Okay, good morning, everybody, and welcome to the second quarter presentation for B2 Impact. I'm Erik Johnsen, and with me today I have André Adolfsen presenting. Second quarter was an eventful quarter for B2 Impact, and going into the third quarter, we have closed a couple of strategic, let's say, deals and, we are happy of the market that we are currently under. Let's go to the highlights for the quarter. Both unsecured and secured markets performed very well in the quarter. Collection is the core of our business and we performed 106% of the unsecured curves that we have. Also secured asset has a good momentum, both, recoveries on the secured portfolio, but also REOs has performed very well.
We sold REOs for over NOK 100 million and momentum is there and we also had a margin of 36% of the REO sold. Very good REO market. We are in the final stages of the restructuring program that we started a couple of years ago. We have today sold Bulgaria. I'll get back to that a little bit later. We have made an SPA. The final conclusion of the deal will be in October. We also concluded the deal with PIMCO which segregated the asset from the servicing and this is a milestone for B2 Impact, so we see the end of the restructuring period. We also see then the performance and scalability and improved scalability in our platforms has come as a consequence of the things that we have done.
We see an increased investment capacity. This last quarter we did more portfolio evaluations and we also see the number of portfolios coming to market has increased during the quarter and going into third quarter we see a good momentum. The pipeline is good. The diversity of portfolios in different regions are increasing and also we see that the portfolio, the IRRs on the portfolio that we see now is good and we also have been having a very good performance on our portfolio that we've been buying so far in 2022. As I said, we received the PIMCO funding. It was concluded. It's been stretched out in time, but finally now we have that concluded and it's very good that we have finalized it and we received EUR 160 million in cash euro on account the other day.
The divestment of DCA Bulgaria is in accordance with the previous announcement. We were going to tone down the footprint a little bit. At the same time we want to use the money to reinvest in our other platforms where we have better scalability and also lower cost to collect. This is in line with previous communication and we're really happy that we concluded this deal. Also, the RCF announced in the previous quarter was concluded in third quarter. This gives us a good funding together with the two previous announcement, the PIMCO deal as well as the Bulgarian deal. The Bulgarian deal will be most likely concluded hopefully in October, but it's up to the, let's say, the financial authorities in Bulgaria to accept the deal. Let's go to the key figures.
We have cash collection of NOK 1.2 billion. Very good cash collections in the quarter that passed. We said REO sales was good. The strategy that we started with REOs and do repossession REOs and selling it afterwards has been very, very successful for B2 Impact and this continued to be successful and going into third quarter we see good performance also. Net revenue is NOK 748 million. Cash EBITDA good, very good, NOK 949 million. Adjusted net profit of NOK 173. The core operation is going very well. NOK 173 is about a 12.5% return on equity last 12 month using that. We have also if you look at the market value, then we actually have 16%, 17% return on invested capital.
It's very good return. We see the portfolio investment. As we said, going into second quarter we anticipated the volume to go up. It did, and the number of portfolios that we look at and we invested in was 758 and the momentum is very good starting with third quarter. Now, as I said, it's been an active market. The volumes are up. We valued more deals and also we see at the end of the second quarter we have invested as well as committed capital of NOK 1.3 billion already for the year.
At this point of time, we have committed over NOK 1.5 billion so far for in the third quarter. We also see the portfolios are more divided between consumer finance as well as banking as portfolios to a larger extent. We see that the extent the portfolios coming to market is widespread across the different regions. Good momentum going into third quarter. We anticipate still to invest around NOK 3 billion for the year and also we see the IRRs that we have on the portfolios are good and also as I said, the performance on the portfolio that we have already invested in 2022 are in line and very good with the portfolios that we invested in 2021 as well.
The performance on the portfolio are good, the momentum going into the quarter is good, and we are in a very healthy financial situation to participate in the marketplace, the way we stand today. Now, this has been a strategic journey and the new B2 Impact is sort of starting taking place. We have scaled down in some markets. We have divested in some markets, but this started really back in 2020. Beginning of 2020, we had a new organizational structure. We were saying that we had two business line, unsecured and secured, two different capabilities that is needed for doing the collection recoveries. This has been worked on, and we see that the new segregation of those and also the new process and strategy with especially within the secured has been really paying off for B2 Impact.
In second quarter of 2021 into, let's say, the fourth quarter, we had reputable investor looking at the secured portfolios and, in parallel, it must be said that we did very good recovery but it then continue with the senior financing with PIMCO alone and also then keeping the ownership of our portfolios ourselves which we see today was the right strategy as our return on the portfolio has been very good during this period. It must be said during this period we had a lot of initiatives in the unsecured market as well. Digitalizations as well as data analytics has been less incorporated into the business model of B2Holding and we do see that these results are coming through now to a much larger extent than we did only a year ago.
We see the very good performance on that. Now, last quarter we talked about Veraltis. Veraltis is the master and special servicer in the region of SEE and CE region, Central Europe and South-Eastern Europe including then Italy and France. This servicer is a special servicer and master servicer that has been established and will service our own portfolio as well as others' portfolios and this is now finalized with Bulgaria being sold, didn't really fit into the constellation there. Bulgaria mainly had unsecured portfolios and in the area here for Veraltis there is mainly also secured portfolios. We closed now the PIMCO deal, very important for us also for the future and we also then as I said closed the DCA deals or actually the SPA has been closed and it's going to be concluded at a later stage.
Now, what does this mean for B2 Impact? It means that we have during this period having improved scalability across our markets. If you look at the graphs up here to the left we see that on the secured side we've been having steady collection throughout this period. At the same time the ERC has been going down. If you look at the number of people it's been going down from 1,047 and that exemplifies also the costs related to the operations down to 772. With sale of Bulgaria we're down to 600. Also on the unsecured we see the same happening. We have very good stable collection. Collection is ticking up now that we also start investing more and we see also the ERC by the way, the last quarter ticking up on the unsecured markets.
Very good collection on the secured, unsecured portfolios and we do see the initiatives and this is important and data analytics and also digitalization now making results positive. Same again with the FTEs development. We have a lower number of people in operations. We are more efficient and we also see the scalability that we've been building for the last couple years now really making its mark both in the secured as well as the unsecured market. I'll leave the microphone and over to André that will take us through the numbers.
Thank you, Erik. Before we go into the financial performance, I would like to walk you through some of the adjustments that we made in the quarter which are related to the sale of Bulgaria as well as the continued restructuring process of secured as Erik mentioned earlier. The sale of Bulgaria, it was signed now in the third quarter. We expect to close the transaction during October with the proceeds of EUR 48 million. This will result in some non-cash effects or has resulted in non-cash effects in the second quarter, where we have written down mainly goodwill and other intangible assets. This impacts EBIT by NOK 135 million and impacts net profit by NOK 105 million.
In this table, this is reflected in the Adjusted EBIT as well as the adjusted net profit. There's also an effect on net revenue, which is not adjusted out in this table, which is NOK 32 million. Consequently, the underlying net revenue in the period was NOK 780 million, which is 3% up compared to last year and 5% up in constant currency. We also had non-recurring costs related to the restructuring process, which was NOK 56 million in the quarter. This is higher than what we communicated back in the first quarter as the process have been a bit more lengthy than anticipated. We expect also some NRIs in the third quarter related to the restructuring process and to the sale of Bulgaria, but not to the same extent as the first and the second quarter.
Moving into the underlying results for the quarter, we are, as Erik mentioned, very pleased with the underlying cash collections that we have seen. Cash collection for the group is up 1% year-over-year, and as you know, we have not invested to a large extent over the last two years. The cash collection is up 3% in constant currency. Now, this reflects strong performance across all our asset classes. On the unsecured side, we delivered 6% above the latest forecast, which is an uptick in performance, but again reflects the trend that we have seen now over the last two years. Secured collections came in very significantly above the curve at 231%. This reflects some earlier collections than anticipated, as well as higher values than we have in our curves today.
REO sales is continuing a very positive trend, coming in at NOK 103 million in the quarter with a solid margin to book value of 34%. I'll come back to REOs a bit more in the next slide. Cash EBITDA NOK 949 million, which is up 1% in constant currency. The Adjusted EBIT up 3% year-over-year, 5% in constant currency. We are delivering growth despite that investment volume did not come up before the second quarter. I'll come a bit back to this and some guidance on the next slide. The underlying growth in earnings is again reflected by obviously the strong cash collections, but also stable underlying cost base.
In terms of investments came in at NOK 758 million, which is an uptick from previous quarters. We are currently at the level in the middle of August, just above NOK 1.5 billion in invested and committed capital for the full year. Looking at the adjusted net profit, as mentioned earlier, it's adjusted for the impact of Bulgaria as well as the restructuring of the secured business. Adjusted net profit came in at NOK 173 million, which is up 17% year-over-year. Now, this obviously reflects again the underlying operational performance, but it's important to notice that we do have 83% interest hedging ratio currently, which impacts the net profit positively in the quarter.
I also want to highlight that the underlying EPS and return on equity adjusted for, again, the adjustments I mentioned earlier, came in at EPS of 0.43 NOK per share and return on equity of 12.5% for the last 12 months. On the next slide, I want to elaborate a bit more on the collection trend as well as provide you with some guidance for the remainder of the year. The unsecured performance, again, we saw an uptick in the second quarter, but we've seen a positive trend over the last five quarters. Now, this is related to good performance on our back book, but also accretive new investments made over the last six months.
Looking forward, at least for the next six months on unsecured, we expect a continued uptick in ERC, and we do expect to see a collection performance in line or above what we've seen on average for the last five quarters. Secured collections is continuing to develop very stable, and we're actually delivering higher cash collections for the secured business in the quarter compared to last year, despite limited new investments. We expect a similar trend on secured in the second half of the year as the first half of the year. When it comes to REOs sold, year to date, we are at NOK 239 million. For the first six months, that is north of 30% margin to book value. This is 80% already of the communicated target at the beginning of the year.
We have seen a continued positive trend slightly above our expectations, and we consequently increase our sales target to 400 from 300 for the full year. I also want to highlight that for the second half of the year, we also expect a notable uptick in collections on our JVs compared to the first half. This is driven by some expected larger secured tickets coming in the third and fourth quarter. All in all, we should expect to see an uptick in ERC as well as strong collection performance across the asset classes also for the last part of the year. Moving to slide 10, we elaborate a bit more on the cash earnings, which is obviously a result of the strong performance that we've seen in the quarter.
Cash earnings came in this quarter at NOK 226 million, which is before any repayment of debt and payment of dividends. During the quarter, we have both paid dividends and made share buybacks, as well as increased investment volume as mentioned. Consequently, the leverage has a slight uptick from the previous quarter, from 2.3-2.4, but still very low from a historic point of view. Now, Erik talked about this, but it is very important to highlight that we have seen very significant efficiency improvements across the group, as well as improved scalability across many of our platforms. Now, this is reflected obviously as mentioned earlier, on the collection performance. We do see growth in cash collection year-over-year. We talked about this some quarters ago.
ERC has come down for the group, but we did expect to see cash collections come up for a couple of reasons. First of all, stronger collections on the unsecured side, better collection performance, getting more out of our existing base. We expected to see sale of large secured claims or REOs, which we now expect also to continue into the second half of the year. On the cost side, we have a very stable development. We do have an increase of about 4% in OpEx in the quarter. This is related to activity based variable cost. We have been able to contain inflation in our cost base and the underlying personnel cost in the group is actually down year-over-year, despite the high salary inflation we saw both last year and so far this year.
Looking at what Erik presented earlier on the FTE side, the full impact of the lower amount of FTEs is still not fully reflected in the cost base, which will give us some room to maneuver when inflation in salaries continues to increase. I forgot to mention one thing. Obviously, when we do the sale of Bulgaria, this will impact our cost base. It impacts the FTEs by NOK 172 million. This is 9% of the cost base. Bulgaria will also, the impact of OpEx will be approximately NOK 90 million per year, or about 5.5% of OpEx, which will go out of the group. I want to highlight again what Erik mentioned regarding the redeployment of the proceeds.
We expect in the current market environment to be able to redeploy the proceeds quite quickly with the supply of portfolios that we see today. We expect to be able to do this at a much lower cost to collect. The cost to collect in Bulgaria is currently north of 30%, and we see that we're able today on unsecured to redeploy capital with a marginal cost to collect in the single digits. Now, we've seen a very positive development on the investment side in the quarter and so far this year. We have invested NOK 758 million in the second quarter. This has resulted in an increase in ERC in unsecured of 8%.
I want to highlight that the increase in volume, we have done that while maintaining price discipline, which is very important to us, and the increase in volume is coming from an increase of supply of portfolios in the market. In terms of investment mix, we have seen activity across all our markets. The main part of the investments in the first half has been in Poland and Northern Europe. The activity level that we currently see and going into the second half of the year, we see a clear trend that there is more portfolios also coming out in the Southern and Eastern European markets. Pipeline going into the second half looks very promising.
Highlight again that we maintain the guidance that we have given of NOK 3 billion, around NOK 3 billion investments for the full year. We are very happy to be able to announce several positive impacts on our funding base. Both the sale of Bulgaria, the PIMCO loan and obviously the communicated expansion of the RCF, which we communicated back in Q1 and now closed during June at very favorable terms for the group. The senior financing with PIMCO was also concluded just after the second quarter, and we now have NOK 166 million facility available to the group. The NOK 166 million facility is slightly lower than what you may remember from previous communication, and this is related to the sale of Bulgaria. The sale of Bulgaria it was signed in August.
We expect it to be closed around October, which will give the group proceeds of EUR 48 million. Important to highlight that this will be used to repay the RCF. Following all these events, including the sale of Bulgaria, we will have approximately EUR 500 million available of liquidity, including very strong cash flow expected in the upcoming quarters. Moving into the second half of the year, we are very comfortable and feel we are in a very good position to take advantage of the market conditions, which is important. We do see an increase in supply of portfolios.
We have the necessary liquidity to invest, and we also have, with the current position, the necessary liquidity to invest and at the same time take out the upcoming bond maturity, which is in November. With that, I leave the word to you again, Erik.
Thank you. Let's just take the summary. Now, we see the collections and recoveries continue into third quarter. It's good. Good stable collections both in all asset classes that we see, both on the secured, unsecured as well as REOs. As we said, we have improved our scalability and that has impact on investment that we do further and as we increase also the investment on the platforms, we see the scalability is there. The restructuring that we've been going through for a long period of time is coming to the end and the cost related to those restructuring also will come to an end. We believe this has very good impact on B2 Impact going forward.
We have closed the senior financing and extended the RCF and we are as far as we can see in a very good position now to take advantage of the market going forward. We have gone through a restructuring period. We have been going through market conditions that has been unstable. Now, we see the number of portfolios coming to the market with good investment returns as well as the organization is more ready than ever to take on new volumes without increasing costs to a large extent. We feel that we are in a very good position now with the market also improving going forward. That ends our presentations and we are ready to take questions.
Thank you both. We will then kindly ask those who have questions to use the microphone so we can get the questions on the webcast. I think it was Jan-Erik first, so I will run up with the microphone.
Thank you. Good morning. Jan Erik Gjerland from ABG. Three questions. The first one on the IRR. You say that you see good IRR levels these days. Could you exemplify a little bit on how your back book is looking? What kind of levels you are now investing in and what you're seeing in the marketplace? Secondly, on the restructuring side, you said you were finished. Bulgaria is still sort of the one that you will leave and then you have continued with the rest. I kinda understood earlier that maybe you were sort of looking into more of your countries. Just could you give us a little bit examples on that? Finally, on disposable income.
You write a little bit in the text that you look deeper into how this energy crisis, the war, et cetera, could impact your collection. What kind of parameters are you looking at and what is your biggest worries when it comes to collection and the disposable income? Thank you.
Yeah. André, maybe you can take the-
I can as always answer the IRR question and we don't guide on specific IRRs. I think the only thing I can say is that the investments we have made during the pandemic has been you know at a low level and consequently the IRR in that period has been higher. We now see an increased volume which consequently is larger portfolios with more competition. That takes the IRR back to probably levels we saw pre-pandemic or slightly better. It's difficult to guide on the total market. What's important for us is the volume we are able to deploy with the margins that we are able to generate on the portfolios that we see.
We are buying into assets where we know that we have certain capabilities, and currently we are doing that at very favorable IRRs, and we are over-performing all those portfolios so far this year. On average, it's very accretive to the collection performance, as you can see from the 106%.
When it comes to the restructuring process, it's been taking a while. We see that by sale of Bulgaria, we're coming to the end of the big restructuring. There will always be improvements going on in the organization, and that will continue, of course. When it comes to number of or the footprint as you refer to, we have scaled down operations in 3-4 countries, so we are more at the lower range there, and we also see the activity in those markets has been going down. If you look at our investments over the past quarters, we have increased investments on platforms that has given us a better scalability and better return.
That is something so we have been striving for and we do see that come through in the numbers as well. The last question was...
Disposable income.
Yeah, the disposable income. So far, we do not see the interest rates or, let's say, the increase in fuel costs and so on actually affecting us at all. It should be said inflation as such increases normally the lower side of the earnings higher and that is coming to us as a positive effect. Also, when it comes to we bought portfolios in anticipation of collection generally goes up also when the earnings goes up. In general, we have concluded that the inflation consequences is giving us more portfolios most likely going forward, but at the same time will not impact our collection base to large extent at all, and we haven't seen that so far.
Okay. Was that answers to questions, Håkon? I think it was Håkon.
Håkon Astrup from DNB Markets. Two questions from me. The first one on the collection performance on unsecured. 106% is, of course, very strong. Can you add some more color to any regional differences? Any countries that is particularly strong or where it's more challenging? That was the first question. The second question, just a clarification on the investments guiding of around NOK 3 billion. Is that the gross investment number that you are expecting, or is it net after subtracting the ERC in Bulgaria?
Well, let's take the first one first. Collection performance, as I highlighted earlier, we do see strong performance on our back book. The strong performance on our back book is an improvement actually across the markets. In terms of the newer investments, they have been mainly in the Nordics and in Poland, as you've seen from the results. Those investments have outperformed our expectations. You can say that obviously due to the ERC that we have, it is the Nordics and Poland that drive the collection improvements. It's actually performance increase across the group. You know, Erik touched upon the inflation and, you know, we don't know exactly, obviously, as everyone else, what's going to happen going forward.
We have looked into this and the increase in salaries that we have seen across low income groups has impacted the collection performance that we have seen as the income in relation to the nominal value of the loans has increased. This is something we looked at from the beginning of the year and expected this to have an impact. It's quite clear so far in the results that there are external factors also that impacts the results positively. In terms of the guidance, it is not net of Bulgaria. It is a target for the group. We stick to the same target of NOK 3 billion for the group. It's not changed in any way due to Bulgaria.
Just, elaborate on how much ERC you're losing in Bulgaria?
It is about 4% of the total.
Perfect.
Above 4%.
Thank you.
Sure.
Vegard?
Yes. Thank you. Vegard Toverud from Pareto . I have two question. First on cost. You mentioned that you expect also some one-off costs in the coming quarters. Could you provide some details to the level of those one-offs and also, if possible, some kind of baseline or underlying costs that we should expect next year?
Next year, I think it's a bit early to guide. Obviously it depends on development in inflation, et cetera. We do expect that the impact you're seeing on FDs to have a positive impact on the group costs going forward. We expect an increase in cost driven by investment, rather the opposite. A stable cost base at an increase in ERC going forward. I don't remember your first question.
You mentioned that you have substantial one-offs now.
Yes.
In the quarter.
Yes.
In connection with the financing and the master servicing. You mentioned also that you could see some one-off items over the next quarter. I just wondered if you could give some more details, the level of those so that how much we should expect.
Hopefully as low as possible. This is a very complex restructuring of the group. As you can see, the number of FTEs is coming down significantly in the area. The cost related to this restructuring, we have to point out that this is not related to the financing standalone. It's related to the full restructuring of the organization. This will impact the third quarter. It's difficult to guide on a specific number for you. It will be much lower than we've seen in the first two quarters. I think that's what we can say so far.
Okay. Thank you. The second question is more on the outlook for the South-Eastern Europe region. I'm not that familiar with the cooperation between the countries within the region, how that's structured, and also your position in those countries. As far as I remember at your Capital Markets Day, although a few years ago, Bulgaria, you had a number one position in Bulgaria, whereas you had top three or top 10 position in the other countries. With Bulgaria now out, where does this leave the other countries in the region?
If you look at Croatia, Slovenia, and Serbia, we have a good position still. We have very large investments still in those countries. I would say that we are number one in those countries. There is a couple others that has also been investing quite a bit there over the past years. EOS is one of them that has a good position there. If you look at Romania, we have a good position in Romania on the unsecured. We see that on a secured basis, it's a little bit standstill due to legislation that came into effect there. We do not do at this time a large investment in the secured space, but on the unsecured space, we do.
When it comes to Cyprus, we have a good position. The biggest position there, of course, is PIMCO that bought several billion NOK portfolio. We have a good position in and we've done some very good investments in Cyprus. In Greece, we see our performance on our platform. We are a smaller, not the largest players, of course, in Greece. However, we would say that in comparison, we had our portfolio, let's say, the collection on those portfolio we had with several others. Our co-investors wanted us to do the whole collection due to performance of our platform was better than the others. We see our performance there good, even though we're not the largest players.
The sale in Bulgaria doesn't impact your position or the profitability in Romania.
No.
Or Greece in any way?
No.
You're happy to stay in those countries?
No, it doesn't impact.
Mm.
The reorganization of Veraltis has given us a more steady platform to work from and more cost efficient, and Bulgaria didn't really fit into that structure.
Important to highlight that it's not a market by market position we're taking. We're establishing a cross-border master servicer for secured. We're aiming at taking a position within secured servicing in the area. Obviously we're positioning ourselves to take the leading position across these markets. Market by market, maybe not number one, but the master servicer is clearly the target is to take a leading servicing position within secured in these markets.
Good morning. Joakim from Arctic Securities. I have a couple of questions as well. If I start with dividends, you have a very, very wide range, with NOK 3 billion investments, this year. With the current outlook, could you give some soft guidance to where we should expect dividends? The second one related to dividends is just relating to the write-down, if you are considering to keeping that aside since it's non-cash.
Dividends are in the bond agreements, we can give dividends up to 50% of the net results. That is the limitation on the dividend side. The board has said that we will do dividends and repurchase of shares up to 50%. There is no guidance on specific level of dividends or repurchase. That is more up to how we see the market conditions at that point in time when the general assembly is gathering every year.
Okay. Just related to PIMCO, since the financing was a bit delayed, when should we expect the first co-investment, and could you give some color on that?
Well, we are looking at the investments together. We've been looking at several investments already. Some of them we actually lost due to the pricing of those portfolios, and we both agreed that then we let it go. Of course, we are looking at new investments and we have a dialogue concerning the front book. It's now been concentrating on finalization of the deal as such to finalize that. Of course, now we're gonna have meetings and so on to look at. When the deal comes up, we are in contact.
Okay.
We are in the market for new portfolios together.
Just finally, when did you expect Bulgaria to close?
October is the expectation, but you know, the Central Bank in Bulgaria has to give the go-ahead. When they are giving that, it's uncertain. Let's say October is our best estimate at this point in time.
Okay, thanks.
Thank you. Just on the finalization of the PIMCO funding, if we should call it that. If I don't remember this incorrectly, it was a flat 5% we discussed earlier.
Mm-hmm.
Now it's Euribor fixed. Why did you change that?
Oh, you can take it.
Should I take it? Well, it has changed to floating 4.55%. They approached us given the current market conditions and asked for this. We discussed and we looked at the potential of meeting their expectations, which was the best for them. They met us at a level of 4.55, which in the medium term will give us lower interest expense, in particular with the hedging ratio that we have. I think the outcome of this is a testament to the partnership that we're having. We're able to meet each other. They went down from 5% to 4.55%, and we met their floating request. That's the background for that.
Should be just mentioned that we have secured our interest caps and swaps on 83% of our loans outstanding. Which we have had all the time as we've been going down, but of course, the payback time is back. The interest rates at this point in time, we have secured that. 83% of loans outstanding.
Jan Erik from ABG again. Just to follow up. The first one was on the reinvestment of the Bulgarian. Did you say that it was to a single digit cost to collect level you were reinvesting into? Because you don't have that in any country as I can see on your slides.
No. What we said is that we expect to be able to redeploy at a marginal cost to collect in the single digits, which is what we have done in unsecured so far this year.
Okay. Secondly, on the financing, as you pointed to, when is your hedges running out? Do you constantly reinvest into hedges, or how do you run your sort of hedging book? Just so we understand what kind of interest level you are up to going forward.
Oh, it's you. Should I take it?
Yeah.
Yeah.
You take it.
It's been the strategy of the company for a long time to make sure that we have a certain coverage in terms of interest hedge. We had that before the pandemic, and we had it throughout the pandemic. I think a balanced level should be in the area of 80%. We don't want to be too high covered. As we saw during the pandemic when we took down leverage, we were close to 100% or above, which is not where we want to be, right? We will continue to do this going forward with the aim of being hedged in the area of 80% over time.
The current hedge is around 1.5-2 years.
Okay. We have a few questions online. We will start with Ulrich from Nordea. First question, what is your sensitivity to 1% higher interest rates, interbank interest rates? Well, the follow-up question, which I think you've answered, have you hedged the floating PIMCO financing?
The floating PIMCO financing goes into the hedge that we already have. We have 83% covered. That is total debt. PIMCO debt is included into that. A percentage increase, as we have hedged, 83% doesn't influence too much at this point in time, of course. Going forward, with the continuation of if the interest rate were to increase, of course, that will also impact us, going forward. At the same time, then you will have also return on invested capital that will increase as well. Those will normally follow each other.
Another question from Ulrich, which I guess I can answer as well. Any loss of non-portfolio revenue with the exit of Bulgaria? For example, 3PC revenue. Which is no.
Thank you, Rasmus.
I'm not sure if I understand the question, but I'll see if you understand it. There's a question from an investor, it seems. What is the result before tax of REOs after operating cost and fully allocated interest cost?
It depends on where the REOs are realized. The tax rates are a little bit different in a different market. Also, we have...
Sorry, Erik.
Hmm?
Before tax.
Yeah, exactly. Before tax is if you sell it for. We have 36% margin. If you then do the calculation, you would have about a little bit above EUR 30 million or Norwegian kroner in profit before tax. After tax then will of course vary depending on where the location of the realization of the asset is.
Let me see. I think that concludes the questions we had online, so thank you for that.
Okay. On that note, thank you very much and, see you next quarter. Thank you very much.