive outlook, which we received during the summer last year. Let's see how that develops over the year. We're well capitalized, and we had an earnings per share of SEK 3 in Q3 and SEK 10 for the full year 2024. We all have a market cap of, I think just below SEK 10 billion . We are, I think with the SEK 32 billion book, the leading investor in Europe at the moment. Obviously with the crowd on this call, a very knowledgeable crowd, maybe this slide is superfluous, what can you say? We usually use this one to sort of describe what it is we do. People outside the industry tend to view NPL investments as very risky. If we look at sort of how we handle that.
In the purchasing moment, we buy at, let's say, call it on average 90% discount, typically higher discount on unsecured than on secured. On average in the book, it's about 90% discount. We buy at 10% of original value. Then we need to collect roughly twice that amount to reach our financial targets. If we look at how we have performed doing that, I think in the last 30 years, we've consistently, even through Lehman crash, COVID, et cetera, been able to perform around or above the investment forecast. Much of the credit risk, in principle, the whole individual credit risk per item disappears at the purchasing moment. How is Hoist then set up for doing this?
Typically, we describe our business in three legs. We have the investment management, which of course is the core process of sourcing, pricing, analyzing, following up on portfolios, tightly, of course, collaborating with the other legs. We have the capital and funding, and I guess this is where we are most well-known. We have been financing ourselves majority-wise on retail deposits for, basically for our whole existence since 1994. Then the mix of bonds there, 80/20-ish. Then we have the loan management leg. Here, I think we don't focus on having internal platforms everywhere. We look at it from an economic point of view. Have we been successful in buying portfolios in this market in the last three, four years? Do we believe that there's going to be a steady flow of new portfolios in the coming five years?
If the answer to both those questions is yes, we will stay with our full internal unit. We might still outsource over capacity, et cetera. In other markets where we see a more unsteady supply, we will typically work with an outsourced model, either fully or hybridly. When we wrap all of this into a credit market company suit, supervised by the Swedish FSA. I think one of the key things in how we've managed this company is the return on equity target. I'm measured on return on equity, everyone in the management team is managed on return on equity. Country managers, return on equity. Portfolio valuations need to reach a certain return on equity target, et cetera. We do this in a decentralized model.
The only thing that is really fully centralized is the investment management process, where we have one of the largest teams in Europe at the moment. Looking at the investment management and the portfolio, we had a portfolio of roughly EUR 32 billion by the end of Q3. Very nicely geographically diversified. Italy is still our largest market, although others are catching up. We see a lot of movement in, let's say, the Germany, France, U.K. area of Europe. We see movement up from the traditional southern countries, with Portugal, Spain, Italy, and Greece. Now we're one country level higher up, closer to the Nordics, where we see the most of the growth or most of the changes in, let's say, portfolio sales or portfolio output. Nicely diversified. We also invest in both unsecured and secured.
Secured are typically mortgages, unsecured, typically personal loans, credit cards, et cetera. We also invest in SMEs. Still, on a very granular level, we don't take on EUR 8 million-EUR 10 million tickets. Let's say we have a handful of EUR 1 million tickets, and then maybe one or two EUR 2 million tickets. This is an asset class that we will be continuing to develop across the markets because we also see that this is also the asset class that is coming more and more to market in more and more countries. If we look at the EUR 32 billion by the end of Q3, that represents a 12% growth year-over-year, currency adjusted, despite having sold off about SEK 1 billion of portfolio to industry partners. Moving on to the retail deposits.
We use retail deposits as a funding source, fantastic funding source, and have been doing it for quite some time. It is an always-on funding source, in addition to being very cost-efficient, it is also always available to us. The savings markets in Germany, Netherlands, Sweden, for that matter, are very deep. There is a good supply of customers willing to take on new deposits. We communicated in November that we would be launching our own internal platform in Germany. We did so in the middle of November, and by now we have collected about EUR 70 million there. Very happy with the outcome so far of that platform. In addition to the deposit funding, we of course have a range of different bonds, et cetera, to make sure that we meet all our capital ratios, defend the Moody's rating, et cetera.
Also there, we've seen fantastic price development over the last three years, where pricing has simply improved dramatically for us. Our average cost of funding is about 3.5%, which we are of course very happy with. To the loan management, the third leg, the leg that contains most of our staff as well. As I said, regardless if we do this insourced or outsourced or a hybrid, we will always make sure to take care of the data. We typically split loan management into two parts. One strategic part, which is setting the collection strategies, following up on the collection strategies, proposing new changes, steering basically the collections, and then the operational loan management, where we actually do send the letters, the SMSs, talk to the debtors, et cetera.
The strategic part, we always do in-house with people on the ground, regardless if it's in-house or outhouse. Whereas the operational collections, we are willing to outsource if we see a good opportunity for that. We have been doing this now since 2023. During the year here now, or 2025, we also opened up Finland as a new market. We launched Portugal, I think a year ago. It's been a great start. For Finland, I think we dipped our toes, let's say, with a small co-investment during Q3, and we look forward to doing more in that market going forward. Looking at our financial targets and how we're doing, I think one of our absolute core targets is to deliver a return on equity of about 15%. Now we have been doing that. We did it in 2024, and we did it in 2022 as well.
I think by the end, or in Q3, we had around 17.6% return on equity for the quarter. We are on track to reach that target also in 2025 or for 2025. I think the key thing here is that if you look at the graphs, there's some light blue and some dark blue, and I think the dark blue is sort of the underlying business. When we started this transformation journey that we launched in the beginning of 2022, continued throughout 2023, and actually also a little bit in 2024, we have gradually made sure that it is the underlying business that delivers this return on equity through strong cost control, a lot of basically decentralized actions where we have sort of taken down central cost and kept them flat since then, basically.
We are well capitalized with the SDR status that we expect to notify for in conjunction with our Q4 report, so in a few weeks. We will, of course, release roughly SEK 1.2 billion or SEK 1.3 billion of equity that we are currently holding against backstop affected cases in the balance sheet. Then the CET1 ratio will jump up even more. Aside from profitability, we are also a growth company, right? We have grown earnings per share. Excuse me, one second. By a CAGR of 78%. I cannot promise that rate going forward. The target is to do above 15% growth over a cycle. We do this by, of course, growing our book. Nobody at Hoist has a volume target. Nobody is incentivized to, well, gets targets for investing a certain amount or deploying a certain amount of capital.
We do have an ambition to have a SEK 36 billion portfolio by the end of 2026, so actually this year. That is basically because being a bank, being an SDR is not for free, and we want to make sure that our indirect costs are sort of a reasonable share of the total cost base. Dividend policy, for the first time in I think five years, we divvied out money last year, and we will communicate the considerations for this year in conjuncture also with our Q4 report. Thank you. I hope I made it in 14 minutes.
Perfect. Perfect timing here. To kick off some question-and-answer for you. We've heard some different things from various presenters about competition in the market, what people are seeing in terms of IRRs, et cetera. You've obviously maintained a very strong investment pace through 2025. Press reports have also pointed that there's a possibility of a larger secured transaction to close out the year. I know there's no comment there. Could you talk about the availability of NPLs and the competitive dynamics that you're seeing? I know you mentioned there is no volume sort of target and that you're being disciplined, but could you talk a bit about it?
I think in 2024, we deployed about SEK 11 billion, and I think 2025, up until end of Q3, we are at SEK 6 billion. Obviously, the fourth quarter is a very active quarter generally. I would say 2025 was a sort of very back-loaded year with very little activity in the beginning of the year and then gradually grew. As we communicated before, we saw a strong pipeline in Q2. We saw that continue building during Q3, and there's no difference there. We still see a strong pipeline of deals. To what extent this is regulatory driven, the backstop, or simply that the local regulators in the various markets put sort of targets for, or requirements, I should say, for the various banks, the Tier 1 banks.
You cannot have an NPL ratio more than 2%, 3%, et cetera, that is forcing out the sales. We're not 100% sure, but we see a very good supply going forward as well.
Great. Do you expect the gross money multiple to stay around 1.6x ?
Yes, we do. Roughly, well, basically in line with where we are today. Yeah.
AI, super topical. You brought it up a little bit. Where do you think that is having the greatest impact for a company like Hoist? Is it on the pricing side, the servicing, operations? Where do you think the expectations potentially are not optimistic enough or too optimistic for the sort of AI trend and craze? Where are you seeing the benefits?
I think we use AI tools, et cetera, in the underwriting to some extent, but a lot during the onboarding to make sure to really crunch the data that we get from the clients. Also, I would say where we little bit unexpectedly see strong use of the AI tools is in the support functions, actually. In finance, in legal, in compliance, risk, et cetera, there we have seen quite some use of AI. In terms of AI agents speaking to our debtors, et cetera, there we have not seen, well, we have not invested any heavy amounts in doing that. We have self-service platforms, et cetera, for anything incoming. Based on our size of operations, we believe we will keep following this development, and we will be following what other players and our servicing partners are doing around Europe. Well, we'll follow with great interest, I would say.
Thanks. Nearing the end here. Last quick question potentially. In terms of geographical exposure, obviously you mentioned two in Finland, Portugal, you had entry there. Are there any other geographies that you're more seriously considering now than you were in the beginning of last year?
I think we've been fairly vocal about that we want to expand in the Nordics. Let's see how that develops during 2026. We are also basically filling in blanks in Europe. Eastern Europe is interesting as a complementary market. We would be looking at that also during 2026. It is the expansion of asset classes that we see with the SME, et cetera, that is driving a lot of the coming growth as well.
Right. Yeah, not only geography, but types of investment.
Yeah
for sure. Great. Thank you so much. Really a pleasure. Thank you so much, Harry. Yeah.
Thank you. Thank you, Kyle.
Yeah.
Next we're joined by PRA Group and its Chief Executive Officer, Martin Sjolund. They're a new addition to the seminar this year, one we're super happy about. Both PRA and Martin have deep connections to the Nordics. Martin is, of course, Swedish, and the modern PRA was in many ways shaped by a transformative acquisition of Norway's Aktiv Kapital in 2014. PRA is headquartered in the United States. They're approximately a 50/50 portfolio split between the U.S. and Europe, therefore they are uniquely balanced transatlantic perspective here that maybe some others don't necessarily have with the exposure to the U.S. Martin, the floor is yours. Are you with us here?
Thanks, Kyle. Nice to meet you guys. I'll just introduce myself. My name is Martin Sjolund, I'm the Chief Executive Officer of PRA. I've been in the company for 14 years, I've been doing this for a long time. I was part of Aktiv Kapital, which Kyle mentioned was the company that PRA acquired. It was an Oslo-listed debt buyer that PRA acquired about 11 years ago, and I'm still here. I thought what I'll do today is share a few slides to tell you a little bit about PRA, talk a little bit about the industry, and then some focus areas for PRA as well. I don't know if we-
Hey, Martin. We can't see the slides just yet. If you could
Okay. Do you guys have the slides loaded?
We're going to load it on our side, and you can just let us know.
Okay.
Yeah, we're going to load it on our side, and you can just let us know when you want to flip.
Okay.
Just give us one other-
Are you able to?
Yeah, here we are.
Okay.
Cool.
Yeah. If you go to the first page.
Yeah.
Just I have to give this caveat that I will make some forward-looking statements and that our numbers here are based on Q3. If people are interested, they can read this statement here. If you go to the next slide. Thanks. Overall, in terms of scale for PRA, we're a very globally diversified debt buyer. We're celebrating our 30th anniversary this year, so we've been doing this for a long time. We're in 18 countries. We manage more than 50 million customer accounts. We only manage our own accounts. We don't do third-party servicing. We have $8.4 billion of estimated remaining collections. In terms of the last 12 months, we invested about $1.3 billion, and we collected around $2 billion. That gives you a sense of the scale.
We're pretty much split evenly between Europe and the Americas, our estimated remaining collections is basically a 50/50 mix there. In terms of cash collections channels, it's also pretty evenly split. 43% of our cash comes from legal channels and the remainder is from call centers and other channels as well. That gives you a sense of the overall size of the business. If you go to the next slide. We wanted to share our capital structure. I know there's a lot of credit investors here as well. We think we have a strong capital structure. We're well-funded. We have over $1 billion available under our credit facilities, so we're ready to take opportunities as they come. We operate with a mix of bank debt and bonds. On the RCF side, we have three facilities. We have very long-standing relationships.
Our banks in Europe have been with us with Aktiv Kapital going back even to those days. We have very long-standing relationships. We do have a bank license as well. We have over $100 million of government-insured deposits there. In terms of the bond mix, it's mostly dollars, but last year, we did issue our inaugural $300 million Euro bond. We're very happy with that. It enabled us to expand our investor base. We further staggered our maturities. We had a better matching of currencies to our liabilities, or rather our cash collections. We also further rebalanced the secured-unsecured mix. We're currently operating at a net leverage of 2.8x. Overall, we feel good about where we are on the capital structure side.
I would just like to take the opportunity to thank the banking partners in Europe and also the investors who participated in the Euro bond. That was a very good outcome, and we're very pleased with that. If you go to the next slide. I thought it was interesting to reflect a little bit on the industry. First, just overall, then I'll talk about the U.S. versus Europe. Overall, these are some of my reflections, having been here for over 14 years. Traditionally, debt buying has really relied a lot on in-house collections. It was really a business where you tried to run low-cost mass dialing and lettering from cheap locations. We were running proprietary, but dated technology solutions, fragmented across markets, very basic capabilities in terms of chat and text and email and so on. It was really a people and capital-intensive model.
The challenge with that is that it creates this imperative to invest, that you need to feed the beast, is the term people use. That makes it very difficult to manage when the cycle turns, because we do have periods when pricing gets tight and supply drops and so on. We've had examples of that in the past. I think that the way forward that we're focused on is really more focused on specialized talent, technology, digital, data and analytics, cloud-based platform, omni-channel contact solutions, and capabilities where you can scale across many different markets and get the scale benefit of moving across markets, but still have the local collection expertise within a market. Digital capabilities are becoming more advanced.
Our approach is to pilot things in individual markets. If we find things that work, we can scale those quickly across different places. AI is an example of that, where we'll pilot things in individual markets, learn. We can scale up the things that work. The final piece is really having a flexible mix of offshoring and third-party DCAs in terms of how we collect. Doing this gives us more flexibility, more speed, cost savings, and it enables us to scale. Scaling up is actually not that hard, but scaling down is really hard. Having more flexibility in how we collect is a part of that mix. If you go to the next page. I wanted to share some perspectives on the U.S. market versus Europe that I think is pretty interesting.
You probably have heard of this, but the U.S. market is very complex from a regulatory perspective. We have federal agencies like the CFPB. We have a whole range of individual U.S. laws from different agencies, things like TCPA, Reg F, GLBA, et cetera. We have 50 individual states with 50 attorney generals in those states, and you have thousands of individual counties. Individual counties can have different approaches for, particularly, legal collections. Managing all of this is very complex. You've also got a situation where there's a, I would say, almost a culture of disputes. There's a whole industry of social media, TikTok, et cetera, that encourage people to dispute their accounts as a way of clearing their credit record. That creates big volumes of disputes, and a lot of those are frivolous disputes.
We have to process them with due diligence to the customer, obviously, because some of them are also fair and legitimate. It creates a very complex operating environment. All of this complexity has to be priced into the portfolios. If I compare Europe has a fragmented regulatory environment where you have different applications of collections rules in different markets, but generally speaking, it's a lot less onerous than the U.S. is. I think the U.K. is probably the most onerous from a collections regulatory perspective, but nonetheless, it's a simpler environment to operate in. The other thing is just the mindset of the regulators. I find in Europe, they're generally pretty positive about encouraging banks to sell NPLs and to not keep the NPLs on their books.
Things like the EU Credit Directive or the EU Prudential Backstop, et cetera, these things are encouraging the banks to sell and I think providing some tailwind to the industry. The other thing is that you have very clear local rules in individual markets, especially around legal collections. Even though Finland versus Norway versus Italy versus Spain individually have very different rules for legal collections, within the country, they tend to be very stable, as opposed to in the U.S., where every state is almost more like a European country in terms of the differences. You have very big differences in how you collect and what you can do and what you need to do, and so on, in different states and even different counties. Again, all of this has to be priced into the portfolio.
People sometimes ask me, "Oh, what do you pay for a portfolio?" The answer is always that it depends, and it has to reflect all of the complexity in collections. If you look at the supply side, the U.S. overall is, I think, an attractive market. There's over $1 trillion of credit card debt outstanding in the U.S. The market tends to be much more forward flow-driven than Europe. I would say that a lot of large U.S. banks actually don't sell NPLs. A lot of large ones do as well, so there's a mix, but you generally have a smaller number of sellers, especially for the large volumes. If I contrast that to Europe has a much more fragmented selling universe, so we're dealing with hundreds of sellers across Europe.
I would say that many or most major banks and consumer finance companies do sell NPLs at some point. Some do very regularly through forward flows, others do it more sporadically. If you look back over time, I would say that many of the European banks are selling more so than in the U.S. In terms of competition, I think the banks in the U.S. are very selective about who they sell to. It's difficult to get onto the panel. There's a lot of auditing happening, and it's driven, I think, mainly by the regulatory environment. They have to be very selective about who they sell to because they are also subject to all of these regulations that are listed at the top there. Success really is driven by track record, extensive data, seller relationships, significant scale, but also compliance capability.
In Europe, I think the market has been quite competitive over the years. There's a lot of markets where the sellers are not particularly selective about who they sell to. That means that it's easier for people to come into the market. Over time, obviously, you're only going to survive in this market if you get the pricing right and you run efficient operations and so on. Over time, things tend to shake out, but it's easier for people to come in. I think a lot of that reflects the regulatory situation. The last thing to mention is just that the European market tends to be more spot-driven. We are seeing more and more forward flows, I would say. I think there's probably a trend there. Generally speaking, more of the volume tends to be spot-driven. You go to the next slide.
Just to give a sense of PRA's business here in Europe, the graph here shows our investments. You can see we're investing somewhere between EUR 450 million to just under EUR 600 million a year. It's gone up and down a little bit over the years, and a lot of that is because of the discipline we try to have in our pricing. You can see for those who've been around a long time, if you go back to 2016, 2017, you can see that the investment volumes really dropped. That was a period of particularly intense competition, and we had markets where we didn't buy a single portfolio in over two years because we just couldn't get to the pricing. I'm also looking back, I'm happy that we did that because it avoided a lot of problems down the road.
You can see despite that, we've had a healthy development of our cash collections during these years. The last 12 months, as of Q3, we collected just under $800 million. I think the keys to success here have really been a stable management team. The average tenure of our investment committee is around 12 years, so we've all been around a long time doing this, learning from our mistakes over the years. We've invested $3 billion over the past seven years. We've been very selective about M&A. We've hardly done any M&A at all. Again, looking back, I'm glad that we did what we did. We've had strong track record of cash overperformance against our targets. We run, I think, one of the most cost-efficient platforms, and we've also invested a lot in IT and infrastructure.
Moving onto one common cloud platform, one common cloud-based contact platform, one common accounting system, one common HR system, all of those things. We spent a lot of effort unifying that. If you go to the last page. Thank you. Just to sort of take stock of where PRA is now. From a global perspective, we're really focused on being disciplined in our portfolio purchasing. We've been trying to get our leverage down in the process, so being very prudent about capital allocation, and taking a long-term perspective. We're not trying to chase a target. Even though the supply environment's pretty good, I would say, generally, we have been trying to be selective about how we invest that. We do run a global capital allocation framework, so we can decide where to put the capital between different European countries, but also markets in the Americas.
I think that gives us the opportunity to take the opportunities when they're there, but also to be able to back off when we need to. If we think the pricing is overheated, we just simply will hold back. In the U.S., we've been on a bit of a journey in the U.S. We've recently implemented a cost drive. Cost efficiency is critical in this business, so we eliminated a number of roles, including over 100 roles within our corporate and overhead functions, just trying to make the business leaner. We've reorganized the U.S. operations in order to speed up decision-making. We appointed a leader there who has more than 30 years of U.S. collections experience to lead this U.S. operations unit. That's going well. We established a second talent hub. We call it a talent hub.
As I mentioned at the beginning, talent is really critical here. We decided that we needed access to a larger talent pool than where our headquarters is located. We're just in the process of opening up a second office. Well, not our second office, but a second, I would call it, talent hub in the U.S. to be able to recruit specialized talent. We're also making progress on various operational initiatives. In Europe, the focus has been on a leadership transition. As I took over the global role, we appointed my colleague, Owen, to lead Europe. He's been in the company for 15 years, so that ensured a very smooth transition of the European business. We continue to try to maintain our pricing discipline and add more years to the track record of delivery.
I appreciate the chance from Arctic Securities to come and tell our story from PRA Group. We're a global debt buyer, strong diversification. We have a good capital structure and I think a clear plan for delivery. Appreciate the opportunity to tell our story and happy to take some questions.
Great. Thank you so much, Martin Sjolund, for the presentation. We have just a couple of minutes here, so I'll try and get one or two questions over to you. You mentioned Europe has delivered consistent overperformance, strong cash efficiency. You mentioned that flexibility between the U.S. and Europe to allocate capital. What are you thinking in terms of marginal capital allocation between those two markets in the current environment? What specifically is driving the majority of that decision? Is it return, risk, regulatory factors? If you could elaborate a little bit on that.
It's a good question because the returns is about more than just the price. Obviously, you have to factor in the risk, you have to factor in the contract terms. It's not easy to do a complete apples-to-apples comparison. We do run a framework, and we actually look at a range of hurdle metrics, and we do calibrate very frequently between the teams, in particular for spot deals. We're kind of balancing how we bid on forward flows with how we bid for spot deals. We'll be looking to, within the leverage framework that we have, we try to deploy the capital such that we get the best return we can. Sometimes there'll be a data angle to it or something like that, but for the most part, it's really about maximizing the global returns for PRA Group.
Great. We have a question in the chat here. Can you provide some color on progress on outsourcing of call centers? How much cash expense or one-offs have been related to this?
I couldn't put a number on that. The big push there has been in our U.S. business. Over the past two years, we've established an offshoring capability that we didn't have before. We've moved a significant portion of our call center activity, but also other types of support functions into offshore locations that have a significantly better cost for us. That's been the transition. It takes some time. It's not like a switch you can flip overnight. It takes time for people to build up their tenure and experience and so on. Generally speaking, we're happy with that. I think about 1/3 of our U.S. call center capacity is currently offshore.
Wonderful. We're getting to the time here, so thank you very much, Martin, for joining us. It's a pleasure. Yeah, great to have you with us this year. Hope to see you again next year.
Okay. Thanks a lot.
Yep.
Yeah. Thank you very much.
Bye-bye.
Bye.
We're joined by Kredinor. They're one of the largest and oldest players in the Nordic credit management space, with very deep roots in Norway. Representing the company today is Chief Executive Officer, Rolf Eek- Johansen. We appreciate him taking the time to be with us here live in the studio as well. Rolf, thank you for being our final guest today. I'll turn the floor over to you.
Thank you for inviting us, being in the neighborhood, it's quite easy to get here.
Yeah.
Thank you for that, having us again. Maybe I should start with an overview, a company overview. As you mentioned, we are quite an old company. We were established in 1905, actually, it was founded on an association of debtors towards one of the biggest bankruptcies in Norway in 1905. This occurred in a politically sensitive year, marked with Norway dissolution of the Swedish Union. Not to draw any parallel to today's headlines, but rather emphasize the importance of solid and skilled collection service in disturbing times. Let's start with that. That's 120 years ago. We're going to celebrate that this year, but that's another story. Kredinor handles about two million debt collection cases annually, with over 660 employees. We're spread out in the Nordics, but mainly in Norway.
We have about 4,300 active clients, the ownership is 1/3 Kredinor Foundation and 2/3 SpareBank 1 Gruppen. The asset under management is above NOK 50 billion in principal value. Our offices is in Oslo, Hamar, Stockholm, Turku, Helsinki, and Copenhagen. We do operations in all these countries, we also have a small subsidiary in Latvia, providing our distribution solution. Okay. What we can see that there's a balanced revenue split. We have 48% of our revenues coming from the portfolio investments and about 52% on the CMS side. The total ERC, which 2/3 is in Norway, is about NOK 10 billion. I think the book value of this is, at the moment, about NOK 5.5 billion. On the CMS side, I think we can say that the main part is in Norway, and we are doing scale-ups, I think we can say, in Finland and Sweden.
We're doing that on the operational platform for our own portfolios. How we are doing this business. We are servicing, of course, products on the servicing side. It's sales ledger services, invoices services. We are doing customer services. We have maintained our contact center. We do full-scale collection services, which is early collection. It's legal collection and surveillance, of course. We also do some legal services or provide some legal services. On the portfolio side, we do forward flows. Of course, we do one-off portfolio purchases, and we also have a product that we call SRG, which is a hybrid of 3PC and portfolio services. I also should mention that a couple of years ago, we established a setup of securitization in a Luxembourg setup. We also have introduced deals already in that part of the company.
We have three core collection systems in the four countries. We have now a new integration model that makes us available to service also on the Nordic level. Okay, let's go on. Some characteristics. How to perform in a challenging market. Let's start by saying that Kredinor is originally from Norway, we are still a market-leading debt collection company in Norway. I think it's about 60 debt collection companies, more or less, in Norway. Kredinor is covering about, I think, 20% market share on the servicing side. On the NPL side, I think the market share is much bigger, but I don't have the figures for that. Our business model is based on 3PC and NPLs only. I will come back to that. There's some synergistic aspects on that. I will come back to that.
We also said that we have quite a robust and stable balance sheet. I think more or less all assets are revenue-generating. There's very limited goodwill. Some will say that after eight consecutive quarters with collection performance well above 100%, we can say that there is quite a conservative portfolio valuation in our balance sheets. We also carry a high equity ratio, and also to mention that our main owner is a traditional saving bank. Kredinor is only exposed to the Nordic countries. Why is that? Well, I think the Nordic countries is highly attractive due to the fact that there is a very well-regulated collection market. We have a very well-functioning bailiff system, although there are some backlogs here and there, but it's very well-functioning.
In the Nordics, except for Denmark, you can have long-lasting garnishments, there's well-balanced restructuring regulations, this provides quite stable cash flow. Last but not least, I think, in the Nordic, you find the most generous welfare systems, supporting consumers who are struggling with their financials. Last and not but least, we now have a very experienced management team. Of course, it's important it's backed with the highly supportive owners, which we solved a couple of years ago. We also have really professional collection teams, that comes natural being such an old company. Okay, back to the synergetic operating model. Why are we only focusing on 3PC and NPLs, why are we focusing on both of them? Of course, 3PC is volume-based, it's a low capital intensity. I think scale is well as important as margins.
Margins is important, but building scale is quite important on 3PC. We do have a stable and recurring revenue. It comes by nature that most big clients are quite sticky. We have, after a long time, managed to get a high-quality collection platform. We have our own collection. It's our own collection platform. We do have quite good client relationships that comes in use. Most important, I think data and recovery insights is very important for us. All these are in place in Kredinor. I think all these elements also creates entry barriers for new competitors. That's why we also see not that many startups within the business. On the NPL side, of course, NPL is an attractive asset class. It's still possible to do profitable purchases. This comes with long-term cash flow, which makes the whole company quite stable.
Doing both businesses, we can do quite good collection optimization. We do operate our own portfolios, and that means we are in control of resources allocation and cost allocation. We are in full control of our own portfolios operations. Having this both business lines, we think we call this as a mixed model. We are a full-scale service provider for all key segments, both in bank, finance, telecom, energy, and factoring. I think it's important for all our clients that we can provide services from both business lines. Let's see what's happened in the last couple of years. We come from some disturbing times a couple of years ago, which is well-known. I think we now can say that we have made a successful turnaround to profitability. You can see that from the collection performance.
As I said, we have been performing above 100% now for eight consecutive quarters. Fourth quarter coming up. I can't comment on that yet, but hopefully no surprises. We can also see that on the revenue side, it slowed down a bit in 2024, which is due to we put new purchases on hold, which came natural for us. We restarted the purchasing activities in late 2024 and 2025. Now we see an increase on the revenue side. On the CMS side, where the revenues mainly is from 3PC revenues, we can see that we have turned into a growth. I would have liked to see a bit more results from that, but with the same, I think the growth not come from new market or building new market share, but it's from existing clients.
This is due to increased collections, which results in a positive development on the EBIT. This is the adjusted EBIT. The light green is the adjusted EBIT, and the dark green is revaluations. You can see, I think, a good development. I think, as I said, we have successfully now turned around to profitability. We're not there yet. We would like to see improvements also on the EBIT in the future, and we're working on that. That was a bit on the overview of the company. You asked me to comment a bit also on the current market environments and the key dynamics in the Nordics.
Yeah. We also want to save a little bit of time for question-and-answer. If we could do that in a couple of minutes, we can spare some time for questions as well.
I can do that. There are some important market drivers. The Nordics being historically quite predictable on the regulatory side, couple of last year, we've seen some changes in that. Also, there were some new tax regulations in Sweden last year that came as a surprise for us, because it was a retroactive new regulation that made us do some write-downs in Sweden. Now we see Norway has a backlog on EU directives, and that comes also to the NPL Directive that is being partly implemented now with the new Debt Collection Act coming in. We also working to get the financial part of the NPL Directive implemented this year or next year, and that's really important for us. Of course, AI automation, I won't go into that, but everybody knows debt collection industry has a lot of potential, and we are working on that.
All FDs are looking for new use cases every day. Yeah. We do see some consolidation in the industry. We are observing this. We also draw some attention ourselves, but we are not in any discussion with anyone. We observe it, and we see that there are some entries into the Nordic markets from outside investors. It's going to be exciting to see how that will develop in the future. We will maintain our mixed model, which I think is quite well-proven in the Nordics. We believe in this model for the future. I think another characteristic is that we see still demand for tailored solutions on the servicing side, which is dilemma for us because I think most of the players are trying to trend towards standardized products. This is quite difficult for us, but let's see what's happening.
I will not go into that.
Yeah. Closing.
For the markets, how are the inflow of collection cases, as we've seen from the media today, there is slowing down. This is confirmed by our own forecast, which we present every quarter, that we are predicting a higher purchasing power for consumer. Now we see also that the wage growth is higher than the CPI. That means a slower inflow of collection cases, also higher collections, which I think is good. I think that's the main takeaway at the moment of the markets.
Wonderful. Is it cool if we open up the question-and-answer and conclude it with that?
Yeah. To just make two comments.
Yeah, sure
if that's okay, on our key priorities for the future or for the next year. Our new strategy a couple of years ago was to focus very clear on our core business, and that has been successful. We will maintain the strategy discipline, of course. Focus on synergies and margin expansion, to increase our EBIT. Of course, using AI, as I said, not need to comment on that, but also optimizing the capital structure. We have just recently refinanced our RCF for another three and a half years, with existing bank syndicates. We also have a bond maturing next year, so it comes natural to consider refinancing or replacing that with a new bond. We are preparing for that as well. Yeah.
Yeah. Looks like a good road ahead here.
Yeah.
Thank you so much. Very insightful presentation. Super nice. Question here. How do you expect the upcoming regulatory change in Norway regarding debt collection costs to impact your business? Lower costs were discussed.
The revenue side of collection in Norway is regulated. The fees are regulated. The new Debt Collection Act has not yet come with the regulations on the fees yet. We expect that to come in later this year. We, of course, are a bit nervous about that. I think all business is quite prepared. I think it is going to be tougher for us. The important part is to drive efficiency through the companies.
Great. You have a, obviously, like you said, a Scandinavian, very Norway-focused outlook here. On the CMS side in Norway, could you describe the competitive environment today versus potentially a year ago? Are you seeing changes in pricing discipline, client behavior, or any tendering dynamics in that market?
Yes, as I said, there is a couple of the big companies that, like Kredinor, that is servicing all segments. Of course, we are challenged by small companies only going for the niche segments, that maybe could put up some more cost-efficient setup. We experience a lot of competition on that. There are very little new players. As I said, there is quite some heavy entry barriers, so we know our competitors quite well. As I said, also the price is quite sticky. Competition is hard, and it should be.
You touched on it a little bit. You alluded to the fact that the consumer is potentially strengthening in Norway, which has the implication that maybe supply might be a little bit more limited into 2026. Is that a sort of a correct assessment that, from what you are seeing so far, it might be somewhat more competitive or tighter in terms of the supply that is coming to the market in Norway?
Yeah.
Yeah.
Yeah, definitely.
Wonderful.
That has been going on for quite a long time. Although headlines maybe says another thing, I think going back, there has been quite stable development on the inflow of collection cases.
Great.
In good times, collections increase. Thus why our revenues comes from solving cases. That's on the positive side.
Yeah. Works both ways.
Yeah.
Well, thank you very much for being here. Thanks for the bit of history as well. Super interesting. Great presentation.
Okay.
This is our last presentation for today. To briefly summarize, the discussion today pointed to a broad alignment across the industry around cost optimization, usage of technology, while there was some different approaches to deployment of capital. Those differences are clearly reflected from where a lot of the companies today have started this journey, their levels of financial flexibility in that journey, and their strategic priorities moving forward. As today's presenters have shown, the sector continues to evolve, and long-term success will depend on how they navigate those challenges. I'd like to extend a big thank you to all of our presenters for joining us today and for sharing their thoughts and insights. I'd also like to thank all the participants for tuning in and the thoughtful questions. Like I said, today was our 10th year anniversary of this seminar.
We're super glad to be doing this and bringing this to you for 10 consecutive years. I'd also like to thank Anna and the Arctic Events team for organizing the event. Thank you very much. I'm Kyle Coca from the research side at Arctic. Should you want to continue the conversation with me or anyone else from our side or otherwise, please feel free to reach out. We're always available for a good chat. Thank you very much to everyone. This concludes the Debt Collection seminar. I wish you all a very nice weekend. Thanks again