Welcome to Hoist Finance Q1 2024 report presentation. For the first part of the presentation, participants will be in listen-only mode. During the questions and answers session, participants are able to ask questions by dialing pound key five on their telephone keypad. Now, I will hand the conference over to CEO Harry Vranjes and CFO Christian Wallentin. Please go ahead.
Thank you very much. Good morning, everyone, and welcome to Hoist Finance Earnings Call for the Q1 2024. I am Harry Vranjes, the CEO of Hoist Finance, and this time calling in from home, we have a very sick CFO, Christian Wallentin. So we will-
Good morning, everyone.
... We will try to do this, not being in the same room, for the first time for me at least. Hopefully the technology will work out just fine. Together, we will take you through the results and highlights of this Q1 . But before we do that, just like last time, I want to repeat and try to drive home the message about what we at Hoist Finance are about. We are a performing financial institution working with non-performing loans. We are a different animal compared to the rest of the industry. Hoist Finance is a regulated credit market institution, supervised by the Swedish FSA. As such, we have a different regulatory environment and a different funding model than our peers.
As you know, our main funding source, some 70%, comes from savings accounts from the public. The remaining 30% are various types of bonds that we hold to ensure a balanced funding mix and reliable access to the markets. Now, this gives us a considerable funding cost advantage compared to the rest of the industry, but of course, the regulated status also comes with, let's say, a relatively high fixed cost. Now, our strategy is to grow our portfolio to some SEK 36 billion by the end of 2026, and to keep our cost base aligned to that growth. And we do that through combining our internal capabilities with outsourcing partners. So we run a very collaborative model, let's say.
Now, we expect direct costs to grow in line with portfolio growth, and indirect costs to grow in line with inflation or just above. Now, and I think what we can see some signs of during this Q1 is that this operating leverage, right, is starting to happen, where we see that the portfolio grows 15%, income 27%, and costs 10%. Now, so many peers are going capital lighter, focusing on third-party servicing. We are, and we want to continue to be, capital heavy. We have the setup, we have the access, and we have the balance sheet for it. So now, let's start with the highlights of the Q1 here.
Yes, profit before tax came in at SEK 284 million, a big improvement compared to the same quarter last year. Now, we had some costs related to the rejuvenation program last year, but I would say we have some similar costs this quarter for restructurings that we are doing sort of as business as usual. Return on equity came in at 19%, helped, we should say, by an unusually low tax rate for the quarter, assuming our sort of usual tax rate, and that will even out over the year. Return on equity is around the 15% mark or basically in line with our core financial target.
We closed portfolio investments of SEK 2.1 billion in the quarter, a solid investment quarter and one of our better, if not the best, Q1 so far in terms of acquisitions. January did start out slow, I would say, across Europe, but then activity picked up significantly in February, and we see a healthy pipeline for the rest of the year, both in the primary market and in the secondary. And we still see repricing continuing slowly, slowly. And after quarter closing, we've signed portfolios of roughly SEK 1 billion, yeah, during what is now Q2, I guess. Collection performance, very strong in the quarter, came in at 106%. Solid performance across Europe.
Despite the impact of Easter, et cetera, landing in the last days of March. And so we still see very limited impact of, let's say, the cost of living crisis and the macro environment around Europe. And we're very pleased to see this level of operational performance around the group. In terms of operations, we continue to work on operational efficiency across the company. We mentioned before that we are bringing home the, let's say, running and maintenance of our IT infrastructure. We're in the middle of that process now, and it's going very smoothly, I must say. But then, of course, we also do initiatives around the markets.
The strategy or the modus operandi, basically, is to keep these initiatives small, local, and clearly measurable. So if we have a problem in country X, in the scanning department or something, you know, that is a problem that we solve in that country, not by starting a group initiative and procuring new global systems, et cetera. This is a local responsibility, and that's how we want to keep it. During the quarter, a big event was the confirmation from the Swedish FSA on the Pillar II guidance at 0.5%. This is within our existing buffers, so it does not lead to any change of our financial targets. We are very happy that this decision came.
It removes uncertainty that has been there for quite some time, and we believe that it confirms. Sorry, our screen went black here, but now it's back again. Yeah. We believe it confirms the way Hoist Finance works with risks and with our balance sheet overall. What else? We launched our share repurchase scheme in the Q1 , where we wanted to buy back shares for SEK 100 million up until the AGM, which is on the seventh of May. I believe this program most likely ends this week or next, as we expect to hit the 100 million mark.
Then we will see what the AGM has to say about anything for the future in that respect. Now, during the quarter, we've also issued senior unsecured bonds at spreads ranging from 325 to 375. And comparing that to the same quarter last year, spreads were significantly higher. And we believe that this sort of shows a greater understanding of and confirmation of our model out in the markets. And yes, we have a strong capital and liquidity position, significantly above the regulatory requirements, with a CET ratio of 14.31%. So, I think those are the highlights. A lot of stuff has happened in the quarter.
There are activities across Europe in the company. But now I'll hand you over to Christian with a shaky voice take us through the details.
Thank you, Harry. Hopefully, not that shaky voice, but let's take it forward here. So Q1 financial summary. We had a strong start to 2024, with Q1 ROE of 19%, and this is based on the foundation that we built the last few years. So we believe that we have a sound and robust credit portfolio. That's both because we invest in the right assets with the right returns and risk. We also have worked actively with the older book as well. We have also, during the quarter, continued with our continuous improvements efforts, including the IT and also working with some of the markets. We have a high effectiveness and efficiency attention, which will continue.
If you look at the dive into the numbers, we have book growth of 15% compared with a year ago, with interest income of 23%. This reflects two things, so the larger book and also repricing efforts. So we've been a lot of effort on repricing and having higher margins on the books we invest in, and we can see that in the development of these numbers. And that's offsetting slightly more than offsetting the increase in funding costs that we've seen, so which leads to a net interest margin of growth of 16%, which is higher than the 15% book growth. We also think that interest expense should have peaked in our geographies.
We see it in the markets, we hear it from the comments from the central banks, and we also see it in our own deposit rate levels that we're offering. So the foundation of our business is the quality of the book, and that's now reflected in the collection performance. So we have collection performance of 106% in the quarter, and that's driven by Italy, Poland, and Greece in particular. And that's a much broader performance, as Harry mentioned, which is really positive because it means, like, the book is gaining momentum across Europe, which is something we think is really encouraging.
If you look at the gross collections, those are up 25% year-over-year, with a 15% book growth, which means that we are getting more out of the same size of book this year than we did last year, which is also encouraging for our operational efforts that we put in the last few years. If you look at the operating income, which reflects both the value of the interest income and also the collection performance, that is up 27% year-over-year. And in the quarter, we have introduced the last hedge accounting in euro, that's now implemented. So the net results from financial transactions in the P&L will be more stable going forward, even if the currencies move.
And a few things cannot be under hedge accounting, and that's why we see this 16 here during the quarter. We have a continued sharp focus on cost efficiency, and that will clearly continue going forward. We can see that the rejuvenation efforts that we put in the last few years are paying off. We see that the underlying indirect costs are flat, and that's driven from central costs going down, and then some expansion in the markets. For example, over the last year and a bit, we expanded into secured setup in Spain, which is clearly having some indirect costs as well to support that direct effort in secured. We're also working on after the rejuvenation program to go into continuous improvement, and that's exactly what we're doing.
The big two buckets are we're insourcing the IT, as Harry mentioned, and that's ongoing. Expect to conclude that over the next few months. Then we're working to optimize a few markets that are not hitting our internal hurdle rates. So hopefully we can deal with this over the next few quarters as well. We have share of profit from joint ventures. This is. We had two JVs historically. We're now wrapping up the Polish one that started in Q4, and we see the last benefits coming through in Q1. That's the SEK 7 million. So this we expect to be the last contribution from the Polish JV in Poland. Then we have another JV in Greece, so PQH, and that is not yielding benefits on an ongoing basis.
We expect that that will be one payment before it wraps up over the next year or so. It's unclear what the timing and the size of that benefit will be. It depends on the last portfolio that will be sold by the Greek underlying government there. In the quarter, we have a low effective tax rate, and this is due to timing. With the full year, expected tax rate to be—we expect that to be historical average levels. So all in all, if you add this up in the P&L, we see a strong operating leverage in the quarter. Operating income up 27%, and then we have a low cost growth and the book value growth, and that leads to almost doubling of profit before tax.
That together with a low effective tax rate gives us a ROE of 19% for the quarter. Or if you would apply the historical tax rate, then it would be in line with 15%, in line with our financial targets. Also, looking forward, 15% is where we plan, and we're working to be for the full year 2024. Overall, we have strong capital and liquidity, which will enable growth and overall flexibility to create value for our shareholders. We are continuing to have a high pace of change. Overall, it's a very exciting time for Hoist, and we see a lot of interesting and productive developments coming as well.
If you look at the portfolio acquisitions, we invested SEK 2.1 billion in the quarter, so it's a steady investment level that's continuing. We have SEK 1 billion, which is closed and/or signed until today in Q2. We also see that the supportive repricing is continuing. So we've seen, over the last two years, a steady IRR expansion, and we hopefully we can see that rates have peaked now on the funding side. And we do believe that the industry dynamics is supporting continued repricing.
There's a number of our competitors and colleagues in the industry that has a balance sheet topics to work out, and there are also a number of them going for more capital-light strategic models, which means all of this means lower investment volumes on aggregate coming from players that historically have invested a lot into this industry. The demand is on aggregate not as high as it was a few years ago. Here you can see the significant operating leverage during the quarter. This is leading to an almost doubling of profit before tax. This is depending on the growth, clearly, from the portfolio book value, so 15%, and then the health of that book.
So a sound portfolio will always lead to strong collections, and we also see that over time, when there's a strong book, we both can, and we need to do cautious, positive revaluations. We hope that that will support us over the next few years as well. The total cost, they include both in Q1 2023 and in this quarter, some exceptional costs. We didn't label them as items affecting comparability, neither in Q1 2023 nor in Q1 2024. We've chosen only to do that, meaning breaking them out as items affecting comparability if they're material and also clear that they will not reoccur. And that we had a few examples. So we had one large example in 2023, which were rejuvenation costs, and those, the majority of those came in Q2 2023 and Q3 2023.
We didn't have any items affecting comparability in Q1 because they were slightly smaller than in Q2 and Q3. The reason behind this is clearly that continuous improvements will always be a part of our business, so we'll have some minor restructuring, reorganization costs every quarter we would expect over the long term. In this quarter, it was SEK 9 million of exceptional cost that was including both for the IT dual running, and then also, we're restructuring our operations in Romania as well. If you look at our book and the composition of it in Q1, as I mentioned, we see that the repricing in all markets is continuing, so that's ongoing. We'll see if this stops with interest rates peaking. We believe and we hope it will continue.
The vintages 2022 to 2024, they now make up 55% of the current credit portfolio. The reason why this is important is that they are very strong vintages, so there's strong collection performance in these recent vintages. As we've discussed in previous quarterly updates, early performance is a clear indicator for future performance. If it's poor performance, it's even stronger indicator. If it's positive, it's slightly less strong correlation with future performance, but it's still very strong. This is very encouraging. Then the rest of the book, the 45%, which is older, we've done a material cleanup over the last few years of those older vintages, so those are also in good shape and supporting our overall collection performance.
It's worthwhile to say also that we're working very hard to ensure we're managing the book in a prudent and cautious way in order to remain it healthy and to ensure that we have a stable and predictable collection performance. Overall, Harry was mentioning this in his introduction as well, we have a highly diversified book. It's across geographies. If you would look back eight quarters or so, you would see that we have we would have larger concentration in certain markets. Now, it's more spread across Europe, which we're very pleased with. On top of it, we have no single exposure risk, so we invest in consumer, unsecured, and secured. There are very small claims spread across a number of portfolios. We're talking about thousands of portfolios, so there's no single exposure risk in these portfolios.
We have a few that are larger in relative size, and those larger are very small, so they're around SEK 20 million. We have a few of those such that is in the book. It's highly granular exposures, and it's also invested over time. So we're very pleased with the diversified book that we're holding currently. We received our Pillar II guidance during the quarter. This was 50 basis points, which is covered within our management buffer. So this means that all financial targets remain unchanged, so including the minimum quarter one target. We believe that this reflects an understanding from the SFA that our business risk is well managed and also low, which we're happy with.
We spent significant time talking with our regulators to explain how our business works, and we think they have a really solid understanding of Hoist Finance these days. We continue to have strong capital and liquidity levels. This clearly can enable growth. It also gives us flexibility around capital repatriation. We have the AGM, as Harry mentioned, next week, so we will understand how the shareholders think about these priorities, and we will revert if and when necessary to these topics. Overall, the interest rate environment has been strengthening our funding advantage. We still have a very, very stable funding base, and it has become increasingly competitive over time. We still do see that that's the case. We have deposits at 27% to 74% of the overall funding mix currently.
So we're trying to run the deposits at the right level, which is roughly here. So we expect it to be around 70, slightly above, % of the overall mix going forward as well. Overall, we believe the regulators and our banking partners think it's beneficial for us to be banking regulated. We operate within the same and high regulation, which is a real benefit. We have three lines of defense, we have the highest possible consumer protection in the market, and clearly, it gives us access to deposits, which brings competitive pricing to the table. And the regulators see this as supporting the secondary NPL markets, clearly, because we can offer good prices to the banking partners.
On top of it, I think it's important to also mention that it provides a regulated balance sheet. So for example, we cannot borrow as much as we would not be regulated, and we cannot have... And if we would buy companies, for example, then the goodwill would be deducted in our regulatory capital as well, which is a benefit because it provides stability to the balance sheet. That, I will leave over to Harry to take us through the last slides.
... Thank you. Thank you, Christian. Let's see how your voice manages through the question session later. Yes, so, to manage the backstop, we've had, or we have, three options. Basically, we have implemented securitization vehicles, which are currently live. We have been working on co-investment, as a way of managing the backstop. Now, I think, co-investment, we see more as a strategic product going forward. So it will not primarily be used for managing the backstop. Our main alternative for managing the backstop is the SDR.
So with the regulation now moving through chambers, basically, there was a vote that passed in the EU Parliament on the twenty-fourth. Taking it one step further, and I guess it will be published in this Official Journal during early summer, basically making it law. And then it will go into force on January first next year. So we are in discussions with the FSA how this will be implemented in Sweden. And those discussions will go on.
But basically, the main message is that this is moving on through the process, and it looks well, basically every month that passes increasingly attractive and increasingly likely that this will kick in from the first of January 2025. Yes. So to then recap the quarter here, I'll try. I'll be brief here. SEK 284 million earnings before tax, 19% ROE, SEK 2.1 billion investments, strong collection performance, good acquisitions. And I think we see very good sort of response from the internal organization on these operational efficiency projects that we are running across the group, which is very pleasing to see.
We are working on collection strategies, et cetera, and so on, and increasing the level of, say, legal collection, which will also show in the numbers of years to come. Now, and the share purchase scheme that commenced in the Q1 , we believe, is ending around now. And yeah, on the financing, the issuances we've done so far this year, we're very happy to see the spreads coming down, and the strong interest from the debt markets to invest in our instruments. And a strong capital and liquidity position still remaining significantly above the regulatory requirements. With that, I think we'll open up for questions.
There is a possibility to do written questions. We've never tried this before, but... So we'll see if we find these questions once you post them. But as far as I understand, we will be starting with the phone queue.
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. The next question comes from Ermin Keric from Carnegie. Please go ahead.
Hi, thanks for taking my questions and for the presentation. Maybe starting on the collection performance, which was obviously very solid in Q1. How should we think about that for the coming quarters? How much visibility do you have, and do you think this is a reasonable level to extrapolate for the near term? Or do you see macro having a risk of kind of hurting it a little bit going forward?
I think, I don't... I mean, 106% is very strong. So, I don't think we should expect that to be the new normal. But we, as I mentioned before, I mean, we have been keeping track, and we have been monitoring sort of the impact of the cost of living crisis on the repayment patterns. And we haven't seen anything significant there, and I think that continues. So, if anything, maybe a small positive, but I... but I wouldn't extrapolate 106%.
Thanks for that. But maybe just to continue, if we look on your money multiple... That's actually down a little bit, or if we look at the ERC, it's growing less than the book. Is this just that you've kind of been able to front load collections, or is it the composition of the portfolios you're buying that has a lower money multiple?
I think, I mean, we always look at the returns. So, that's a combination between the IRRs, and then the funding cost with the leading to the ROE on each individual book. So of course, sure, we're investing in, I mean, NPLs are a one name, but it consists of a number of different sub-asset classes. So some are much more stable and more almost like performing, and some like non-paying portfolios, you need a much higher return on. So it's quite difficult to draw a line across all of them. But we are seeing that over the last two years, we are increasing both money multiple and the IRRs, and also clearly the ROEs on the portfolios that we book.
But there's no easy rule to draw across all geographies to say that a money multiple is right or wrong, so to speak. And it's also, to be frank, quite difficult to compare against competitors sometimes, because for example, forward flows, which is a large part of many of our competitors now, because they've signed up for this, tend to be much riskier and therefore higher returns as well. And then if you mix in telco and energy into that, then it's even more difficult to. But we are pricing very competitively, so we're having a win ratio, which is reasonable in our view. We don't win too often because then we would push too much, and we don't lose too often, so to speak.
So we have a balanced win ratio, which is something we track really carefully because we don't want to overbid or underbid on the margin. I don't know, Harry, if you want to add something to this.
No, I think you covered it. Thanks.
Great, thank you. I mean, if we continue on that you're seeing a good win ratio, it seems like you're seeing an even increasing activity, especially on the secondary market. If we would also put in a potential buyback program into that, how do you see the opportunity to actually deploy the capital without doing any sort of extraordinary dividends or buybacks? Do you think you could still be at 15% ROE for the full year without continuing to do something actively on the capital?
That is the plan. We would plan to have 15% for the year, and clearly, if we would buy back more stocks, then that would lead to a lower number of shares, so that would help ROE, everything else being equal. But it's not depending on share repurchase, because that's out of our control. So we try to plan. We always focus on planning, but we can control and impact, and this one is for the shareholders, clearly.
Great, thanks. And then, one last thing, if I may. Just on cost, so I saw on one of the slides you mentioned that you had about SEK 9 million for the IT insourcing and then some local initiatives. I think previously you've talked about roughly SEK 50 million for the IT insourcing. So should we expect that whole delta to come in Q2, and then from there on you start to see the savings from H2, or how should we think about the phasing of cost?
I think it's... I mean, we're always trying to be realistic, internally, I try to use the metaphor of driving a car. We always want to keep our eyes open and look at the road ahead. And the IT insourcing, the dual running, the estimate that we had, when we said this, it was SEK 40 million or SEK 50 million. I think it was SEK 50 million for the benefit of 40 of cost, and we are always trying to beat what we set out as a realistic target. So hopefully we can beat that. I don't have any detailed insight into Q2, but it was cheaper than we expected in Q1, and hopefully we can beat Q2 as well, but that remains to be seen.
The savings are still to be the same, regardless?
Yeah, we hope to beat those as well, but those are the numbers that we put out there for now.
In terms of progress on that, so basically it's a contract with 6 modules. I think we've done three of those modules, we've insourced by now, so there's three remaining. So there will be additional cost in Q2, but as Christian says, we hope to beat the SEK 50 million one-off cost.
That's very good. Thank you.
The next question comes from Rickard Strand from Nordea. Please go ahead.
Hi, good morning. Can you hear me?
Yes. Good morning.
Good morning, Rickard. Yes, we can hear you.
So, I thought I'll start with a question on your funding cost. Given that sort of you have a fair share of fixed or term deposits, but we also see that the rates are peaking. So I just wanted to hear if you could give an indication when you expect your funding cost to peak from your deposit base?
... I mean, if you look at, I think it was page, let's see what page it was, page 10, I believe it was in the presentation. You see a clear plateauing of that of that funding cost. And, as I mentioned, I think we hope that we've seen the peak now. It's, it's, it's clearly up to the central banks to to run this. The US is is pushing their interest rate decreases forward, and I think they will, I think it's priced one in December now. And then, Sweden looks very likely in my mind, that we will, we'll see more decreases during the year, and also the European side. And clearly, Sweden and Europe is the two important ones for us.
Hopefully during the year, we will see that this is peaking and then, then slowly coming down.
Thanks. And, tying into that, also on your wholesale funding, given sort of your current growth pattern, what should we expect there, both in terms of wholesale funding, but also AT1 issuance, going forward?
I think it's important to note, should we go for the SDR status, then one of the criteria is the 130% NSFR, and then we would need to pro forma upscale the balance sheet somewhat. So if we would take that decision, then we'll come back to the implications of that, clearly. But on an ongoing basis, we're always, we're both growing and then replacing, so we expect to be in the market this year as well with market funding. And overall, I think, if you read the credit research from Moody's pieces on us, we have a, we're ticking most of their boxes if not all, from memory, from what they want to see from us.
So, that is, in my mind, a representation of how credit investors see us. And as Harry pointed out, we've been seeing tightening spreads over the last 12 months, and hopefully we will continue to earn more tightening spreads. So, that's the hope and I almost dare to say expectation that we will see this, because I think people are starting to understand us. We're delivering more and more on our plan that we presented, and also the risk, I think, is better understood now than two years ago as well.
Thanks. Then, two questions on the capital. CET1 developed quite, quite much stronger than I had anticipated in the quarter. Are there any one-offs that we should bear in mind? I haven't had time yet to dig into the numbers, but, are there any sort of one-offs impacting the development quarter-over-quarter here?
No, I wouldn't... I think the biggest one is the earnings in the quarter. So, we had a really strong quarter, slightly stronger than what we ourselves expected. And that impacts the capital clearly positive. But no, nothing that you wouldn't expect.
Yeah. And then, forward looking on capital, given that the bank package is fully in place, and that you're classified as an SDR from 2025, should we expect then a release on REA to happen from sort of that point in time, sort of early 2025? Or how should we think about the timing here going forward?
I think it's slightly premature to talk about the implications of the SDR, but in general, clearly, we wouldn't have any capital deductions for the backstop impacted NPLs that we have. So, that if we would go into SDR regime, that's one of the positives clearly.
And then, final one then on buybacks. What are the sort of considerations we should bear in mind here in terms of the sort of buybacks versus other types of dividends, et cetera? Sort of given and also on your growth trajectory. You mentioned that you would wait sort of more firmer guideline from the AGM, but how should we reason about this going forward? Are there any reasons why buybacks should not continue here in the second half of 2024?
I think it's not for us to comment in detail. The AGM will need to give the mandate to begin with, and then it's up to the board and the shareholders to, if relevant, restart this. I think there's a number of positives with share repurchases, and there's also a number of positives with the dividends, clearly. And then, growth is there as well. So it's a balance. Sorry, I heard you were trying to break in as well, Harry. Go ahead.
No, no. No, no. Just fully supporting what you're saying there. So, we will, we will, see what shareholders on board want to do going forward here.
Yep. Okay. Thank you very much. That's all for me.
Thank you.
As a reminder, if you wish to ask a question, please dial pound key five on your telephone keypad.
On our screen, the questions queue is empty, and now we're clicking... Oh, okay. This is-
I see one question on SDR, so maybe we should take that one. So it's what's the benefits in short of if we would be turning into an SDR? So I think for us, it's on the really principal level is the recognition of the value that we bring to society, meaning we're fully aligned, we believe, with the regulators and the society wants to, meaning keeping the balance sheet of the banks healthy, so they can continue to finance both businesses and individuals. And then clearly, we're helping people to be able to be part of the financial system and financial health or financial inclusion, whatever you want to call it. And this SDR will enable us to focus on that core mission and business.
So, for example, if we wouldn't be hit by the backstop anymore, the regulation, which is the key benefit of this, that would have a positive impact, as I explained with Rickard's question on CET1 capital, because we wouldn't deduct that. And then, we wouldn't need to leverage other structures which can be complex and where you depend on external parties as well. So those are probably the key benefits for Hoist if we go that direction.
Yeah, and then there's one more question from Per. Is it a sensible investment to increase bonds exposure, to invest in more debt portfolios? The market seems to be in a once in a decade opportunity. Well, I think, one of the... If we look at the primary market, in terms of portfolios for sale, it is strong, but it is, let's say, not, not a once in a decade opportunity at the moment, right? Where we see the very large potential volumes is in the secondary market. And I think the trick there is that those transactions or those discussions are usually very, very complex and take quite some time.
So, we will just have to see where those lead in the case that we are involved in them, of course. But we will stay on the same, let's say, financing split as we have today, the 70-30-ish, unless something extraordinary was to happen. I don't know if you have any additional comments, Christian.
No, I think it's the way we grow is to scale up the balance sheet as it is. We like deposits. It's very stable. It's diversified across our currency markets. We have deposits now in Poland, U.K., Sweden, and in Europe, and so we have the number of different deposit platforms that we can access. So there's plenty of... Just the largest deposit market is in Germany, and there's no-- If we would raise prices, then we would have access to a large amount of much more than we would ever need amount of funding. So we try to leverage the deposit side as much as we can, and then for various reasons, to have access to quick, larger funding.
We also have bonds and also to support our rating. So that mix ensures that we have a really, strong and also, always access to funding when we need it. So it's, it's a good mix that we want to scale up when we grow, that is.
Yeah. Then we have a question from Hammer. I don't know, can everybody on the call see the questions, or do we need to read them? Because this is a long one.
I think it's we only see them, I think.
Okay. So then there's a question from Hammer. What makes the performance of a portfolio generally strong if the repayment is high in the beginning of the lifetime? Are these portfolios bundled according to credit rating and not tranched like a CLO from the movie The Big Short, where triple A and triple B was bundled? Well, let's start by saying that these things are... The portfolios we buy are typically not rated. There it could be potentially in the mortgage portfolios, but that we haven't seen that. So basically, we do the valuations ourselves, right? We bring in experts where we need to from external, and then we do the due diligence, and then we do the analysis ourselves.
For that, we have a 42-man strong men and women strong investment team that work around the clock on analyzing portfolios around Europe. This is not like in the movie Big Short, which was a great movie, by the way, and the book was even better. But yeah, these are individually priced and individually analyzed. Christian, I don't know if you have anything to add there.
Yeah, no, I can add one thing. We've been in business now, starts to get close to 30 years, and if you would accumulate all of our initial views of cash flows in these portfolios. So at every investment decision, we have a cash flow by day, by month, and then you bundle them up into one big cash flow for a portfolio over 15 years. If you would look at every single portfolio, we would add it up and all the expectations, and then you look at realized cash flows coming out of those portfolios. We're at roughly 110% of what we thought at the time of investment.
So the investment team, enabled by solid data, solid analysis, long experience, is, has a very, very strong record of being able to forecast the cash flows coming out of these portfolios. And then it's clearly about pricing the right way, meaning setting the right return requirements, and then you win or you lose these portfolios. But the ones that we won have delivered roughly 110% of the initial expectation on those cash flows. So we believe that we are very, very well placed because of we've been part of the European NPL markets for a very long time across Europe, and we have the data, we have the insight, and we have the right experience in the firm, and particularly in the investment team.
I think that is what makes us stand out on the investment side.
Great. If we click on that button again, does, is there like a refresh thing or something? No, I think that is, that seems to be it. Okay. If there are no further questions, myself and Christian want to thank all of you for the shown interest in Hoist Finance, and I think we'll be closing this call. Thank you very much.
Thank you very much, everyone, for participating.
Thank you.