I'd like to share that we have now opened up for live questions, which is the second link in today's Oslo Stock Exchange release, and also an invitation. So for those of you who want to ask questions live, use this link where you can call in. So with that, I will leave the word to you, Erik.
Thank you, Rasmus, and good morning, everybody. As Rasmus said, welcome to our first quarter presentation for B2 Impact for this year. Let's go to the highlights for the quarter. We see still a continued steady and good performance this first quarter. Collection performance is very good, 105% on unsecured, coming back to that later. And going into second quarter also, we see this is still the case or even improved in this quarter. We are in line with our investments that we anticipated, NOK 1 billion invested and committed for end of Q1, and we believe that this will take us to the target. And if there's more investments coming this way, there are opportunities, we will be able to extend our investment beyond what we did last year. We are in very strong financial positions.
We have delivered steady results over a long period of time, and both rating agencies has improved our rating. And when we then issued our bonds this quarter, the NOK 100 million and NOK 50 million, we see that we see that we have received improved margins on those issues. Our low leverage give us good room for growth going forward, and we are thus able to invest more than we did invest last year, without this having a particular impact on our leverage going forward. Note also that we sold Hungary. It was in May, so this will be reported in May in the second quarter. But we are continuing taking away the countries that are not core for B2.
Priorities going forward, selective investment approach, and also further reduce our cost on our debt, that André will touch upon, and, you know, continued focus on footprint. Going over to our key figures for Q1, cash collection was again strong, NOK 1.273 million. Also, on the unsecured performance, 105% for the quarter, and going into, as I said, second quarter, it looks even stronger. So good start of the year when it comes to collection, and we see most of our markets are overperforming. Portfolio investments, NOK 1 billion with committed and expended investment on investment this first quarter. We, 290 million of those are expensed, but we also have around 800 million that is committed capital.
Cash EBITDA, again, strong, NOK 905 million. Should also be noted that our book value of equity per share is NOK 16 at the end of Q1. Now, what we've been talking about several quarters, and this, this has effect going forward, is that we see that the OpEx ratio is coming down. This is quite a bit due to also that we've been taking down the FTE cost and reduced our FTEs numbers to a large extent. But we haven't reduced it as much, the FTE cost, as much as it can look on, on a board, because we have increased some of our fixed costs with related to data analytics. So we have a little bit more fixed cost going forward, and a much higher scalability.
When we are then going to increase our investments going forward, we also will have a much higher scalability on our operations. This is important. This is one of the driving forces going forward. Now, B2 Impact is uniquely positioned to capitalize on the opportunities. It's three things that is the driving force behind this. You have the indicated returns on the portfolios, on the graph to the left-hand side. We believe that the competitive environment, as well as we see that the NPL volumes are coming up, as well as Stage Two loans are coming up. The conversion from Stage Two, that is the stage before the NPL level, Stage Three, is coming up, and the conversion rate there is around 25%.
All this indicates that we will have more portfolios going forward, and there will more portfolios coming to market. At the same time, we see that quite a bit of competition is lower in some of the, some of the markets, giving better opportunities for B2. The second thing is that the funding costs are coming down. Two elements there, the market rate, the risk-free rate, is coming down in a general manner that is anticipated by the market or the macroeconomic indicators. Also, the margin for B2 is coming down. So there's two elements why funding costs for B2 will come down going forward. And then it comes back to the third element that I talked on the previous slide. Scalability of operation is coming up, and with better opportunities, we will buy more.
We have full intention of increasing our purchases going forward. That will increase also the scalability and operations due to the fact that we have done, taken the measures necessary to improve our operations. Now, together this with, we have countries, 17 countries still. We had two, on runoff, and in addition, and one of them, those has been sold in the quarter. But we do have also see that our focus is on 10-12 markets. When we concentrate then the purchases going forward on those markets, we will achieve the scalability that I was talking about. And as well as we see that our improved margins and low cost of capital, this will have a positive effect going forward.
So the core unsecured markets still use economies of scale and continue focus on efficiency and automation, and this is going to also be one of the driving force going forward. And with that, I'll leave the word over to André to go through the financial performance. Thank you.
Thank you, Erik, and good morning, everyone. Let me first draw your attention to the Q1 report, which is now in a new and cleaner format. Our goal has been to simplify the report. The number of financial KPIs have been reduced, align the report and presentation to a larger extent, and provide clarifying tables throughout, the material. Hopefully, you will find B2's financial development and performance somewhat easier to understand, and that the key messages will be clear. For the first quarter, we are very pleased with the underlying business performance, and we see, as Erik pointed out, a very strong trend in collection performance. We also see that our actions on both operational costs, but more importantly, the interest costs, are impacting the quarter positively compared to previous periods.
I also want to highlight that during the material and the presentation, we will focus on deviations in constant FX and pro forma adjusted for the sale of Bulgaria. So moving into the financial highlights of the quarter. The first quarter delivered strong collections with positive trend in our collection performance, and we saw a 4% growth in unsecured collections compared to last year. The unsecured collection performance came in at 105% of the latest forecast, and we are pleased to see a further positive trend into the second quarter. Secured cash collections came in at NOK 265 million, which includes NOK 96 million related to sale of REOs. This is in line with the collection level we had last year, despite no new investments in secured in the period.
Now, important to note that we have repossessed fewer assets in the quarter compared to last year, amounting to NOK 38 million lower repossessions, which are reported as collections last year, but they have no cash impact. Consequently, you will see a negative effect on comparable basis on a reported EBIT compared to last year. But as you can see from the Cash EBITDA, we are collecting more actual cash this quarter compared to the same quarter last year. The cash collected from joint ventures in the quarter was around NOK 15 million too low compared to the collection performance, which is related to a delayed extraction of cash from one of the joint ventures, and this will be part of the second quarter cash flow. The underlying operating expenses are trending down.
And as you can see from Erik's presentation on personnel, we have made many initiatives to improve efficiency, and we now see personnel costs compared to last year down 4%, again, in constant FX and on comparable basis pro forma adjusted for Bulgaria. We did incur higher legal collection costs in the quarter, which are related to the higher collection level on unsecured, but it's mainly driven by positioning for tax refunds in the coming periods. We expect these investments in OpEx to yield a positive return for the company in the coming quarters. In terms of the underlying cash EBITDA, as mentioned, we had some delays in cash flow from one of our joint ventures.
If you include that cash, we had an underlying cash EBITDA in this quarter of NOK 920 million, which is an increase of 2% compared to last year. In the fourth quarter presentation back in February, we presented a target to notably reduce our interest cost during this year. We have already seen a clear impact in the first quarter, with interest costs reduced by 10% compared to the end of 2023, and I will come back to more details and further progress on the interest costs later in the presentation. Our investments came in at NOK 290 million for the quarter. This is in line with normal seasonality and the same level as we had last year.
In the first quarter last year, we reported investments of NOK 767 million, and this included NOK 435 million of investments that were booked in that quarter but were signed in the fourth quarter of 2022. In addition to the Q1 investments of NOK 290 million, we also have an additional commitment for the remainder of the year of NOK 700 million, taking the invested and committed amount to NOK 1 billion for 2024. Moving on to page 10, we elaborate a bit more on the collection performance and trends in the quarter. We have seen an overall very strong collection performance, with a positive trend in unsecured collection performance, in particular.
The performance in unsecured was 105% compared to the latest forecast, which is up compared to previous periods, and as mentioned, the observed collection so far in Q2 confirms this positive trend. Secured cash collections remain stable, with claims collected and REO sold comfortably above our booked values. The REOs was NOK 96 million in the quarter and sold at a comfortable margin to book value of 51%. I just want to highlight also that the spike you see on the bottom left in secured collections in the fourth quarter last year was related to the collection of the group's largest single claim of NOK 500 million. Moving on to page eleven and the cash generation for the quarter. Cash earnings came in for the quarter at NOK 371 million.
This is after adjusting for portfolio investments, interest costs, and tax. The positive cash earnings resulted in a further reduction in debt and a reduction of leverage to 1.86 in constant FX. We expect strong earnings in the coming quarters as well, driven by the positive trend that we're seeing in collection performance, lower underlying OpEx, and reduced interest costs. The low leverage, coupled with strong cash generation, provides a very solid foundation for investment growth in 2024. On slide, on page 12, we elaborate more on the operating expenses. Over the last 12 months, we have seen the cash revenue grow by 8%, with a corresponding OpEx increase of 3%. In the first quarter this year, we saw an increase in revenue of 2%, with a corresponding OpEx increase of 3%.
Now, very important to note that the underlying cost base has been reduced in this quarter compared to last year, with personnel expenses down 4%. The increase in the quarter is driven by activity-based costs related to unsecured collections, mainly legal collection costs, in order to maximize the cash from tax refunds in some of our core unsecured markets. Now, this is expected to support the positive collection trend observed so far in the second quarter. And just to highlight, this is not a recurring cost, but an investment in higher collections. In the first quarter, we made additional actions to extract efficiencies. We have made further reduction in central cost, and we have further reduced the group's footprint. We have booked non-recurring items of NOK 6 million in connection with these initiatives.
On page 13, some more details on the collection performance in terms of investments in the quarter. As mentioned, the investments was NOK 290 million, but we have an additional NOK 700 million committed for the remainder of the year. All investments are related to unsecured assets. Due to the sizable secured collections we had in the fourth quarter, but also the strong monetization of the secured book over a 3-year period, the secured ERC has declined more than 30% compared to last year, and is now 17% of the total remaining ERC. The unsecured ERC is now then 83% of the total, and we saw a growth in unsecured ERC of 3% compared to last year, in line with the group's communicated investment strategy. On page 14, an update on the group's capital structure.
We issued a new bond of EUR 100 million in January this year, with a maturity in 2028. The bond was placed at a notable improvement in credit spread, moving the curve of B2 Impact below five hundred basis points, compared with the previous issue at six hundred and ninety basis points. Later in the quarter, we increased the size of this facility to EUR 150 million, and we further improved the spread to an indicative four hundred and sixty-one basis points. We have also, during the quarter, fully repaid the senior facility agreement with PIMCO. As you can see on the bottom left, following the refinancing of bonds in the quarter, we see a positive trend in interest expense, and a reduction of interest cost and commitment fees of 10% compared to the end of last year, or Q4 2023.
The credit rating has also been improved and is now among the most solid in the industry. So, we would like to elaborate a bit more on the target and status of the target that we set at the end of 2023, in terms of lowering our interest cost. Now, we demonstrated in the quarter that the hard work to delever over the recent years, and to reduce cost, has given us the ability to successfully issue new debt at improved terms. Going into this year, we consequently set a target to significantly reduce our interest cost compared to the run rate at the end of 2023. We target a lower annual run rate of NOK 200 million during this year.
I want to highlight that this target is fully based on company-specific actions and is not dependent on any potential lowering of the floating interest rate. We intend to utilize the improved credit spread. We will extend the RCF during the year. We will maintain a hedging ratio above 50%, which we have done in the first quarter. And we will have reduced cost going forward related to repaying the Senior Facility Agreement. We are well on track to achieving this target, and we expect at the end of the second quarter to have achieved more than 50% of the target set. We expect the full target to be achieved either during the third or the fourth quarter, depending on timing and availability of the bond market.
We are happy to see that we already have a positive impact on interest rates, and we expect that trend to continue, as mentioned, then into the second quarter, and to reach more than 50% of this target already in the next quarter. With that, I leave the word back to you, Erik.
Thank you very much. Just to summarize a little bit, where B2 stands. We have a strong collection performance. The underlying back book is performing very well, both on the secured side, but also on the unsecured side. Going into second quarter, we can also say that the unsecured is continuing the positive trend that we've seen in the previous quarters. The scalability and underlying cost for B2 holding is coming down and the scalability is coming up. Fewer markets means also that we are able to do the investments and have a higher return on those investments in those markets that we invest in.
We have a strong financial position, which is also leading us to have the possibility to go beyond and invest beyond what we did last year without having any notable effect on the leverage ratio or on the debt structure. A lower cost of funding is just as André has said, looks very positively on back on track or on track to achieve the goals earlier than anticipated than what we said last quarter. And also, then the last part, it's a favorable market with the expected higher returns, and we also then see possibly higher volumes coming to market. Now, the seasonality is always that the second and the fourth quarter is good, but we also anticipate volumes addition to what we've seen in the previous years coming to market. So looks good for B2.
On that, we close and we take then a Q&A for those that want to ask us questions. Rasmus?
Thank you, André-
If you wish to ask a question, please dial pound key five on your telephone keypad to enter the queue. If you wish to withdraw your question, please dial pound key six on your telephone keypad.
That was the AI speaker. Thank you. We will then open for questions. You can, as previously, as in previous quarters, you can use the chat, and we've already received some questions. But if there are live callers, we would then ask for them to ask questions now as we will start with them. So unless there are... If there aren't any live callers, we will then continue to the chats. Okay, so far, no live questions, then we will continue to the chats. We will then start with a question from Vegard Toverud: "Should some of the higher external costs in the quarter be considered NRIs? How much do you expect external costs to be in the second quarter?
These are absolutely not NRIs. These are not recurring cost every quarter. It's a deliberate action to increase collections in a period where we expect to cash refunds, tax refunds to be important for some of our markets, and we have deliberately pursued this strategy to increase collections. I think the only thing we can say is that this has impacted already positively the second quarter.
Thank you. And then a follow-up question, from Vegard: "Can you provide some more information on the size of your Hungarian portfolios, both book value and, ERC? Will this allow you to further reduce OpEx?
The book values are small. As we noted earlier, what we have done in the Hungarian market, and I told you earlier that we had about EUR 3 million in Hungarian market. The book value now is EUR 2 million, so it's a very small market. And those small markets, we've been scaling down and extracting the cash flow from those markets. So this is just ending what we have started already some years ago by deliberating, not investing and just extracting the cash for those markets. So the book value is only EUR 2 million, so it's a small market that has no P&L impact, exiting.
It will have, on the bottom line, a positive impact. So yes, there will be a cost saving, and we can come back to that, but on the bottom line, this is accretive to B2.
Very good. Then, a question from a shareholder, I assume: "How will a lower market rate influence the results? Everything else the same.
Well, yeah, obviously, a lower interest cost will have a positive impact on our bottom line.
I guess it's just to understand the dynamics of the bonds, but, fair enough. Okay, let's go to, the next analyst, Ulrik Zürcher of Nordea. "How confident can you be that returns on new portfolio investments will increase from 2024 to 2025? Would you be happy with an investment level of NOK 3 billion-NOK 4 billion in the coming years, or can it go higher?
Well, it's. We had a goal of NOK 2.5 billion-NOK 3 billion investment last year. We made that within that target, and we have around the same target this year. But we can extend investments beyond that without having any particular impact on the leverage or debt level of B2. So, if the opportunity comes by and we see the opportunity as accretive to B2's performance, we will, of course, invest more beyond what we did investment last year.
... Very good. Then we have a question from Thomas of Pareto. Could you elaborate on the SFA facility? Does it remain available, or will it be terminated or canceled?
What we can say is it's, it is repaid, and the reinvestment facility that we had under the SFA was terminated in April, or expired in April, and will no longer carry any commitment fees in the second quarter. So, we do not anymore have a facility to draw on the SFA.
Thank you. Then we have another question related to the leverage ratio. What leverage ratio is B2 Impact comfortable with, and has the company reevaluated its investment target for 2024? Can you also give some color on the company's strategy for a bit longer term outlook, for example, 2025 and 2026?
Well, I think Erik more or less answered the target on investments in the previous question. And we probably add that we're targeting a minimum of the same level as last year, and we clearly aim to increase our purchases, and that will, of course, at some point increase the leverage. But of course, we're at the level we are at today is not the level we want to be at. We clearly want to increase our investment level. But for the next 12 months, given the strong cash flow that we've had, and continue to have, we can increase our investments, notably above NOK 3 billion, and still have a leverage around 2.
So, I think the answer to the question is we're very comfortable with increasing the leverage, but we do not want to not increase the leverage too high. And we are at the level now where B2 can invest over time, more than what we've done in previous years, and maintain a low leverage at the same time.
Thank you, André. We still don't have any live questions. If you have any live questions, press pound and five. There we have one.
The next question comes from Håkon Astrup from DNB Markets. Please go ahead.
Good morning. Two questions from me. The first one, just a quick follow-up on your guiding on interest rates. So just to understand, when you are saying NOK 200 million in lower run rate interest, cost, that is assuming short-term rates at current levels. So if the short-term rates, decline from where it is today, that should be more than NOK 200 million, is that, correct?
Yes. So, all else equal, we're in terms of the floating rate, we're targeting to reduce the margin, the blended margin of our outstanding facilities. And of course, there's also other elements as improving our cash management setup throughout all our markets, where we expect to also have some reductions in interest expense.
Perfect.
So-
Very clear. And then just... Yep.
Yeah, please go on.
Yeah, then just a question on your, say, hedging strategy going forward. Will you now say how will you hedge your new portfolio and your new portfolio acquisitions? And how would you, say, target your hedging ratio going forward?
So we don't necessarily hedge specific investments. We hedge our outstanding interest expense. As we point out in the material, our target is to continue to have a high degree of hedging ratio above 50%, which we still do have at the end of this quarter at 53%. We had some hedges that matured in the first quarter, and we have made new ones in this quarter. So we currently have more than 50% coverage with maturity above, on average, above two years. So the clear strategy is to continue to make sure that we have transparency and visibility into our interest expense.
So what will determine if you, say, increase it from more from this level? Is it the attractiveness of a hedge, or is it the other consideration that impacts whether you increase it further from where it is today?
It's always a balance, right? You just, you obviously want to have some transparency and visibility, but you also want to have some flexibility. So hedging 100% may not always be the perfect solution. So it's a balance of striking that flexibility and transparency. We're quite happy with where we are right now.
Perfect. Thank you very much.
Sure.
Thank you, Håkon. Then I think we are, we have finalized all the questions. So with that, we can conclude this first quarter presentation. If you have any questions that comes to your mind after this presentation, you feel free to contact us. My contact details you can find on the last page of the presentation. So with that, thank you very much, and we will see you again in August.
Thank you very much.