Hoist Finance AB (publ) (STO:HOFI)

CMD 2018

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Nov 15, 2018

So a very good morning to all of you here in Stockholm. And also a very good morning to all of you following this on the webcast. It's so good to see you all here in together with us with the management team. And it makes me a great pleasure to welcome you to this Capital Markets Day in Horst Finance. I think most of you know me from before. But for those of you who don't know me, maybe just a shorter recap. So I joined Hoyce Finance now almost eight months ago. Well, I think it's on the day actually, eight months ago. But I'm not new to the industry. I used to be CEO for Lindorf in almost five years. And prior to that, I have different jobs in different multinationals, ten years as CFO and fifteen years as CEO. And I think one of the common denominators between these jobs have been changed. And I think change is also going to be coming through as a common denominator in Hoyst. Let me also assure you that we, as a management team, we feel ready, we feel dedicated, we feel committed and we believe that we have put forward very realistic plans for how to achieve value creation in Horst Finance. But let me use this opportunity to introduce to you the management team in Horst Finance. Let's start here with Kristor. Good morning. My name is Kristor Wasson. I'm the CFO, and I've been with Horst for five years now. Hello. I'm Stefan Ohlmeyer. I'm the Chief Investment Officer. I'm based in London, and I joined HOYST in January. Manuel Areale, chief sales officer since, six months. I joined OIST in 2014. I'm based in Rome. We also have a head of investor relations. We also have Victor Nyquist. He's filling in for Anders Karlsson. And Anders Karlsson, he's in the picture there somewhere. He's on to your left side. He's at home with his little baby, Maja. He's got paternity leave. So Victor is doing his job at the moment. So we have this agenda for today and it kind of follows, I guess, the traditions. I will start off by talking about the market outlook and our strategy. Hoyt and Emanuele will take us through sales. Stefan will talk about our investments, our investment criteria, different asset classes, etcetera, and then we will have a coffee break. Will take us through one of the most important topics of today, I guess, which is operational excellence. We will have lunch and then Victoria and Ulf will talk about our OneHoist approach. Kriste will take us through the numbers, the financial review and we will have a wrap up and some Q and A. There will be an opportunity to ask questions also at different intervals here. We will stop after Stefan's presentation on investments. We'll pause there for some Q and A And then we'll have another Q and A session after Bjorn's intro on operational efficiency. We will even stop after Krista, I guess, to have some questions there. So there'll be plenty of opportunity to ask questions and interact with us. So use the opportunity well. For those of you who follow this through the web, there is an opportunity also to ask questions there. There should be an envelope. And we'll read up your read out your questions the break. So Michelle will take care of all your questions later on. So this is the agenda. But let me before I sort of go into the market outlook and the strategy, I feel it's important just to try to reflect back to you how we think about our vision. And our vision in hoist finance is helping people keep their commitments. And I think actually that keeping a promise, returning a favor or sticking up to your commitments is almost like a universal value. And if you think about it, repaying your debt is not only an obligation that you have, but it is also the morally right thing to do for yourself, of course, but also for society at large. And if people did not repay their debts, the cost of credit in society will be significantly higher. So what we do is both relevant and meaningful from different perspectives, from an individual perspective, from a business perspective and from a society point of view. And in hoist finance, what we do every day is interacting with people. We influence people's lives by providing guidance and structure. And I'm not sure about you, but at least I've had both friends, colleagues and family at a certain time period in their lives have had financial difficulties. And of course, having financial difficulties is not only a stressful thing to do stressful thing to experience, it comes with a lot of personal costs. And being more or less financially excluded from society is a very heavy personal burden to carry. And that's why we in Hoist Finance take a lot of pride in our approach to a collection. We have a holistic, amicable approach to collection, trying to find ways for people helping people keep their commitments. And I truly believe that we in Horst Finance, we are a compass to provide direction and we are also the navigation to help people through troubled waters. So I take a lot of pride in what we do in forest finance. Let us then talk about market outlook and our strategy in this market. I think we have some very clear and crisp messages today. First of all, we see a very attractive market out there with significant growth. Number two, hoist finance has a business model that represents a unique and sustainable competitive advantage. As you will see many times during the course of today, we have the lowest funding costs in the industry. Point number three: We see a clear path forward to close our performance gap. Point number four: You have met the team. They have the right personal qualities and the right professional experience to deliver on our strategy. I'm really proud to be working together with this team. Thinking about the market then, what do we see? What is going on? What is the context? What are potentially the concerns in the marketplace? What do we observe? So let me try to address this through these five trends. One is the growth that we see. Second point will be consolidation. The third will be the increasing funding costs that we observe now. The fourth, I'll talk about regulation, that's definitely an important factor. And last but not least, what's going on from a digital perspective and operational efficiency. Obviously an important point for hoist finance. Let's start by talking about growth. This is the non performing loan deal volume. 2017, close to €7,000,000,000 see that the unsecured consumer, the magenta colored here, is a significant portion of the deal volumes, close to 40%. And of course, unsecured consumer is going to be important also in the years to come. We still see a healthy growth in unsecured consumer, here estimated at approximately 6% a year. That's pretty positive. So that's the classic core for hoist finance. We are definitely moved into other asset classes. The microphone is going on and off, think, but now it's back on. When you look at the growth from the other asset classes, we see even stronger growth than from the classic consumer unsecured, here estimated at 17724%. And we in Horst Finance, feel it makes total sense to move into those adjacent asset classes. First of all, this represents a big, almost untapped market potential. Secondly, we only work with other banks. We only do bank originated non performing loans. And of course, we would like to increase the share of wallet that we have with our clients. So when our clients are talking with us and say, we have some unsecured non performing loans or we have some SME, are you interested to help us out? Of course, we want to have that discussion. So it makes total sense from a client point of view. And of course, also, although there are differences between asset classes, there are also very many similarities. So there are operational synergies internally to work with a broader spectrum of non performing loans. We will come back to this. Emmanuel will talk about sales and what we see in the pipeline. And Bjorn will talk about this also. And Stefan will talk about how this sort of how we should think about returns in between different asset classes. The next slide talks about industry consolidation and it should come as no surprise here that there has been significant consolidation in the industry over the last few years. I wouldn't say that we see this daily, but there is definitely a process towards larger companies. And we see that the market share of the top five operators in the space is increasing. I repeat myself, right? So we have just listed up here the biggest competitors in the credit management services industry and we have listed up here the number of transactions M and A transactions that at least we see has been happening. Interim, of course, the combination between Lindorf and Interim, perhaps the largest piece of consolidation Cabot being acquired by Encore, definitely again driving consolidation Lowell, Primera as the owner has been quite active, of course, with JFKrell in Germany, Lowell in The UK and then Remco in The Nordics growing rapidly. Arrow has been quite active too, B2 Holding, yes, sure, definitely in Central and Eastern European markets. And here in Hoist Finance have been doing some consolidation through acquisitions, five deals here mentioned and we will speak about the latest one, which is Maran, a servicing platform that we acquired just recently in Italy. So to share with you then our thinking around industry consolidation, what is our decision criteria? So let me then first say that we are a specialized and focused company. That goes to the core of the strategy. We would rather be in few markets rather than many markets. We would rather work with one client group rather than trying to be everything for everybody everywhere. So we are following a focused strategy. We work with banks in some markets and we don't really have an ambition to open up new geographies to a large extent. That's criteria number one. And of course, since we are regulated as a bank, we want to deploy and use our strong balance sheet. As you know, we have equity and we also are investment grade rated. We have a robust and strong balance sheet. As a point number three then, like to when we are looking for synergies, financial synergies is important for us because we can refinance the target costly financing with our much more cost efficient deposit based funding. So we will be looking to source for financial synergies as well as of course operational synergies. And I truly believe and I've seen this in the industry that synergies in markets are much stronger than synergies across markets. So in essence, we are looking for specialization, we are looking for how we can build benefits of scale in the markets and we are looking how we can develop our skills. So specialization, scale and skill. That's how we think about M and A. If we take one step back and take a look at the market in terms of debt purchase volumes, what's been happening over the last few years? We have just here accumulated nonperforming loans purchases of the biggest competitors in this space. Over the years, since 2012, these companies have acquired non performing loans totaling €10,500,000,000 a significant number. And there are a number of factors behind this growth. One obvious is of course supply. After the financial crisis, banks had non performing loans on their balance sheets totaling 2.5 times the level it was pre crisis. And I think still the level is about two times the level it was before the crisis in 02/2008. So supply is an obvious factor. But of course, regulators have been keen to see banks divesting non performing and addressing their NPL problem. And so they have done. There have also been accounting changes behind this, so there have been a lot of opportunities for companies like ourselves to grow in the market. But don't forget that one of the key drivers on top of what I mentioned also has been availability of funding low cost funding through the bond market. On this page, and most operators here work in the high yield bond market, has had a lot of bond issuance through the years, accumulating here billion. So the high yield market has been open and provided low cost financing to the industry. And as you know, that's not really the case any longer. This slide illustrates that since 2016 or beginning of twenty seventeen, spreads were still coming down somewhat, but you can see from the blue arrow that things have changed. Spreads are coming out. Availability or low cost funding is significantly more constrained. This slide talks about and I had to learn this through this presentation, yield to worst. I didn't appreciate that term before, but it illustrates yield to worst, how we stack up next to the other ones. And it's clear from this slide that relative to competitors, hoist finance is in a very good spot. And if you see the change the last twelve months, the spread has come out significantly more for our competitors relative to hoist finance. The spread has come out for us probably around 20 basis points, whilst for the competitors, we're talking more than 100 basis points. So we think this is a very strong message in terms of where we see that we have a strong and sustainable competitive advantage. The fourth sort of trend I wanted to talk about is regulation. I will not tire you by going through all the changes in banking regulations, but as you can see, there is a magnitude of regulatory requirements that we have to fulfill because we are a bank. But have in mind that Hoist Finance has been regulated as a bank since 1996. So we have vast experience in dealing with this kind of complexity. We have an excellent relationship with the regulators across all our jurisdictions. And I think it's fair to say that we as a company and this goes to the heart of our vision of helping people keep their commitments we have been a strong advocate in the industry of amicable collection. And we have been a strong supporter in regulations that have been imposed to push the industry to have more amicable solutions, a more amicable approach to collections. And I think if you are honest about things, in some markets there used to be practices that we today would find unacceptable. And come to think of it, we in Hoist Finance, and especially myself having lived through the financial crisis as a CEO for a bank, learning about non performing loans the hard way, I actually think that a lot of the regulations that have been imposed on banks to ensure that they are well capitalized, that they are compliant, that they are protecting the customer data, that they are addressing management's needs, those regulatory changes are there for a good reason. So we are supporters of this. And when I think about regulation, I tend to say to my colleagues here that regulation is our friend. We understand regulation. We are used to working with regulation. We're doing that in an effective and efficient manner. And I think that there's going to be more regulation for the industry and not less. And we are in that regard ahead of the curve. And also, since we are only dealing with other banks as our clients, we have a better understanding of their requirements as banks, what makes sense for them when they are thinking about collections. So we think this is a clear commercial advantage too to be regulated as they are. And I also have to say that having joined Horst eight months ago and learning the organization, I have to say that we take on this complexity in a smart and good manner with a very effective approach. Our banking the cost of running the bank with a license is much less than I thought. And we attract talent, we have effective processes and deal with this in an excellent manner. Of course, currently, there are, as it always is, discussions around new regulations. And again, we are used to dealing with this. There's always these kind of discussions. I'm not going to go through all of these. I've highlighted two. And I think on Brexit, which we tend to get a lot of questions about, we struggled a bit trying to nail down what to say on purpose, so we said NA, not applicable. I think everybody struggles to understand what the purpose of Brexit is. So sorry for being a bit political now. Maybe there will be some sort of resolutions. I will add, we are not so much afraid of Brexit really and this goes back to the resilience that we have observed that our business model has. And Stefan will talk you through this and we will show you a slide that shows the impact of macroeconomic changes on the collection. But our business model is very resilient, it's very robust And even though there will potentially be macroeconomic changes in The UK due to Brexit, we don't really see a significant impact on our collections from this. And on regulation, it's too early to speculate what kind of banking regulation changes that might happen in The UK. But UK is definitely our second most important market. It is a market we like. We like mature markets and we are quite optimistic, although realistic about the prospects. The second one I want to bring out then is what's called the NPL backstop. And this NPL backstop is now being discussed. It's a proposal on the table. We're having good dialogues with the relevant authorities on this. And we like the NPL backstop. The purpose of this is good. The purpose is really two things. One is the regulators wants encourage the banks to recognize their exposures earlier and to take action faster. This is a good thing from our point of view. That means that more volume will come to the market. The purpose of this mechanism is to help the secondary market work even better than before, more effective than before. So we can sort of tick both those boxes. And right now, we are having a good discussion with the regulators how to interpret this and to understand the full magnitude of the backstop mechanism. And we are quite convinced that we will find good solutions for the industry. Let's then move on to the fifth trend I want to talk about and that's digital. I think it's fair to say that the industry overall is really not very sophisticated or advanced in this area. The industry is definitely behind what we see fintech is doing or the best retail banks are doing. As said, I used to be CEO of a bank and that was actually the first online bank in Norway. It was originated in 1996. We are not an online collector, that's for sure. Our processes are still very manual. But if you think it through, and I will not read out all of this, but take a look to the far bottom left, talks about dialers, having an effective and efficient dialer in the call center industry. We in Huiz Finance, and Bjorn will come back to this, we're still not there at all our call centers. We need to catch up what we do. Same goes for the customer journeys and the customer portals. Most of the interactions we do with our customers is on phone, via letters, sometimes SMS. So still at a very basic level. I will show you where we are today. We are going to be brutally honest about where we are. And I think that's the best for everybody because that shows us what we need to do. And I truly believe that we can catch up here. I truly believe we can. It goes back to the core of our strategy of being focused in few markets to focus on one type of client group. It makes it easier. But also the fact that we as a company, we are prioritising to be harmonised, standardised, industrialised in everything we Many of the other companies in the sector are just too diversified, too fragmented, too scattered, trying to be everything for everybody to be able to succeed in driving through change in the same manner as we will do. And we have chosen an operating model that drives things from the center. Country borders do not justify country solutions, where group wide solutions work better. So we are going to develop once and then deploy across all our markets. And I seriously doubt that our competitors are able to do so, coming from another company in the industry myself. For those of you who know me that's basically most of you, I guess, you probably know that this is my favorite slide. I've shown it before. I think it's good to show it again because it shows in very clear text or with a clear picture, I guess, where we are. So we are on par profit wise with competitors, illustrated here on our earnings before tax margin twenty one percent twenty seventeen, on par with the peer average. But the thing is that there are two things going on here. First of all, there is a significant contribution to the EBIT earnings before tax margin from our funding model. Significant contribution, the low cost funding. The problem, however, is that this positive is being eaten up by a big negative, which is the performance gap. And I think we have to realize and appreciate the fact that the hoist finance perhaps didn't quite understand the full benefit of the funding model or the full magnitude of the problem, which is the performance gap. So if we can close the performance gap, of course, our profitability is going to be higher. So we will keep the benefit, which is the funding model, which is sustainable competitive advantage and we will close the performance gap relative to the competitors. I hope you understand why I think this is an important slide in this deck. So I have talked you through these five trends of growth, consolidation, what we see on the funding side, how we should think about regulation and they also talked about our challenge in becoming more digital and more operationally efficient. And if you think through this, I think we can hand out some ticks. Of course, we're going to capture our lion's share of the growth. And Emilie will talk about the growth opportunities in our different markets in a minute. You want to participate in the consolidation of the industry using those decision criteria that I talked you through. We see our funding model as being a sustainable competitive advantage. Regulation is our friend, as I mentioned. And we have one important priority right now, and that is to become much more effective and much more efficient. And the strategy that we have chosen to deliver on this is clear. We want to be top three in our prioritized markets. We'd rather focus on a few markets rather than many markets. And we like mature markets, but we think it's important to have a meaningful presence in those markets. Scale matters. Secondly, we want to be focused and specialized. We don't want to be everything for everybody, everywhere. We want to focus on bank originated, non performing loans. We widen our asset classes, yes, as I mentioned, that's part of the growth, but we believe there are clear synergies between them. And last but not least, we are not where we need to be. We are not where we need to be, but we are working hard not only to catch up but potentially even leapfrog the industry, to be recognized and the industry leader out there in digital. And we can do this because we are focused, because we are specialized, because we have an operating model that allows for this. And we believe that following this strategy, we can release significant value accretion. And we see 50% EPS growth over the years to come. And we see significant buckets of value here. You can see where we are now at 2018, where we need to go and you see how we have structured our approach. One is the growth in new asset classes, M and A, servicing even then Manela will talk about servicing. And you clearly see here that what really stands out is our activities, our initiatives, our drive to become more operational efficient. That's the biggest bucket of them all. To be prudent, we even allow for an execution buffer. But we feel confident that this is something we can do and we are committed to delivering on this in order to deliver on these financial targets that I'm sure you all already have seen as it was released last night. So we are going to deliver to you return on equity at 20%. I mentioned this 50%, which represents a 15% compounded annual growth rate in terms of EPS growth cost to income ratio at 65%, which is lower than what we announced at our Q2 reporting a CET1 ratio of 2.5 to 4.5 percentage points above the regulatory requirements and to pay out dividend of 25% to 30% of net profits. So that concludes this section as an overview. And we will now hand over to Emmanuela, and he will talk us through sales, asset classes and what's going on in our markets. Thank you, Emmanuela. Good morning again. My name is Emmanuel Ariale. I'm Chief Sales Officer of OIS Finance since June. I've been working for OIS since 2014 when together with my family, we've decided to sell the family business to OIS Finance, which is actually what is now OIS Italia. I've been working in the industry for more than twenty years. And since I met the first time OIS Finance in 2011, I immediately saw a great entrepreneurial spirit in an international company. That's what I thought was a good company to sell our family business to also because we were asked to work with them. One great message, I think, I've been giving to the people who've been working for me in sales in the last years has been that in this market, really never been to be carried away. The right portfolio will always come at the right price. And this is actually what we do in OIS Finance today. We're growing rapidly, as we would see in different asset classes, and we are doing so in a very disciplined way. You will hear from me three main messages, which has already been going through Klaus Anders. We're focusing only on financial institution. We are expanding into different asset classes coming from mainly business to consumer portfolios, acquisition. And we are focusing mainly in six main countries for us. As you have seen from this is the and in the next two presentations with my colleague, Stefan, you can hear me anyway. Contribution to the growth through yes, okay. Contribution to the growth by expanding into new asset classes with some potential M and A transaction and we also entering the servicing arena. We focus purely in financial institution. We've been regulated ourselves as a financial institution under CSFA since 1996 and since the first time we bought a portfolio in 1994 was from a financial institution, so we're clearly focusing on financial institution. We understand the regulatory environment, we are ourselves regulated and we understand it's not the most friendly and easy environment to work in, but with our strategy of collecting all our assets, all our loans through our internal collection, we really do minimize with amicable collection reputation of risk for our financial institution partner. Going around to talk to clients for quite some time, I've been always asked two main questions: What's happening to my loans once I'm selling to you? How are you going to treat my customer? Okay. Maybe they're not being my best customer but still my customer. And what's going to happen to them? And obviously, my question has been, especially now with OIST, that we know how to treat customer. I mean, we have our strong compliance on the way we're working in our platforms. And the second big question I normally ask is what was actually happening if you resell my customer again, focus on what's going to happen to them. Bo, this is pretty clear for us. We don't resell our portfolios. We never done so. We are an industrial player in the industry. We want to send industry for a long time. We don't resell the tail of the portfolios. We collect them all the way through. We have a clear strategy to move in a fast growing market. We are expanding very rapidly from acquiring only business to consumer portfolio into different other asset classes. After every built in technology, know how, internal know how people, we think we're now ready and we've been doing so for the last few months, ready to move into other asset classes. I read lately in the media that our market is not growing anymore. I think already Claus Anders touched this point. I mean, we are in a very likely situation. We are in the market that is still growing quite a lot. In the business to consumer, we see a 6% and this is actually also why we quickly move, one of the reasons why we quickly move to different asset classes, but you can see a super growth in other asset classes up to 24% in secured SME. But let me tell you also why this market is growing more in other asset classes. What has been happening in the last years is that it's been much easier from the banks point of view selling the small ticket, the typically business to consumer. They were creating a huge volume in number, but a small volume of gross book value. So it's always been for years and years almost the only one, not the only one, but almost the only one asset class to be sold in the market. Typically now with a major pressure from the regulator, this is changing pretty rapidly. So the growth is coming from the other asset classes and not anymore, only from business to consumer. Always addressable markets and volume in the total NPL stock is increasing rapidly and drastically. On the left, you'll see that divided in countries, the total business to consumer stock in the NPL was only around EUR 30,000,000,000. It was covering only about 13 slightly less percent of the total EUR 1,000,000,000,000 market. So this typically, as Clausander was saying, was not really a very good situation for us going and talk to our clients, the bank. We focus on banks. We focus on financial institution and sitting with them and typically being able to talk only about 15% of their NPLs, so definitely not a nice situation to be in, so for us and for them. And by moving to the other asset classes, as you can see, we can now cover and discuss with our great friend financial institution, 75% of their NPLs. Corporate is something we're not entering yet. I'm saying that is not going to happen in the future, but at the moment, we're not focusing on corporate. We see great values, great volumes, of course. I mean, see that more than 30% is there, but it's definitely a bit too far away from us from the moment. So we focus on what we're doing and we'll leave corporate to next step. We are focusing on six major markets: economy of scale, local presence, all good reason to be focusing in few markets instead of being everywhere. Let me take you through the six markets we have decided to be our prioritized one. Italy, you've seen before, I've actually skipped part of the presentation on the left of the previous slides, there was a big biggest country was Italy. So honestly, it's difficult not to say that we need to be in Italy nowadays if we want to work in the NPL market. Italy is the biggest country for NPLs, biggest volumes, is also actually the biggest country for us. Huge opportunity, quite a mature market, not as mature as UK and regulation is following more mature markets like UK, but best country to be at the moment. UK, the most mature, the most regulated, the most everything, Not anymore for us the biggest one, but still very big and that's a place we really want to be. We've grown rapidly with three different acquisition in U. K. In the last three years. That's a country where, as Claus Anders was mentioning, being very mature, we want to focus even more in the future. Poland, it's another great market for us. It's they have a solid legal framework that helps a lot in collection. This is definitely the biggest market in the Eastern Part Of Europe and we have actually lately announced a potential good interesting deal with one of our competitors acquiring from ex competitors, Get Back. So really another place to be. France, I would say, funny country. We noticed going around Europe, but this is rapidly changing as well. The French bank, where there are actually international big French bank, they tend to sell more NPLs outside France than in France, but this is changing. Now they're following what they've been doing in other countries. And now the market is really growing up. And then from 2017 to 2018, we have already seen a big grow. So the French market is really opening up. We've been saying so for quite a few years, but now it's happening. We see the numbers in 2018. Germany, difficult market. It was for always the first market for a very long time. You will see some other slides afterwards. And that's, at the moment, a market where the volumes are not so big, but it's a big country and it's big for OIST. And Spain, this is probably a country where we need to do better. We see great potential. I mean, I don't need to say that volumes in Spain is probably the second country after Italy. We're not top of the list for the moment, but we're working hard and we will get and be one of the top also in Spain. We are present again, remember, economies of scale. We are present where 85% of the volume is on the business to consumer market. You will see next slide 70% on the SME market. We believe and our strategy is again on economy of scale. We don't need to be around and looking for open up in other countries because we want to focus in the main countries and in the top three players in every one of our prioritized markets. These are the volumes of SME and it's probably worth mentioning in here, which I think comes out very clearly that Greece, it's not our prioritized market for the moment, but it's definitely where quite a big volumes are, especially in the SME market. We are we've been in Greece since 2016 when we have been appointed by Bank of Greece to be liquidators of their liquidating bank, 16 of them for a portfolio of 9,000,000,000. So we've been gathering data for a couple of years. We know the market. We have a servicing license. We're bidding on portfolios. And so hopefully, we're going to buy and actually, I'm sure we're going to buy pretty soon a portfolio. Never be sure in this market, but I'm confident, very confident. As I said before, we started with a strong presence in business to consumer. Clearly, since years, we've been in every country buying business to consumer asset classes portfolios. Germany was already ahead years ago because as I mentioned before, Germany has been our first country for a few years. But now we are rapidly growing in different asset classes and in different markets. Some of them already been lately covered. Some others, they will come very soon. I have a strategy and we have a strategy, Neust. We want to be close to our customer, to our clients. This is a geography a bit of geography where our offices are, and you will clearly see that sales office, people reporting to me, a bunch of 30 people, well spread around Europe in every market where we are, and they are responsible for the whole market. I truly believe in a central coordinated function, but I want them to be in the market, analyze and understand the single situation in every market, being close to our clients, understand their needs. And this is why we actually spread all over. And of course, we give attention to the biggest international clients, which they may be in one of these countries, but we also look to be close where OIST has a particular big share of the wallet of our clients. I think it's interesting mentioning here that in 2018, in any of this country, we've done at least one deal, exclusive deal. That means we've been sitting without a tender, without the competitors, talking to a client that wants to sell the portfolio. And actually, in one country, one of actually our biggest country, this number goes up to 50%. So there's been one country where we've been able to do exclusive deal with 50% in what we actually bought. So that really shows how we are preferred partner from financial institution. We offer a range of solution to our clients. Of course, pretty much as everybody else, we do spot deals, sit down with the customers, probably a tender to make a price, best price wins. That's pretty straightforward. But we also like to present ourselves for committed forward flow. And what I mean for committed forward flow is when we get into an agreement with the client, with the seller that will last typically from twelve to twenty four months, where they are obliged to sell for a certain amount of periods and we are obliged to buy for a certain amount of period. And that, of course, gives a bit of stability in their strategy because they don't have to rush and hurry to do a tender every whatever. For us as well, it gives a bit of stability, a bit of volumes in the countries where we do for flow, which is almost in every country. What we also like to do is what we call full structural outsourcing, which is when we don't only buy the credit from the loans from our clients, but we are actually willing to buy something more. It could be typically office space, FTE systems and that's when somebody is typically in a runoff situation. They could be performing and non performing portfolios and then the seller wants to have maybe a clear cut with the country and get away and we're there to buy and help and to buy the whole lot. And we entering quickly in what's implicitly I call servicing, whether it's a third party collection arena. And this is something we're doing lately, not in great volumes, but we are entering because customer are actually asking us to do so because when we go and talk to clients, there's actually potential Ford product we can sell to them. And so when we meet them, this is something is also we can discuss about. There's also great opportunity for origination coming from servicing. Of course, you got more chance to talk to the clients. And if you then able to buy portfolios from their clients, of course, you have a little advantage from the competitors because you know your customer and you know the customer of the clients. And that's really increased the chance of winning portfolios. And it gives also a lot of economy of scale and operation because of course, it gives volume and also revenues at a capital light low revenues. This takes me to what we call the case study of Maran that Klaus Anders also mentioned before. We have just announced an acquisition of a great company in Italy, a company that I personally know for twenty years. Has been in the third party collection service for more than twenty years with 200 employee, very much focused themselves on financial institution, clients. They do a great job for have been doing a job for a long time. We see a lot of synergy with them. Remember that Italy is the biggest country in volume and the biggest country for us. And this will strain our capacity in the market and will also strain our presence in our first market. So in summary, we focus only on financial institution and we want to be preferred partner. We are expanding quickly into new different asset classes where bigger volume are coming in the next following years. And we are focusing mainly in six major country where we want to be top three in the industry. With this, I leave to my smiling colleague, Stefan, that is going to take you through the investment presentation. Again, my name is Stefan Ohlmeier. I'm the Chief Investment Officer. We're actually pretty international bunch here. You had the Norwegian, you had the Italian. I'm the first German. Bjorn is German as well, and he's going to talk about operations after this. Let me give you a bit of my personal background first to start with. I actually have a PhD in mathematical physics. I did Einstein's general relativity, quantum gravity, all that fun stuff way back when, twenty years ago, but then decided I was going to move into finance, which was a good decision, I think. I moved to London, where I'm based, where I live with my wife and four kids. In those twenty years, I worked for various investment banks. I worked for Morgan Stanley. I worked for Goldman for six years until the music stopped in 02/2008, and I started working for funds. I worked for Lone Star. I worked for Oxf. It's maybe worth noting as well that I had the Chief Investment Officer role for Interim as well a couple of years back. So definitely been involved in a lot of loan portfolio acquisitions in those years and really in all kinds. I mean in consumer unsecured, clearly, which is our historical core business, but also in nonperforming secured loan transactions, in performing runoff transactions, so all the new asset classes that we're looking to get into at Hoist now. I think that fits quite well. What are we going to talk about? And how do we look at investments? We look at it from the perspective of profitable growth, clearly. That's what everyone wants to do, right? So we focus on returns, and we focus on volumes in that order. As long as we can get the returns, you want us to grow really. So what I'm going to be talking about is returns from the back book perspective. I want to show you that we have a great track record in projecting cash flows from investments. I want to show you that in the front book, we're seeing a reversal of the margin compression that we've had over the last couple of years, so initial good signs of that happening finally. In terms of volumes, I want to show you how we're getting into these new asset classes and magnificent growth that we get from that. And then I want to show you that we've invested in people and infrastructure to be able to capture the opportunity in those new asset classes. So let's jump right in. What we're seeing here is really the actual cash collections that we have on our overall back book versus the management forecast. And the management forecast is what we expect at any point in time is our best guesstimate of what the cash flow is going to come out of the portfolio. So it's the ERC curve that you all know and comparing against that the actual performance that we're doing. And you can see here over the last couple of years, there's a nice trend upwards towards an average of around about 105% over the last couple of years. And what I would like to say here is that that's pretty much our expectation, the 105%. So we're obviously 100 is the absolute minimum we're trying to achieve, but really we're trying a little bit more. And you can see we've achieved that over the last couple of years. Hopefully, we'll be doing even better though once we have all these efficiency improvements implemented that Bjorn will be talking about. I want to talk about not just the management forecast because the management forecast is something, as I said, it's the sort of latest and greatest of how we see cash flows. But when we make an investment, we obviously have an initial forecast as well. And that initial forecast then gets adjusted by revaluations and then to get to the management forecast. But now here, we're stripping all that out and we're just looking at the initial forecast. So that's the real benchmark, if you want, in comparison to the actual cash flows that we're really achieving. So it shows you how well we're projecting cash flows when we do a deal. And you can see the picture is very similar and the revaluations we're doing, Kristo will be talking about that a little later, are not that significant actually. So we feel we're doing really well in projecting cash flows and that there's not that much adjustment needed. And again, the average sort of hovers over the last couple of years around 105%, which I would say is what we're expecting. I want to look at this performance accuracy in another way. Clearly, what we showed before was for the total back book. Here, what we're trying to do is split out the different years in which we've made investments. And even here, you can see a very nice picture. You can see a dip in 2014, 2015. That was really due to two larger unsecured NPL investments that we've made where there was a strategic push to move into two markets, at the time, The U. K. And Italy, and that would explain those kind of numbers. So it was sort of a strategic point there. But you can see in the last three years, we've had some very, very solid performance on the deals we've originated. Claus Anders had mentioned this point. One question we get a lot from analysts is, well, how does something like a macro shock impact our back book? And here, we're showing a chart which shows that, well, absolutely, our back book is not immune to those macro shocks. And we've taken the financial crisis as an example, which is a pretty severe shock. And you can see that even at the worst of times, the cash flow actual performance against our projection did not dip below minus 10%. And that is a big number, but it's not a permanent thing here. You can see it then lowered to minus 5%. But then in the years after, there was a big recovery, which means that overall, it actually turned out to be more of a delay of cash flows in the end as the impact. Nevertheless, we clearly had to take a write off at the time, and that book value reduction was 2.6% in 02/2009. So the message here clearly, even a severe macro shock, whilst it has an impact, the impact is relatively limited. Okay. Here, we're getting to my favorite page actually. I think what we're trying to show here quite nicely is the building blocks of value in our industry. And you can see that, obviously, the parts of the value that we have is: number one, the back book. That's the portfolios we bought. The purchase price is paid. The asset is on our balance sheet. We have a very good sense for what's coming out of it, the ERC. You take off the collections sorry, collection costs, you discount and you get to our back book value. Now obviously, because we paid the purchase price, there's liabilities that have been generated in that time as well, and it makes sense to take those off to come to the tangible net book value. And there's an industry concern out there right now, very clearly, that in our industry, lot of leverage has been employed and the tangible net book value is actually not that high. And I think on an overall perspective, it is a valid concern and something that needs to be addressed. From a hoist perspective, we're actually sitting quite pretty in the sense that we're a regulated entity, and we are required to have a positive tangible net book value, and we have a CET1 ratio. All that makes us have to have a positive tangible net book value. So from that perspective, it's a very good starting point. Now other players in our industry may have lower numbers, in some cases even negative. Obviously, that is driven also by M and A activity and premiums that have been paid on assets that are not part of your back book but are still debt financed. Obviously, that value can be made up to get to a positive equity value through either a third party collections business, which generates EBITDA and then there's a multiple of EBITDA that is value and then the front book opportunities. And let's remind everyone what that means of front book value. Front book value is clearly the IRRs you see in the market and the opportunities to acquire portfolios at that IRR. But obviously, they're only valuable if the IRR at which you're buying them exceeds your weighted average cost of capital. Now again, that's an industry concern these days. Are there IRRs out there that actually beat the WACC? Well, for Horst, absolutely yes, because we have the lowest funding cost in the industry. So also from that perspective, we're looking very good. And I think that is the main message here. The main message really is we are different from our industry in many ways, and it shows in these kind of statistics. In terms of the front book value, besides the low funding cost we have, I want to make clear that we're actually seeing the front book IRs turning around quite a bit. Claus Anders mentioned the high yield markets, all the leverage that's been taken up in that market, the lower funding cost, the funding cost has come down over the years that, to some extent, has been passed on to sellers in the form of purchase prices. That's going to turn around. And we do feel that, that is something which is going to happen. And we do see it even in our bids in the daily life of putting in bids on portfolios. And when we bid on those portfolios and we have an investment committee, we look at a number of metrics clearly in order to be able to determine whether a portfolio has good value and what we want to bid. We look at IRRs clearly. We look at gross money on money multiples, but we also look at return on equity. And what we're showing here on this chart is the way we look at this. So obviously, we have a group ROE target of 20%, and that includes everything. That's the bottom line, right? When we look at a portfolio, though, we're trying to put that into perspective, and we look at the marginal contribution of that portfolio in terms of the ROE. Now it's not a perfect analysis in the sense that there are certain costs that cannot be allocated very well, and that's the group overhead and the country overhead. So what we then do is we operate with certain targets in the investment committee where we say, here's our group ROE target, and then we have to have a buffer that is meaningful to cover these overheads and that gets us to a portfolio ROE, which we then have in the discussion in the investment committee to make sure that on average when we do portfolio acquisitions, it meets the hurdle rate for us at a group ROE level. And the thing that I can happily say here is that from the beginning of this year, we've already been able to increase those hurdle rates twice and without any meaningful impact on our volume. So we're really seeing that reversal of return compression in the markets. And we're very open about this actually. Here you can see Claus Anders in Targets Industry where he very clearly said that we believe we've passed the low point with regards to margin compression. So very good news on the return front. So moving on from returns to volumes. Our investment levels in the last twelve months have been pretty staggering. We've invested SEK8 billion, which is a lot more than we've invested in the past. I'd argue it's about twice as much as we've done that historically. And every single quarter has been some record of some sort recently. I mean, even in the last in the quarter fourth quarter of twenty seventeen, we invested SEK2 billion above SEK2 billion. The first quarter has been more quiet, but still SEK 1,000,000,000 roughly. And then quarters two and three this year, we're around SEK 2,500,000,000.0, the first one slightly below, the second one slightly above. So again, adds up to SEK 8,000,000,000. Now how do we do that? Now we didn't do that by lowering the IRRs or opening up the tap in the floodgates to get all the portfolios in. What we did is we expanded into new asset classes. And this chart here shows quite nicely the distribution of the cumulative investments we made this year by asset class. At the bottom, you see the unsecured NPL contribution. And that actually is somewhere in the range of where we were in the last years before where we did only consumer unsecured ones. So really what we've done is we have continued to invest in the consumer unsecured space at around the same levels that we did in the years before. And then on top of that, we layered on the secured NPL piece and then the performing runoff situations that we're acquiring and that we're very suited to acquiring by virtue of the fact that we have capital, the right capital for it as a bank. To show even clearer the step change that's been happening here, you can see that in 2015, 2016 and 2017, almost close to 100% of our investment were in unsecured NPLs. But that so far year to date, this is only half has been unsecured NPLs, and then we had 36% in secured NPLs and 18% in performing. Now that is a big number clearly, but obviously historically having invested a lot in the unsecured NPL space, looking at our overall book, we're still at less than 20% on the new asset classes. So there is a change there, but obviously, it feeds through slowly over time into our overall book. We have a very experienced investment team. Similar to the sales function that Emmanuela runs, we have people across in the different countries. We're actually two dozen people overall, and about half of those sit in London with me, where we form, if you want, a center of excellence for the whole pricing. But at the same time, the other half of people sit close to operations, they sit close to clients. All the local specificities of those markets get factored in when we look at portfolios. And Ulf and Victoria are later on going to talk about OneHoist Finance. I would argue that our investment function has been OneHoist Finance all along because it's run as a harmonized function across jurisdictions and asset classes even though people are distributed across Europe. I mentioned the center of excellence for pricing that we're doing. We're obviously doing R and D for new asset classes. We're also responsible for M and A transactions, and we're getting involved in portfolio performance reviews as well. Now the investment team are not the only ones that get involved. There's local acquisition and management teams working closely with the investment team, and that's particularly important for the new asset classes that we're getting into. And I want to explain here that when we get into these new asset classes, we very much focus on certain sectors where we feel we have an edge and also sectors where we have built up expertise. And the three examples I want to bring up here is the team in Rome around Carlo and Francesco, who are leading our effort on the secured NPL side, doing due diligence, valuation. They have a real estate background as well and they have combined over twenty years' experience. And they lead a team of 10 professionals. So that's our Italian business supporting the investments in the secured NPL space in Italy. We have Marie Sophie in Paris. I'm going be talking about the setup of that business a little bit later. She's working on French SME transactions as well as a big secured NPL transaction that we have done. She has over twenty years of experience as well and leads a team of five. Finally, we have Marius here in Poland. He is our performing loan expert. He came on board with this performing loan transaction that we did in Poland when a Danish bank exited that market, and we took over the portfolio on a runoff basis. And together with the portfolio, we also took over a team of six professionals together with Malleus, and they now form the basis of our expertise on the performing loan space. Obviously, as we go into these new asset classes, the cash flow characteristics of our back book are going to change. The ERC curves that you're used to seeing and that Kristor will go into a little bit more detail on later are heavily driven by the unsecured consumer investments that we've made. And you can see on the upper left here, it's the typical decaying curve that you expect from an unsecured portfolio. And especially in relation with the amicable strategies, the costs are very, very similar, aligned to that as a percentage of that overall gross collection. When we do legal strategies, there's a bit more of an upfront cost. But then in exchange for that, you also have a ramp up of the gross collections, which then later on decay in a flatter way than what we are seeing in the amicable strategy. So these two strategies nicely complement each other in the unsecured NPL space. Now as we go into secured NPL portfolios, what we'll find is that there is a little bit of sort of an activation, if you want. There's some legal procedures. In particular, in Italy, it takes a long time to actually finally get to foreclosure auction as a last resort. And that leads to this hump you're seeing here a couple of years away when all these strategies that you've put in place early on in a secured deal actually pay off. So these cash flows are more back ended. The actual costs are lower because typically one is dealing with larger exposures and one has collateral involved, which is highly valuable, but it's less work intensive. It does require quite a bit of a different person. So we're clearly in the unsecured NPL Arena. You have lots of collectors sitting in these booths making calls. On the secured portfolio side, you need experts with legal background, with real estate background. So it's a different business, and it's different people collecting on these portfolios. And finally, the performing portfolios, which yes, they run on a schedule as long as nothing defaults and the cost of servicing those portfolios is very low. I want to show this ski slope diagram, and I want to illustrate the key characteristics of these different asset classes with regards to IRR, cost to collect, ROE and duration. And you can see maybe here for unsecured, the magenta curve here, the IRR is the highest. So I think we can see the highest returns in those types of portfolios, but the cost to collect is also very high. In terms of the secured portfolios, we see slightly lower returns. You have also collateral, right, which makes it a safer investment. At the same time, I already mentioned the cost to collect is lower. In terms of performing, that's clearly the ones where the IRRs are the lowest. The risk is also the lowest, but the cost to collect is the lowest as well. Now what is interesting to then see though is that performing loans I mentioned, how does it make sense for us from a low IRR perspective? Well, does because we have to hold a lot less capital against it because the risk weighting in relation to those assets is much lower. So that then in turn leads to this point that the ROE in the end then does match our internal requirements. And that's why you see all these converging here for all these different asset classes. In terms of duration, you can see some very long performing loan portfolios, whereas unsecured portfolios typically have are more upfront front loaded and shorter. This is obviously very, very illustrative. A portfolio in Greece is expected to have a different IRR than a portfolio in The U. K. So this is a very generic page from that perspective. Why does it make sense for us to get into performing loans? I'd already mentioned that it's much less capital intensive for us, so it boosts the ROE. So from an ROE perspective, it works even though the IRRs are lower. Emmanuel had mentioned and Claus Anders as well that when we talk to banks, they're not just interested in selling unsecured nonperforming loans, They're also interested in selling secured performing loans. But on top of that, they oftentimes have performing runoff situations. Certain countries, they want to exit, so it's only natural to talk to them about performing loans as well. Our regulated status and the good reputation and very clearly, there's much more regulatory focus on performing loan portfolios than on unsecured, so that works quite well with our background. And then lastly, I would say that NPL books with payment plans sometimes have very, very similar characteristics to performing loans, which means that the pricing is actually not all that different a lot of times. Claus Anders talked about the decision criteria in relation to M and A. He talked about specialization, scale and skill. So absolutely, M and A is, for us, a valuable tool to support the strategy. And what I want to distinguish here is, though, two M and A transactions. One is the transformative deal, and the Lindorf interim one is an example of that. I mean that's obviously huge, and it creates scale, and it may have industrial logic. And a big focus is on synergies, right? There's the obvious one, which is the reduced costs, reduced fixed costs in particular, where you have an overlap in the geography. So that is a clear one for us. Very important is the funding synergies because of our low funding costs, which we can export to a target. That's a big one. And then in terms of operations, if we see something that has better operations than we have, then obviously, there's also revenue synergies in the sense that those operations can work our book potentially better than we do, and we have an uplift there. So synergies are very important in those types of deals. The other type of deal is the bolt on M and A transaction. And that's the one where you want to add specific capabilities, you want to broaden our product offering, where you want to strengthen our position. And Emanuele has talked about Maran as one of those where we now have third party collection capabilities in Italy. I want to show one case study, which is something where we have identified the French SME well, we had identified a year ago, the French SME in secured NPL market as an opportunity. We then wanted to go about it in the usual way of, hey, is there a bolt on transaction that we can do? And we look at various potential targets, but discarded all of them because the actual price was way too high. So we said, look, this is silly. We're not going to pay those prices, but we still want to do this. We want to get into the market because it made sense to us. So then we said, well, how about we just set up an office in Paris, We hire a bunch of banking and recovery professionals who know what they're doing in that market. And we have some back office synergies as well. And we go about it and then go find our own deals instead of taking a portfolio on. So hiring the people and then finding a portfolio to buy. And we actually did win this portfolio, and we did it in Q2. So it's early days, But it's very much overperforming to date, and we have a very healthy pipeline going forward. So it's been a real success to add that capability to us without doing M and A because this platform development that we did here came at a fraction of the cost that an actual M and A deal would have cost us. So this is a real success story for us, how to expand our capabilities without the actual bolt on M and A transaction organic bolt on, I would call it. And what I want to show here is that we've received in relation to that same transaction some real, real positive feedback. You can see a picture here with Flowers. This was a thank you note from a customer in a situation where there was an auction date set up and we canceled that auction. We obviously asked for our fees that we had spent before in order to make that a neutral transaction for us, but it made sense looking at it. And we it enabled, in the end, an open market sale of the property, which helped everyone because we achieved a better price. The auction didn't happen for the customer, and they were very, very happy. And it shows our amicable approach really to the situation, which is something that they weren't used to. And so we got a lot of positive feedback, and not only from customers, but also from lawyers representing customers. It was a real validation. It was really nice. So before I finish, I just want to remind everyone again what we've talked about. So Emmanuel and myself have talking about the growing footprint. We've been talking about the track record. We've been talking about the gradual increase that we're experiencing in front book returns. We talked about M and A and third party collections. And Bjorn will soon come up and talk about operational efficiency. But at this point, we want to pause for some Q and A. And I would like to have Claus Anders and Manuela join me here on the podium for that. Thank you, Stefan. Thank you, Manuela. And well, the sound is in the process of being adjusted, I guess. So this is a good time to pause and I'm sure there will be some questions either to myself or to Stefan or to Emilele. And we're also going to monitor questions that come online. Victor Lindeberg from Carnegie. A couple of questions from my side. First for you, Klaus Anders. Thinking about the improvement in operations going forward from you becoming more efficient, how should we think about that if you break it up on top line improvement, collection improvement from you improving the business and maybe more OpEx improvement. Is it possible to provide some more flavor on that if you have a split? I know you press released the GBP 300,000,000 cost saving target. Maybe we'll come back to that. But if that split is something you could provide and how that will sort of play out? Yes, you're right. We have launched that as part of the press release. There will be ample time to understand the magnitude, the initiatives, what are the sources for the different cost savings. If I was to guide you on the split, would say 50%, 25%, 25% in terms of a three year period. Okay. Thanks. Stefan, looking at your slide on the ski slope, the ROE sort of just thinking about the different asset classes and maybe also geographies, call it risk adjusted returns. How do you go about this given that the new asset classes are still I mean, it's fairly new material and it's many, many years away from peak collections to secure, for instance. So how can you get good comfort in that return profile? And how do you go about those from a risk adjusted perspective? Yes. So I mentioned that we're not only looking at ROE. ROE is sort of an average measure for us that needs to work. So very clearly, when we look at a deal average increase, for example, right? I mean there, we're not even trying to gauge it to this portfolio ROE target. We're actually gauging it to an IR, which is clearly in the double digits, right? So higher than what we experienced. Could you provide an estimate for the span that you have on your IRRs looking at the different geographies? Just ballpark. So we get a sense, are we talking 8% in The U. K. And 18% in Greece, for instance? No. I would say 8% to 15%, I mean, is a good range. I'll stop there for now. Thanks. Vegard Hoover from Pareto. Questions. First, you highlight, of course, your competitive advantage being a bank and being regulated. You highlight the opportunities in M and A. Couldn't you also say that there's a competitive disadvantage being regulated as a bank and doing M and A, noting that, for instance, how your intangibles have been steadily building over the last quarters? Question number one. And question number two to Stephane, when you came into the company with your experience, what would you say was the best and the worst thing you saw when you looked over the portfolio? Those are good questions. I will start then with M and A and DataBank. And yes, you're right. There are one disadvantage, and I think Stefan also alluded to the fact that we're not particularly happy to buy goodwill, right, because goodwill, we need to allocate a lot of equity against that goodwill. So you won't find much goodwill in our balance sheet. So Moran transaction happened basically without goodwill. If we do get back and we are able to do that, it's almost like an M and A, but we are buying assets. So in that sense, we're not attracting any goodwill. So that goes to your question. We are not really looking for servicing platforms, for instance, because that typically has a lot of goodwill associated with it. So we need to find companies where there are assets, similar companies to ourselves, and with our financial synergies that potentially can help us in financing that goodwill if there is any goodwill or operational synergies. So it is possible to do M and A, yes, but it needs to be the right target and for the right reasons. And then to the the best and worst. Yeah. The best and worst. Yeah. So the best thing is the enthusiasm. I mean, the the the people on it. So just to be specific, I'm talking about the portfolio, so looking at the the boring numbers and not the people. What no. Looking at the NPL portfolio you have when you came on board, what was the best and what was the worst surprise? Well, think I can start because I came just in he actually started before me, just a few months, but I can start. So the interesting thing is that going back to the interim in the merger, which of course I was a part of, it was very interesting to see the investment philosophies and the models between the two and they were very, very close to each other. That was kind of an interesting observation. And the same goes for Hoist, right? I mean, if you look at the processes, the models, the way we think, it's very similar. So there's no doubt that the professional operators in this industry are gravitating towards similar procedures and processes. That's also why having rational competitors is not a big worry. Having good, professional, well educated competitors, great. So that was one reflection, just to give him some more time to think. There you go, Stefan. Is this working? Okay. Yeah. I mean, I I when I say worst, I mean, I'm struggling here a little bit. But It's okay. It was a No. But tricky question. Look, mean, it's like this. So, I mean, we have an overall portfolio. Right? And it it ticks like clockwork. Right? I I think what you do find is with that is that as you break it down further by country and you break it down further all the way down to portfolio level, you find quite some variance. Right? And that's that's that's not a big surprise. Right? But but but it but it is, and that was been my experience at interim as well. Right? It's like you have certain countries where maybe from a macro perspective, you'd expect that to be safe countries, but at the same time, the overlay of the the management and the comfort you have of doing deals in in that country is is a lot more important actually than the macro side of things. And no, I mean, look, mean, as with anything, we have countries who are very, very mature, who have the best practices, and Johan will be talking about how we will move certain countries up to that level. So I think maybe it's the sort of discrepancy you find in quality in sort of individual countries and portfolios. But again, then the diversification of the overall book leads to this amazing clockwork then at the end. But but it is the if you're sort of digging into it, maybe the the discrepancies you you see in the individual deals. Yeah. And and I can add to that. You say that there is there is, of course, a spread between portfolios. I mean we have one particular portfolio in Spain that we struggle with, right, which I think is probably around 80% of what we expect. But you also find portfolios that are 200% of what we expect. So there is that kind of out layers a couple of thousand portfolios you typically find that. We have that in Lindorf, Interim has that and Hoist has that too. Overall, I think it's a very solid and good performance on the portfolio level. That's my clear, clear sort of underwriting on question. Mikael Hallum at Danske Bank. I have two questions. The first is regarding this performance gap you're showing compared to your competitors. But if you look back for the last six, eight years, I guess, Hoyst is the company that has grown the most in terms of portfolio purchases. And I guess that implies that as you won more than your average competitor that you paid more. And I guess that then implies that it would make sense that your margin before the cost of funding would be lower. Or am I missing someone something in that equation? Yes, I'm not sure if you're missing something in that equation. But yes, we've had good growth in Horus, but coming from the outside and Bjorn will share this also coming from the outside, it's very clear that we have we as a company have not been able to prioritize, you know, working with operational excellence in a very systematic way. So it is a very sort of documented now, good performance gap to to to our competitors. And the good news is that this is not hard fixes. It's, you know, a lot of low hanging fruits, things we can do, that things will that will improve. So so we we feel very confident that we can do better than we are doing currently. And so how did you calculate that that gap then? I I think it's exactly very easy. I mean, the value of the funding is easy to calculate. It's just to, you know, come to the same same conclusion that everybody else can do by running through the average cost of financing. And the the gap is really, you know, the gap between where we are relative to competitors in terms of profitability, you know, the value of the benefit of the funding and then you basically have the the plug which is the performance gap. But we have been able to evidence that gap through the work we have done and we'll we'll show you that later on where we are on digital, knowledge, processes, technology, etcetera. So there are a number of sort of key things that explains this gap. Okay. And Can the I disagree on your equation on that we buy more and we pay more? Yeah. I mean, that's why sales team is in place actually. We actually disclosed that we've done quite a few exclusive deal. So that means we try and find the good deal, not always in the tenders and always buying overbidding the rest of the people. And even when we are in the tenders, we're trying to choose the right tender where we believe there is kind of less competition. So we try not to overpay portfolios. It's never been something that always has done. So I think that answer as well a bit of your question. Okay. And in terms of the growth potential, back in when you were at Lindorf between 2015 and 2017, you did grow strongly on these larger BPO transactions in Spain. Do you see that as an opportunity for for Hoist as well? No. I don't. And the larger BPO transactions with upfront M and A payment and M and A style, you know, BPO contracts, I think those days are gone. To be honest, I think they were they were a good mechanism, a good tool, especially for Spanish banks at that point in time. They desperately needed to get capital. To sell these contracts was a way to get improvement on the capital ratios. That's no longer the situation with these banks. They will need to strengthen their capital, yes, but not through doing that kind of outsourcing contracts. I think outsourcing, third party collection is going to be interesting also for us, but not with this upfront payment that we I think you were alluding to. There's one here and there's one back there. Kirits, Nordea. So my first question is you show this graph on the collection performance, and the collection versus forecast was a bit below 100% for 2014, I believe. You said that was strategic decision, but shouldn't that be reflected in sort of the forecast already? Well, no. I mean, the actual is what what you what you can achieve then. I mean, if you if you if let's read it this way. So let's say you you have a certain view on a portfolio and a projection. Right? And if you can buy it for that price, then, well, then you then you get to the 100%. Now if you make a strategic decision, hey. We wanna be in this country. This deal gives us more than just the performance of itself, but it will get get us future opportunities. Then what you can say is we'll put certain premium on top in order to win it. Maybe also because we only develop over time the capabilities to do it. And at that point, what you would expect naturally is that you'd probably get a lower performance on that. Can I add something to that? I mean, some a very nice way of starting fresh in the market is to start by servicing because then you learn the market, you learn more about portfolios, you gather data. That's exactly what we've done in Greece. We do that through a joint venture, PQH. So we learn, we observe, we understand the clients, we understand the requirements and then your bidding is safer rather than bid and enter the market through buying portfolios. Okay, thank you. And then you also talked about these exclusive deals. Could you give us any more flavor on sort of the financial difference between an exclusive deal and a tender offer? Because I suppose from the outside, you could just argue you're you're paying more, and therefore, they don't really feel the need to have a tender offer. Mhmm. So when I said we I think it's important to be local. I mean, typically, not going to have a big and huge international bank to do an exclusive deal with you. I mean, that will be always through tenders. But I mean, as you know that in some of the countries, the banking sector is pretty much fragmented and there's definitely been a lot of situation where you can actually sit and talk to a bank, which could be a small, medium, local bank. In many countries, there's still a lot of them and kind of guide them through an NPL sales. And so take your returns definitely higher than when you are bidding against everybody else in a huge tender coming from a big international bank. And then the last question I had was, could you give us any more flavor between the delta between the back book and the front book? So you're saying the front book margins are coming up somewhat and you've increased your hurdle rate, but I suppose it's still a bit below your running back book. Is that correct? Yeah. So, I mean, I was I can't give you the number clearly, but but yes. Absolutely. I mean, our back book is has been built over the last couple of years with IRRs coming down. So I would say the front book is still below the average of what the what the back book is, but but it is catching up at this moment. K. Thank you. There was one back there, I think. Yeah. You. Adeel Guntady from Morgan Stanley. I have a few questions. In terms of your target, I think in terms of your ROE target of 20%, you said you plan to achieve that in 2021. So if you could just give us an indication of does that mean 2019 and 2020, we should expect ROE below 20%? I think your previous target before today was expected to get back to 20% by 2019. So if you could just comment on that. I think maybe I'll just add a second question and maybe pause for before I ask my other questions. Second one is relating to your comment on when you say you've gone past the low point of margin compression, what does that actually mean? Does that mean you are seeing lower purchasing prices? Or you're actually looking at it from an ROE perspective? You could give specific comments on that. Yes. So I can start and you can do the whole point. So on ROE until 2021, yes, it's correct that we are targeting 20%. We are not at 20% at the moment. So from that it follows that there will be an improvement over time until we reach our target. We haven't laid out or disclosed any sort of yearly targets for ROE, but you should see an improvement year by year. And then maybe you can just talk about the low point. Yes, the low point. So I mentioned that we have this system where we have a portfolio ROE that is on top of the group ROE and it takes into account the overhead costs. But we have certain targets that we if we buy portfolios at that kind of portfolio ROE in average, then we're very much on our way towards the group ROE target. And that threshold, we've been able to increase twice already this year without seeing a material negative impact on our volumes. So it's literally as practical as we're sitting in committee and we're evaluating, if you want that portfolio ROE, which is again the marginal contribution to the ROE of that portfolio. And we've been able to say like, look, we want to have it at this level and we've still been winning the deals, Yes, so no negative impact on the volume. So that's really good news. So if I get you correctly, in terms of purchasing prices or your purchase prices in the market, there has been no change in that? No, mean, purchase prices have gone down accordingly, right? I mean, so we're paying less. We're paying less and the impact will be better performance on the portfolios. Okay. My third question is relating to your Slide 20 on the target. I think you have a few footnotes there. In terms of your EPS growth target, if we should include the cost of your ET1 capital instruments, what would that imply? So we'll wait with that question. You can hold it because our excellent CFO will go through this later and go through the definitions. I will not answer it now, make sure that you'll get your answer by the end of the day. But there will be a good section on financials and also the targets. We'll just pause that question for later, if that's okay with you. And then maybe a question on your expected growth in your portfolio acquisitions. So basically, you have a slide the way you expect the markets to grow at 11% in terms of overall industry sales over the next few years, what should we expect for OIST? Should it be above market growth in terms of do you expect to capture additional market share? Or should we expect a level below the 11%? Right. So we're not guiding on specific growth numbers. What we're guiding on is the financial targets. So that's what we're guiding at basically. All right. There's one here and then I will actually in case there's anybody needed questions, we'll take it. If not, we'll break after this question and go for coffees and then we'll reconvene after, I think, thirty minutes, but there's one here. This is Vegard again. If it's going to be cold, we could delay it also for later. I was just curious to the rather wide range on the common equity Tier one target. How should we interpret that range? And is there anything you foresee? Or is there any uncertainty to your underlying requirement going forward? We like to have a buffer, of course, towards the regulatory requirements. We think this is a comfortable level. Right now we're actually being too much capitalized in a way because we did our capital raise in Q3. But I think this is a we think it's a comfortable level to be in, comfortable zone to be in. I think it makes sense. Maybe Kristo can make a better answer later on, but that's my CEO comment and he can expand on it when he presents. And no uncertainty to your actual requirement from the Swedish FSA? No. Okay. Thank you. Right. Okay. Thanks, everybody. We will then have a break. I think it's thirty minutes for coffees outside. Coffee break is over, Claus Anders. The coffee break is over, I brought mine in here. There was no time to drink my coffee. There was too many questions. So welcome back after the break. I hope you enjoyed the break. I did, now with my coffee. And it's a great pleasure to introduce our new Chief Operating Officer. A few weeks into the job, think he's got some exciting messages for us all. So over to you then, Bjorn. Yes. Thanks, Lars Anders. And yes, I keep confusing people because, as Stefan already said, I'm actually the second German in the team, also a Maier. So we're choosing people from Germany by the name, Uhlmaier Hoffmeier. And to complete it, my father gave me a Swedish name, which confuses people in Stockholm still. Everybody tends to talk in Swedish with me. I can't speak any Swedish, to be honest. It was just accidentally my father worked in Sweden, so he thought it's a good idea to give his son a Swedish name. So that's that's all about my connection so far to Sweden. And and I have a Volvo. That's the other connection. Yeah. To be honest, listening to my predecessors, I I feel a little bit pressurized because there's a high focus on operational efficiency now. And being ten weeks in the company, I need to say it was a real sprint in the last ten weeks, meeting all the different markets, meeting with the leadership team, preparing for today. But I think it was a great kick start. Normally, tend to have like a thirty, sixty, 90 plan. I had more like a ten, twenty, thirty plan, and then I needed to rush already into this new venture. My background is I I worked for the last fifteen years for American Express, famous, cards company. I had different senior roles. I the last, I had two jobs. I was country manager for Germany, and I was heading the Nordics hemisphere, let's call it like that. So Nordics, Eastern Europe Benelux, Germany, Austria for the corporate business. And yes, ten weeks ago, I joined Hoist and Klaus Anders keeps saying, oh, you're fresh. Look at it through the fresh eye. You can still be and I think that's brutally honest. Germans are always pretty honest, and I think it feels sometimes it's brutally, but it's all meant in a good manner. Right? And my former colleagues, they they keep asking me, and I just met somebody who lives next door to to to a good old colleague, say hello, keep asking you, why have you chosen for this challenge? And I keep saying, look, I'm a challenger by nature. I'm a problem solver, so I love challenges. And I have a philosophy that every challenge is an opportunity, right? And I think that's how we should be looking at it when we go through the deck because the opportunity in front of us is huge. We haven't tackled it. And I need to say what makes me very confident on the whole plan that we have developed is that there's a really good basis in the company, right? It's not that I joined a company where everything is in turmoil. I think we have a very solid basis. We have had very good performance over the years. And I think this is really something to build on. So we're not starting from scratch, and I think that's good. And in that sense, the challenge and opportunities ahead of us are very promising. The key takeaways from an operational perspective for today is, as I already said, we are on a very solid base. We have an organization that is in place. We have great people, but evenly important, we haven't talked about the customer yet. And the customer relationships that we have are excellent, not always flowers, but and totally very positive. The challenges in operations or the opportunities in operations are we cover them in four different buckets. One is in collections to improve our collections efficiency. Analytics plays a big part. Claus Anders already talked about digital, which is definitely one of the key cornerstones. And then we have an opportunity in the indirect costs. In total, as you have read already, we summed up the whole opportunity to be at SEK 300,000,000. Here is the only time when I get worried because I'm still not used to Swedish kronas. I always have to translate it into euro and then €30,000,000 sounds much better to me and I can relax again. And then the good thing is that we are building on a strong foundation. We talk about, yes, we are we have gaps in the operational efficiencies. But to be honest, if you look at it on a market by marketplace, then this company has very good best practices in the different markets. The key to success in the future is to deploy these foundations that we have built in different markets across the whole jurisdiction, and that's what I'm going to be talking about. In terms of the operational setup, you have seen that landscape already. We have roughly 800 people in operations. Our frontline people that are in the collections, mostly in amicable. You have seen that we have dedicated specialized teams in the secure piece, but the majority is in the amicable business, and you see the different places here with different offices. My remit goes a little bit further than operations. When Claus Anders first discussed the scope of the job, we came to the conclusion it's maybe helpful if we combine operations together with IT because, as you are aware, this the efficiency is very dependent on the technology. And not to have silos between the two most important functions, not to disregard all the other important functions, we combine them and alongside we also included the analytics part, and I will explain later what that is in this and also the responsibility for the indirect costs that we have. Before I go into the optimization, let's talk about the great customer relationships we have. As you can see here, we receive excellent feedback from the customers that we work with. We monitor all the calls that we have. We receive feedback from the different customers. And as you can see, 76% of our customers are really satisfied with the outcome of our discussions with them. And then there's an overall 74% positive feedback. And if you look at it, it's a five scale, it's the top two boxes. Then I need to say, in conjunction of one of the questions, was what your biggest surprise. That was my biggest positive surprise that we have such a good, excellent relationship with the customer. Because as you can imagine, these discussions with the customer are not easy, right? You discuss financial situations with people that have outstanding debt. So it's a tricky discussion and then still receive such a great feedback, has my respect for the organization. That's really something that we can build on. And that's also an area in the operations where we are very good already. But talking on the areas where we are maybe not so good, as I said already, there's four different buckets: collections efficiency, collections analytics, digitization and the indirect cost and partly the organization. These are the key themes that I will talk you through now in terms of how to improve. But most important for you is to understand what is the financial impact and maybe a bit of the breakdown, so you get a bit more of a comfort level of what we're tackling. In terms of the breakdown, the SEK 300,000,000, as we have outlined, are spread around the different buckets. The biggest portion sitting in collections efficiency with DKK 100,000,000 and equally indirect cost, but then also digitization and analytics kicks in with roughly DKK 50,000,000 on each of the different pillars. How did we come to this number? Because we did an extensive exercise on that. We assessed the market, where we are, where we stand against our together with our peers. And as you can see here, we are behind the industry average, right? There's categories where we're doing great. Litigation is one of these where we feel very comfortable, which is actually that we sometimes feel too comfortable because we go too quickly through the funnel into litigation because we know we are great there. So that's something we can change and save cost there. On the organizational structure front line, we are okay. So that's not an immediate attention. I think immediate attention really comes with technology. It comes with analytics, so how we segment the portfolios we have, how do we tackle it, how do we approach the customers, targeting the right customers with the right messages. Not a lot has been done across the markets there. And then it really deteriorates. Digital, we say, is our highest priority, but we are far from great. The good side is we have a market where we already launched this, which is The UK, where we're doing excellent. We just now need to deploy it in the other markets. And then policies harmonization in terms of indirect costs is another angle to tackle, bring more discipline into the organization to stick with our policies, our preferred suppliers, etcetera, etcetera. We are on the way in transforming the organization. And lot of the times and I got the question already yesterday, oh, yes, we have heard this. We optimize operations. Normally, it's all back end filled. It's a hockey stick, etcetera, etcetera. Our focus was really on looking at the short term wins and the low hanging fruits in the first instance. So we're not first building perfect foundation and then we build on this because that can take ages, especially when you deal with technologies. But the goal is really to apply the different best practices we have across the market and then roll it out across the jurisdiction and also leverage the great people we have. I'll give you an example for in collections analytics, for example. We are doing great stuff in The UK, where I have an analytics team that has developed very sophisticated models around segmentation and targeting. We haven't applied these to any of the other jurisdictions. So what we do now is we take that team, roll out the modeling across the whole region to apply the techniques there because models we create for The U. K. Are not very different than for the other markets. We do the same on the collections efficiency. When we look at call center setups, performance management, how to improve really to cover a larger share of the book because that and Christa will elaborate on this. This is really where a lot of value sits. And Klaus Anders is nodding. There is not a simple meeting that he doesn't reiterate. We are sitting on this gold mine. We need to dig harder. We can get much more out of it. And you will see later that actually we have already done that in the past, but I think we can even do better. Digitization, as I said, I go into more depth in this. And then on the indirect costs, I already elaborated there. Policies harmonization is a lot. And when Ulf talks about the new organization, you will also see that we reveal a lot of duplication that we have currently because we have a market led organization, which we are transferring now into a more functional organization. And that has led to a lot of duplications in the different jurisdictions that we can eliminate and where we can definitely see some gains for the near future. All of these things that we are going to do is improving our collection funnel. This is really the heart of operations, right? The collection funnel is how you measure your performance. And the collection funnel describes what's happening with the cases that we buy from the banks from the start to the end. So at the end is the conversion. That's where the money gets collected. And the good news is we are good there. We have had a lot of focus on this in the past. We have deployed psychologists, trainings, etcetera, etcetera. So our frontline people are really good in converting our customers into paying. I think where we can do much better is in the start, so get all the intelligence around into data. We have a lot of data, and it's all in house. We're just not leveraging enough. And as you have heard many times already, data is the new oil. So we sit on this oil pumping field, but we just need to reveal it. And we need to combine different data sources to become much better because our penetration rate, which describes the number of cases we can contact, is below industry average too. And in improving there using other data sources than today, we will be able to reveal much more out of the book that we have today. So all what we do is really tackling this. And analytics is a big chunk of this, and that's where we have an immediate focus on. I touched base already on a little bit of this. Analytics will have helped us really to get better data in place structured way and in a way that we can target more customers. So we reactivate all the sleeping files with new techniques that we currently have in the book. And by that, we're going to be collecting much more than we potentially have expected at times, and Krista will elaborate on this. We will also be identifying better segments how to tackle customers. Today, go very broadly. We say, okay, we target this segment. We're calling people frequently, but most of the times, maybe at the wrong time, right? It doesn't make any sense to call somebody who is at work in the middle of the day. We should be calling them in the evening hours or in the weekends, and that's something that we need to better elaborate on. The other thing is we need to get more sophisticated in the messaging. We should be giving our call center agents better guidance on what is the key message to target the people and what is the trail of thought that you go through so your conversion is actually even getting better. And last but not least, what analytics will do, help us, is guide better the traffic that we have in terms of communication. Clausander said it already at the beginning. Today, our operations is very much focused on he calls it manual, I call it people, people interaction with our customers. And I think there's more efficient ways to do this. And this will form a big part of our operations excellence program to transform the way we act from a very people focused into a very much more balanced people versus technology focused organization. That was maybe the second surprise that I had when I arrived. I need to say, I was like, Sausannes told me, oh, we do this and this. And I I said, this is core, and I think they they should have been more sophisticated, right? For example, in some of the call centers, we're not deploying yet dialers. By the end of the year, we will. But this, you would imagine, is a call center technology you have already in place when you run 800 people in the operations. So coming to this, we really look at the transformation of our collections business in terms of how we tackle the cases throughout the funnel and really moving from manual to more digital low cost solutions. In the moment, as I said, over 90%, we deal what I would call like a more high risk, high value based type of environment. So very highly skilled collectors, But we don't make very good use of them because you have collectors that sit on the phone. They have negotiations with large ticket items, very sophisticated negotiations. At the next moment, there is a call coming in, and they're answering a phone call to tell the people what their balance on the account is. That's not efficient use of people, right, because people cost is very high. So we need to implement technology there like interactive voice response. Nobody likes them, but they are very efficient in operations. Those of you who have an online banking account know you call and then you have this endless, oh, given your number and for this service one, for that service 2, for that service 3. But it helps guiding the flow and it helps guiding the people to low cost channels. So that's something we're also deploying in the moment. And then definitely, as time goes by, digitization and not just with self serving platforms, but also with the employment of robotics will play a major role. I personally and we had the discussion, think the technology is not yet there, that there's only any robotics that can, where we can make the switch from human to robotics. That definitely is not the case. But we are already preparing that for the future because if you're not there yet, you will be not there in three years when it really kicks in. So that's got to be a big part. And then digital is the one that excites me super much. It was one of the things that was really close to my heart at Amex, and it is now close to my heart here too because that offers great potential. And we have laid our mission in terms of where we want to be in the next three years. And take it as a mission. It's what we're striving for. But we really want to get to an eightytwenty ratio, so 80% done in low cost solutions, being either low cost environment in call centers or be it digitally. That's an ambitious target, but we see good signs that we can get there. In terms of the collections, we are striving for 3050% in digital collections. Today, we are at 3%, so long way to go, but the good news will be coming in two slides. It's achievable. And last but not least, we will continue with our effort to do site consolidation, and we are looking at nearshoring options in terms of call centers. In the old world I lived, call centers were mostly not in the market where we were active. They were somewhere in Buenos Aires or Brighton or New Delhi. You don't need to go that far. But I think that's definitely an option also for this industry to move and see cost efficiencies. And the cost efficiencies, everybody seems to have a favorite slide. I this is tend to be mine because it tells a lot about the story where we are heading with cost, right? If you look at the pyramid, then digital, taking as a baseline with a cost of one as an index, goes all the way up to legal. Legal is the most expensive. That's why I say we also need to make sure in the future we collect more in the amicable phase and less in the legal, take a little bit of time before we move. So we're not in a hurry. But if you compare digital channels to high value, high risk environment that we're currently operating, then the cost there is like 15x higher than in a digital space, which is a significant chunk of cost. And on the digital space, this is not just like vision and future. I think we need to act now and get our act together. What you can see here is on the upper side, you see online banking, which we have taken as a reference and how it has moved. So this is people engaged in online banking. It is 25% on a European average, has rapidly grown in the last four years like 10%. If you look at The U. K, you're already at 40%. And this will vary by market. I would assume that the Nordics are even higher than the 40% than The U. K. Because you're much more digitally advanced than anybody. But this is definitely happening, and, I keep telling the people, I think the Internet will be there somewhere in the near future everywhere. So because I still keep getting feedbacks, oh, the Internet is different here, and, it works. And in moving there, we have done the first step with hoist finance in The UK. And we have started last year the journey. One year later, 20% of our collections in The UK is digital. So 20% of the volume that we have manually worked on in the past is now done in on a self-service platform, and that was in one year, which is really great. And we see, especially with the newly boarded portfolios, that even the pickup rates are higher. We see already adoption rates of 35%, 40% there. So it's definitely something that the people want. And it's very logic. You don't always want to have a discussion with somebody on the other side about your financial situation. Some just want to pay off your debt. Why would they talk to somebody? Why would you need to call a call center if you just want to know what your outstanding balance is? There's a lot of the same mechanisms that each of us who has an online account apply. I don't want to talk to a bank clerk just asking him, do I have enough money in the moment in my bank account? There's very simple other ways to do this. And because U. K. Is the only one where we have it right now, the overall penetration is very low. We are at 3%. But the journey we have started is we're now rolling this out. Target is by mid of next year. We want to deploy the platform in every other market. At the same time, we are developing more capabilities for The U. K. So we can really level up so we can achieve the 3050% within the next three years. Just very practical, how does it look like? And it is really not rocket science, right? You get your simple account, you log in, you get your balance, you have a payment function. So it's really very simple first steps that we have done, and it really pays off immediately, which I think is great. Clearly, at the end, there will always be a touch point with our call center if needed. But yes, clearly, avoiding that will improve costs quite significantly. And that will come at a much lower cost from a setup perspective, from a running cost perspective and also from a customer engagement perspective. Because once we get the people digitally, we can save tons of money on communication, which is we print a forest every year, I think. So we can get rid of this. This. And these are all things that are definitely not new to any of the businesses out there. It's a very logical step. We just need to go it now, and we need to do it in a very efficient manner, making sure that we can deploy the platform we have quickly even though we have a very scattered infrastructure sometimes in terms of our collection systems. And that we have a good footprint on this. People tend to forget, and it's was interesting when I joined Hoyce, this may be the third observation. We have this great funding source. We we look at it as a funding source. But what from an operations perspective is even much better is it's more or less run by itself. So we have the deposit accounts, and we have them in Sweden, and now we brought them into Germany. So we are managing SEK 15,500,000,000.0 in deposits, and we have three people on this. If you come from operations, that's a great model, right? You manage that much of volume with that little of people. So there is definitely DNA in the company that is digital. We just now need to transfer it to the other side of the business. So from that perspective, great job there. The last bucket is the indirect costs. That's also where I think there's very low hanging fruits. Remembering where we come from, market led organization, we have applied best practices in the markets, but we have never applied them across the markets. And the same is for indirect costs. Most of the preferred suppliers we have are market led. We have very little contracts with suppliers that are across the whole organization. So that's definitely an early short term win that we can generate. We also need to be more disciplined and robust about the policies that we deploy. Simple things also coming from Amex, being a little bit educated in travel. Travel policies, very, very quick wins that you can gain there. And the same in other technology in other areas of the business that we can apply from a purchasing, making sure we buy at preferred suppliers, no maverick buying, etcetera, etcetera. So very simple techniques, but with a big impact. So in terms of time lines, to give you a bit more comfort, this is not all December 2021. Just give a little bit of outline about the approach that we are running here. So what we have said as a principle is we need a good balance between building foundation but delivering at the same time for shareholder value, right? So make it very tangible and give also the ability to generate short term wins. That is important for the balance sheet. That is also important for the journey we have in front of us because we need to get all the people on board that we now, as a group, deliver collectively. So therefore, you can see, and I don't read through it because we have gone through it already, a lot of the short term things that we do and very easy tangible things, deploying dialers into the markets, having digital platforms out there, deploying analytics skills that we have already in the company, just making them available to the different markets, rolling out policies and key suppliers across the jurisdiction. And while we do that, we still need to definitely develop further and professionalize in a lot of areas that will then kick in at a later stage. I talked about machine learning in terms of analytics. I talked about the overall collection setup that we are looking at. So we piloting some nearshoring activities as we speak, but that's definitely then something that isn't rolled out for the whole company overnight, but clearly something for the next three years. And then also eliminate on the on the organization some of the duplications that we might see in the different jurisdictions. And I hope by now everybody has slightly understood why I'm feeling comfortable. But if not, I have a slide on it again. If we just do what we have done in amicable collections in The UK and deploying this across all the markets, we will be done with 50% of the target, right? So out of EUR 300,000,000, if we just do the best practice correctly across the different markets, we will have done half of it. I think that's a very good starting point. It also gives you a feel of how quickly we can gain some wins there. Clearly, yes, it's only half the way, but half the way is already a good chunk. And then we have time in the meantime to level up and get the other half to the more midterm solutions that we have described here. So far, so good from my end. And Claus Anders, you're going to join me for some Q and A? I will. So thank you to I hope that was clear. Happy to take some questions. There's one there at least and then over here afterwards. When you look at competition in U. K, do you think you are ahead of them in terms of this digitalization process? Competition is broad. I would say we are good average. Okay. Because the reason I'm asking is when you look at the return on purchase debt in The UK, it's below the group average. So what does that tell us about the incremental effect from these savings in other markets then? I think the important thing is what Bjorn was saying that The UK is not standing still. We have expectations that The UK will continue to improve. And there are improvement projects that are specific and relevant also for them. When I look at The UK and know some of our competitors quite well, would I say that there are a couple of companies that are better than us, but also some that are worse. And we will take inspiration from the best ones and become better. And then there's one more or no, Victor? Thank you. So Ermer Kjerich from Nordea again. So first off, do you see any trade off between more digitalization and lower customer satisfaction that could impact your P and L negatively as well? Say again the starting? Mean So I mean, you have quite a high customer satisfaction currently. And you're saying that you will implement more maybe robotics. So maybe when you call, you have to delve through a long menu before you actually get to human contact. I suppose that could impact your customer satisfaction negatively. And could that have a negative effect on the P and L to sort of offset the effect? Actually, it's the opposite. It impacts the customer satisfaction positively, the digital interaction, because people there's a lot of people out there that don't want to have that human interaction anymore, they react very positively to that. So I I wouldn't say you have a negative correlation. And if so, then we need to find out why and need to be more sophisticated in how we target people. And we are not forcing people to go digital, right? It's not like you sometimes have the experience, you need to look for the phone number of a contact center at the twentieth page of the Internet site and you can't find it, right? It will still be also human touch if you like it. But in general, what we have seen, the performance on satisfaction is better. And actually, what was surprising to me, even the collection performance has improved slightly. Okay. And then a follow-up question as well on the slide with U. K, if you could do that in the whole of Europe. Do you think all markets are mature for that sort of technology to get the same adaption, so to speak? No, there will be difference in the adaption, right? I would say the adaption with us will be going alongside with the market trends. And yes, too bad we had a slide where we had all the markets, but it was very confusing. So you would expect that in the southern cultures, you maybe have less so of an adoption at this time. But I think that will be gradually also shifting. Thank you. Great. Thank you. Thinking about the part of the collection strategies now and when you're going more digital, how do you go about this? Are you more reliant on external data now going forward? Or do you set the strategies internally and then try to sort of push that out in the digital channel? That's my first question. Then on digital going digital, do you develop this internally? Or do you procure and purchase these sort of digital services externally? Yes. So on the first part, in the moment, we are doing the digital strategy very much on our own data. I would expect going forward, we do a lot more with data management from outside sources too to enhance the data we have because it's still going to be much cheaper to target people through this channel, than wherever we don't have the details, contact them on a different channel. So that will definitely be one part of the strategy. It will increase potentially slightly the cost, which we have factored in, by the way. But that's definitely a way to go. If you look at skip tracing, which is an important part to cover more of the book, That's definitely one of the area where we can most improve and where we have a gap. On the second question, that was on remind me. On the when you go digital, do you develop Yes. Price of It's a mix of two. We have our own development in house, but I'm also a big believer in buying strategies, so where we can leapfrog because there is technology out there. Why would you do it yourself, right? If you can get good stuff out of the shelf, then we're looking at it. So definitely, we have a two way strategy there. All right. And maybe a follow-up for Klaus Anders then on this when thinking about the business model from a barriers to entry perspective, taking into the account that you go more digital, maybe you have a bigger legacy than some, let's say, greenfield players that were to start up using standard off the shelf data, safeguarding your just to understand it from a barriers to entry. Are we heading in the wrong direction from that point of view? Or how do you think about that? Yes. I don't think so. The potential to go digital is great, and I think that's clearly the route forward. And then you can kind of discuss, okay, will this lead to more disruptors? Will we encourage disruptors to sort of take our place? Is there a reason to think that the banks will sort take it claw it back and do it themselves? I don't see that. The more we develop and sophisticate and industrialize our solutions, the better suited we are, the better positioned we are. I mean the more competitive we will be, the more efficient we can be, the better data we have, the better collection strategies we have, the more we're able to match our agents' competence with the requirements and needs of the debtors, our customers, I think the better position we are going to be. So by driving our operational excellence agenda, I think we add one more competitive advantage to our skill sets. Now it's the funding base, clear tech, I think that's unquestionable. Then I think that over the years now we will see that we can not only catch up but potentially even leapfrog a little bit relative to competitors. And the good thing again, the premise for this, the premise you have to believe in is that being in fewer markets rather than being scattered is a positive. I think it's a tick. Only working in one client segment, the banks rather than working for everybody. I mean, we don't do fitness centers, municipalities, dentists, insurance companies, retailers, what have you. We don't do that. We only work with one client segment. That makes it easier. And we collect our own portfolio. So really strongly believe that this is doable, it's actionable and we'll prove it to you. There's some questions back there. Adew Kuntadi from Morgan Stanley again. Just a few questions. In terms of achieving these cost savings, would there be any additional costs being cured in terms of investments in the digitalization process to achieve these savings? And then if you could be clearer on the starting point for costs in terms of what should we be using as the base cost to measure these cost savings. And then three, in terms of when I look at Slide 69, I think when you look at legal costs, that accounts for the greatest proportion of costs. As you move more into new asset classes like secured NPLs, which will likely involve some additional legal costs. What does this mean, in terms of your cost targets? What's the implications? And finally, in terms of the SEK 300,000,000 target, would that be achieved by the end of twenty twenty one? Or would you fully realize the benefits of these savings by 2021? So in essence, are we likely to see a spillover into 2022? Or you already have the full benefits of the savings by 2021? Should I start? Or do you want to Yes, please. Go ahead. Otherwise, I would have diverted it to Christian's section because he's going to be deep diving through this. So I saw him taking notes already. It's the slide the last slide or something like that on his presentation where we will be discussing that. But you go ahead. No, no. So very quickly then, Kristian will elaborate. I think it's good to repeat even. So the cost to achieve is estimated to be 200,000,000, right? SEK 200,000,000, that's the cost to achieve and some of that is that's the cash to achieve. Some of this is investments and some of this is cash or costs. And Krista will explain the difference. The starting point is next year then, 2019. So it is the end of this year then is the reference point. So over the next three years, so its full run rate will be achieved at the end of twenty twenty one. I think that was basically it. And there was something about legal costs. And I can assure you that sort of the portfolio mix changes are embedded in our targets. So that's already reflected. All right. So seems to be no further questions at this point in time, nothing to the web apparently. Michel is just double checking. No. So if you have questions, if you follow this on web, please forward through that mechanism on the homepage and we will answer your questions. But then we will break. We'll pause for some lunch. I think there are some wraps outside. So please just find a place outside here now and enjoy your lunch and see you after the break. Thank you. Thank you. Welcome back from lunch. Hope that was fine with wraps. I shied away because they're so difficult to eat. You know, what's gonna happen with my suit? You know? So the hope is fine with you. We're going into the the the the the last phase of today's Capital Markets Day. We are going to do a piece now on yeah. Stefan will click for me. On the people side, and I mentioned that I've been working a lot with change, and change require leadership skills. It and we know from experience that soft issues soft issues can be very, very hard issues if they're not dealt with in the right way. So what we wanted to get across to you now is really a section that talks about the change, our new operating model, what we're trying to internalize, and how we deal with communication and sustainability. So, happy to welcome on stage, Ulf and Victoria. So over to you guys. Thank you, Claus. So my name is Olfe GeForce, and I'm the Chief People Officer. I will walk you through the OneHoist Finance strategy. And I have more than twenty five years of international leadership experience, both from the banking sector as well as being a CFO at a large global trading company. Anne, to my left is Victoria. Yes, that's me. I'm Victoria Ostrop. I'm the new Head of Business Development and Communication. I've been at Hoist for two months. So both me and the unit is still under development, you can say. I have a background in the financial industry. I've been working for a little less than ten years in Nordea. I've been running retail banking businesses. I've been implementing new operating models, including or adjusting to a more digital way of working and interacting with customers. I've also been material when it comes to the compliance change journey in the same company, and that was a change journey, all new processes, operating models, IT systems, you name it. And prior to that, I worked with the Swedish government offices, with state owned enterprises primarily, serving in total eight ministers. So you can hear that I have a red thread of change and implementing operating models. And I really love operating models, and I will get back to why a little bit later on. But I've learned one thing, and that is during these change journeys, communication is key for success. So Ulf, what we're now doing? Well, you will hear from Victoria a little bit later on. So when I joined Hoist roughly two years ago, I started off as being Head of CEO Office. I worked with projects and strategy. And later on, I was appointed being Regional Director for Region West. That was UK, Spain and France. And now I'm the Chief People Officer. So that's my third position in less than two years. It's very exciting. I had a mentor at one of the Swedish banks. She was Head of HR and this was some twenty two, twenty three years back. And she said to me that one day, you should really try HR. And today, I'm here and it's a privilege to run the Hoist Finance people team. It's an excellent team we have in place. So I will give some reflections, giving my background about the old and the new and what has changed. So on this slide, to your right, you have the organization we have in place. And to the left, you have some of the actions that we have already now implemented during this change journey. So instead of going through a number of charts, I will talk a little bit about how it was in the past and what it is now. And when I joined as this I think it was early August last year, I became Regional Director, I quickly realized that the organization was growing independently. We were fighting about internal resources and we were building up support functions. This was quite easy to understand from the geographical perspective. And it was also quite easy for me to understand that this is an organisation that we need to change. So now we have a functional organisation in place and this functional organisation has a lot of advantages. One is that it's clear reporting lines. We have got rid of one layer of management and also some support functions. And this organisation is ready for growth, for delivery and has a clear structure. So considering the industry, I was quite surprised when I joined that we didn't have a shared service centre in a low cost country. In my previous positions, I had developed shared service centres both in Asia and in The Baltics, which I have to say, even if I'm a bit honest, with excellent result. And now we have started to de assure certain processes to a shared service center in Roslo. And besides the obvious salary arbitrage of doing this, we also will see major improvement in efficiency and quality. I have experienced that myself in the past. And as you have heard from this has already started. We have some 20 staff in the new shared service center we started just recently. And we are very high ambitious going forward. So in the old geographical structure, where the countries were not held together, we could have certain processes that were different in how it was carried out, four, five, six different ways for the same function and for the same process. Let me give you an example. Procurement. We are now centralizing procurement into one central unit. In the past, we had six, seven or eight different ways of handling procurement. This will change and it will change now. Currently, all functions are harmonizing its processes along the countries. So a legal process will look the same in Lechte as in Duisburg. And this will of course be more efficient and will create the best practice along the group. And besides the harmonization of processes, we are developing a number of centers of excellence. And one example, this is within my area, we are starting up a hoist finance academy for leadership training. So the leadership training will be aligned all across the markets instead of being developed in each country. I'm sure you can understand the efficiencies that we will achieve. And this leadership training, it will also help us to deliver on our plans, because we will have a leadership training for all our leaders that is aligned with the OneHoist strategy to avoid duplication, to promote collaboration, performance management and execution. So this will be an enabler when we are going through these years until 2021. And I believe that the total implementation of the new organization, it will take us well into 2019, if I am humble. But I am already today convinced that this organization will be able to deliver on the high ambitions we have. So, Victoria? Yes. And I will tell how this unit, the new function Business Development and Communication, with support on delivering on the strategy. So as you can see, the new unit consists of three parts: business development, sustainability and communication. And sustainability is at the core, also together with our vision, helping people keep their commitments. And business development and communication are enablers, and we are supporting not only our vision, but also all the function within Hoist Finance on communication and business development. So I will talk you through how these give some examples on how I see that this new function can support our journey. Starting with communication and brand and brand positioning. 30% of the European households are today lacking a buffer for unforeseen expenses, and unforeseen expenses is one of the most common reasons why people end up in debt. Hoist has, of today, approximately 10,000,000 customers, but we're not interacting with all of them far from all of them. Only in UK, we're sending out 8,400,000 customer letters last year. So how come that we don't get in touch with the customers to the extent that we want to? There can be a lot of reasons, of course, very personal and very individual. We know that shame is a big one, shame of being in debt, shame of not being able to cope with your own private finances. And as we said earlier, and Claire Sandes pointed out that helping people keep their commitments is our vision. So perhaps it's not widely known that we're actually providing help. So by working with our brand and the brand perception can make us improve our interaction with our customers. So when a letter arrives from us or when we reach out, the customer will feel that they will get help from us. Moving on to business development. We have talked a lot about digitalization earlier today, So I will not dwell very long on that, but I will add some views from my point of view working with Business Development because it will be very much on the digital side and customer interaction and from the customers' point of view how we interact with them on that part. We said that the customers don't get in touch with us because perhaps we're unknown or our brand is not it doesn't feel well when you receive that letters from us, but perhaps we're a little bit complicated or complex or cumbersome to get in contact with. We need quite a lot of customer data still from our customers in order to support them and help them. And that can be cumbersome or complicated to gather that data. And my experience is from working with no view customer processes within the banks that when gathering this data, specifically through onboarding or self-service channels and onboarding new customers, we have a high dropout rate because it's so much information that we need and the customers doesn't know what to fill in, in the different fields. So working with, for example, data aggregation, as Bjorn mentioned earlier, our own data but also from Open Banking, PSD2, third party data will enable us to prepopulate fields. So when we onboard customers, we just need their consent and one click and we have all fields prepopulated and that will be a super efficiency gain for us as well. And with a more complete set of data, we will be able to be more personalized and more relevant to the customer when it comes to how to give them help. So we should be easy to deal with. We want to meet customers wherever they want to interact with us, and we should be personalized and relevant in all touch points. And still being a little bit new to Hoist, I take the liberty to, well, make some identifications or reflections on Hoist. And that, in my view, is that Hoist has been a little bit of an introverted company, perhaps not with a full focus on what's going on outside the hoist walls. And I think that we need to raise our eyes and see what's going on, on the market as of today in order to capture things that are already developed when it comes to solutions, especially technical solutions. And we are looking into a range of them already today. And by exploring different solutions, including partnerships and collaborations, we increase our ability to leapfrog on the technical development, not doing everything by ourselves. So we know that the customers that we get in touch with, the ones that we set up a plan with, are more likely to make the payments. So if we can improve the interaction rate through our brand and interaction points, we will increase our collection performance, which Kristo will talk about a little bit later on. And finally, on the business development part. A typical customer within hoist stays as a hoist customer for approximately ten years. That's quite a long time and that gives us a unique possibility to get to know our customer and help them throughout the customer journey together with us. And their needs may vary during that journey. And that gives us also possibilities. And we have a banking license. And today, we're offering deposit accounts, but we will look into to broaden our portfolio when it comes to products. Closing the loop, I will talk about communication again and our brand. We want our employees to be proud of our company. We want to be a company that is keeping up with development or even being the forefront of development, with high ethical standards, a well known company with a strong brand. And brand is everything and everything that we do is actually reflected in our company brand. So by having a strong brand, our ability to attract and retain skilled people will increase and that's crucial in order to develop Hoist further and to create a great place to work. And talking about great places to work, Ulf? Yes, got it. I've said that I've been working with operating model and change journeys, and I love those. And in those companies that I've been working with, I'm drawn to this part, operating models and change journeys. I really love it. So why do I love it? It brings clarity. An open native model brings clarity to the organization, how to run the company. It brings clarity on roles and responsibilities and hence also expectations and accountabilities. Exactly as Carlsander said in the beginning in the strategy part, if you recall that. It brings safety. People and employees can focus on their working tasks. Leaders can focus to be leaders and not defending blurry functional borders and leaders can set a standard for the corporate culture. And we know that there is a strong link between corporate culture and financial performance. So the link operating model together with leadership, strong corporate culture, financial performance. That's why I love operating models. And I'm so happy to be working with OneHoist Finance operating model. So Ulf? So our key takeaways are: First of all, we have a new operating model in place and we have already concluded several changes in line with that model. And brand and business development will improve operation and collection efficiency, but it will also support financial inclusion in society. Thank you for listening. Kriste? So thanks to Ulf and Victoria. Now we're moving into the next and final section of today's Capital Markets Day presentation. We will do a wrap up. And while you are getting your microphone, I just wanted to welcome you on stage, Christer. Thank you. Christer has a long experience from, from voice finance running, controlling, business controlling. So it's an excellent wingman from you now in Hoist Finance. So over to you, Kristor. So good afternoon, everyone. I guess by now you know that there's a CFO, and his name is Kristor, and he's going to answer all the questions. So that's me. So I've been with Hoist Finance for five years. I've been the CFO for the last seven months. Before joining Hoist, I was working in management consulting and retail banking for ten years. Within Hoist, I've been working with finance and controlling, and I was also part of the team that took the company through the IPO. So it's fair to say that I know this company pretty well. Now during the day, you've heard about the opportunities that we see and the plans that we have. And in this session, I will try to draw that together. I will link it to the financial targets. I'll try to pick up some of those questions that were thrown out. And I will also give highlight three things, which gives me, as the CFO, a lot of confidence, and that's the predictable top line, it's the efficient funding and it's the potential we see in operations. So I will go into each and every one of those, but first, I'd just like to give you my perspective on the historical financial performance. So we've seen strong volume growth all the way since the IPO. In the early years, this growth helped us to get cost income down and profits up. And in these years, we expanded in Italy, Poland, The U. K, and this growth we benefited from pure scale, and we benefited from improvements in funding. So this improvement in profitability was not so much about integrating the company or running our processes in a more efficient way. Now in later years, volume growth continued, but profits lagged behind. So why is that? Is it margins? Yes and no. So it is true that margins converge towards the levels we've seen in more mature markets, but it is also true that we took a hands off approach to integrating the company and towards group wide cost efficiency. So profits grew, but not as much as I think they should have. And I think by end of twenty seventeen, some of you would actually agree that something had to change. And that change is what we've been working on now for the last six months, to Anders, the team here and I. So that's history. Of course, there's a number of strengths that we can build upon going forward. And visibility of income is just the first one, so I'd like to start there. Because, in fact, some three quarters of our income for next year, some 75%, is already in the bag. That's what I expect from the back book. Now of course, in an industry sorry, so on our balance sheet, we have nonperforming loans for 18,000,000,000. And on those loans, we expect to collect some SEK 31,000,000,000 over fifteen years, and you can see the distribution here. Of course, in a business like ours, collections is center stage. So when we agree on an installment plan with the customer, when we help them keep their commitment, it translates into gross collections. Now I'm the CFO. So for me, it's really about income, how much income will the back book generate. And the short answer, you would have at the bottom of the graph here, that's how much income the back book will generate. The somewhat longer answer justifies going into three topics. So that's accounting policies, portfolio revaluations and collection performance. So by having transparent accounting policies, modest revaluations and solid collection performance, we are able to maintain a highly predictable income. So let's start with accounting policies. Actually, it's very simple. There's no black box here. I will walk you through a little bit of the theory for nonperforming loans. First of all, our business model is hold to collect. So we are not in the business of trading NPL portfolios. We acquire and we keep and we collect, as Emanuele told about earlier on. Based on this, we account for our portfolios according to amortized cost as defined in IFRS nine. And in practice then, what does that mean? It means that when we go out and acquire a portfolio, there will be a purchase price. So nothing is for free, I guess. Let's say it's 100,000,000 There will also be an expectation of gross cash collections over fifteen years. Let's say it's 170,000,000 Those two combined will define the so called effective interest rate. And the effective interest rate is the rate which exactly discount expected future gross collections to the purchase price. So with the numbers I gave you, this would be typically in the range of 15% to 20%. For the back book that we have as a whole, it's 17.1%. So when the effective interest rate is defined, it plays into the balance sheet and the P and L. It plays into the balance sheet in the sense that the valuation of the portfolio is the NPV of remaining gross cash collections discounted with the effective interest rate. Plays into the P and L in the sense that interest income recognizes the in the period is the value of the portfolio times the effective interest rate. So very straightforward actually. I'll give you an example in a second here, just a few comments first. To start with, we apply these principles to all our NPL portfolios. So it applies to secured, unsecured, front book, back book, all markets. So very easy for me to manage and very easy for you to follow. Secondly, we account for collection cost as it is incurred. And collection cost includes, for example, litigation fees, which can vary a little bit up and down. As we've commented upon in some quarters. Nevertheless, we account for it as it is incurred, which is also very easy for us to manage and easy for you to follow. Finally then, performing loans, and these are loans which have not yet defaulted. They may never default. We have a few of those investments, and I want to just point out that those loans are accounted for in a different way. In one of the appendixes, you have we've given you a lot of data, which is meant to help you model that. I hope it will be helpful. I won't go through it here, but I'm happy to take questions on that as well, of course. So I promised you an example. In this example, we've assumed that we are acquiring a portfolio for €100,000,000 So balance sheet, opening balance, 100,000,000. That's what we pay. On the cash flow side, there will as I said, there will be a collection forecast. This would extend for fifteen years. And in this example then, we assume that actual collections actually differed a little bit from the forecasted collections. So there is a little bit of a difference there. In the income statement, you will have the interest income, as I covered on the previous slide. And on top of that, you will have any potential difference that you will have in terms of collection. That's the 1,300,000,000.0 there. Those two combined add up to the total operating income, 16,800,000,000.0 in year one. And I guess that sort of set us it for year one then. Moving into year two, as you can see, the opening balance will be lower. Remember, the value of the portfolio is the discounted residual cash flow. So now there's one year less in the cash flow, hence the book value is lower. Other than that, basically, two is just the same thing over and over again. Now for those of you like Ermin here who prefers spreadsheets to PowerPoints, you should have a look in the financial fact book, which you will find on our homepage. There, we have some very specific examples with formulas and stuff, which I think should help you. Now predictable income is not only about accounting policy, of course. One other component that plays in here is portfolio revaluations, and we touched upon it somewhat earlier today. Historically, our portfolio revaluations have been modest, as you will see on the left hand side of this graph. And remember now, revaluations are triggered by changes to future cash collections. Those changes can be small, large, they can be positive, negative. Either way, it will feed into the impairment losses and gains line, which is part of income. Now you will notice that back in 2015, the revaluations as a percentage of book value was a little bit higher. Since those years, I've been highly involved in improving our routines, and this includes routines to identify and deal with outliers early. It also includes routines around governance. So the decisions regarding future collection projections, how are those decisions made and who signs off on them. Today, it's signed off by Stefan and the Investment Committee, the Centralized Investment Committee. It is also reviewed by our Risk and Audit Committee and, of course, by our auditors as well. So by having these routines in place, together with a well diversified portfolio, we are able to avoid surprises. Now accounting policies and portfolio revaluations, that's covered. Collection performance, of course, collection performance is very important. And Stefan spoke about this earlier. In recent years, we've had solid collection performance around 104%, 105%. So that's good, but it gets more interesting when you drill into the different vintages here. So let's do that. And this is a very content rich slide, so let me spend a little bit of time here to explain what we have here. And I'll use the pre-two thousand and eight vintages as an example. So in the years up to and including 02/2008, we acquired portfolios for billion, expecting to collect SEK6 billion. That's a good deal, SEK2.5, SEK6 billion. Now actually, year to date sorry, to date, we've collected SEK 6,500,000,000.0 on those portfolios. So that's even better. But here's the interesting part. We expect to collect another billion on these portfolios, SEK1.5 billion. So how can that be? Is it inaccurate pricing? Stefan got something wrong in his spreadsheet? No, it's not. So this is improvement in collection operations that has taken place since those acquisitions were made. So this is better use of data, better use of system, better performance management. Now fast forward, let's take 2012. So we acquired for some billion in that year, expecting to collect SEK3 billion. Now these are more recent vintages, so we have not yet collected that full amount. But in fact, we expect to collect SEK3.5 billion. So you can see the pattern is pretty much the same. Now let's move back over here. 2017, a year when we acquired quite a lot, billion, if I remember correctly. Of course, very recent vintages, we've not yet collected all of that. But in fact, we are very committed to implementing improvements in collection operations, as you've heard during the day. And as those efforts materialize, it will benefit not only the 2017 vintage, but all of the other vintages. And this is why I take a lot of comfort in our ability to sustain a solid collection performance. So before I turn to the balance sheet and the funding, I want to touch upon cash generation. And this is a topic which attracts some interest in the industry, so I figured I might as well bring it up here. So the question that is sometimes asked is how does cash generation look like in steady state. So that is in a state where purchases are exactly at the level where it replaces the ERC. So it keeps ERC flat. So let's talk about that. As you know, we collect cash. That's what we do. Over the last twelve months, we collected SEK 5,400,000,000.0 over on the left hand side there. There is a little bit of servicing income, not that much yet. And those two combined should, of course, cover cash expenses. It should cover cash interest. We are happy to pay our fair share of taxes. It should also cover maintenance CapEx. So this leaves some SEK 3,000,000,000. Now based on the average one hundred and twenty month gross money multiple, we estimate the current replacement purchases to be SEK2.6 billion. So out of the SEK3 billion, SEK2.6 billion goes towards reinvesting, which then leaves some 400,000,000 to $450,000,000 in free cash flow. So that's a healthy level, but I have to say that this is a bit of a theoretical exercise because, in fact, as we've told you multiple times during the day, these expenses are really too high. And by the way, margins should come up. And even though we do not have a specific growth target, we're certainly not aiming for a standstill state. So a theoretical exercise, but nevertheless. With that, let's turn to the balance sheet and funding, and this is not a theoretical exercise. So here, the facts may speak for themselves. We have a very tangible advantage in funding. On the left hand side, you will see the weighted average cost of debt for Hoist and some of our peers and clearly a very, very strong position here. Now this position is not due to us having a very different leverage. So on the right hand side, you can see that on leverage, we're sort of on par. And so obviously, there is something else that we do differently. So let me share a few aspects on that. We have a very well diversified and liquid balance sheet, unlike any of our peers. To start with, a fair share of our funding comes from retail deposits, and most of this retail deposit sits with a 0.7% interest rate today, 0.7%. Those are mostly SEK and euro deposits sorry, they're mostly SEK deposits and also euro deposits, and we attract these deposits through online offers. Secondly, we have a very strong balance sheet, which allows us to maintain an investment grade rating, Moody's BAA3, and this rating is, of course, very helpful when you issue senior unsecured bonds, which we do, the middle part here. Furthermore, we operate with a very large liquidity buffer, and this gives us the opportunity to go after investments with a lot of confidence. You've seen us do that in Poland, for example. So we're always operating from a position where we can do investments with short notice. Now this liquidity buffer is invested into very low risk assets, and we could deploy roughly half of that. If we wanted to deploy more than that, we could because we could, for example, utilize the RCF or we could issue commercial papers. So there's a lot of flexibility in our funding model. Now overall, I am, of course, very satisfied with the setup that my treasury team has built over the years, and it's a very rigorous model. So we do what is called ICAPs and ILAP, so this is a lot of stress testing. We monitor counterparty risk, FX risk. We monitor hedge interest rate risk. We monitor operational risk and all of this with three lines of defense, just like any other bank. So obviously, that's a lot of work, but it's worth it. Our competitive advantage on the funding side is, as you can see, very material. I mentioned leverage earlier on, and I was sort of brief about it because, in fact, we think that capitalization is a more relevant metric to look at for us and specifically then the margin towards regulatory requirement. And I'll try to pick up one of the questions that came earlier on here. Today, we are at 5% margin towards the regulatory required level, and that is a very strong level. Actually, it's a little bit too strong. It's above the range of 2.5% to 4.5% that we've set ourselves. That target has been the same over the recent year, and we have not changed it this time. And it aligns very well with having an investment grade rating. So I believe the question earlier here today was why is it so high? Why do you need to have that much of a buffer? Well, it aligns very well with having an investment grade rating then, which is, of course, useful. You can ask then why are we above the target range, and this relates to the fact that we raised equity very recently. So give us some time and we'll work on that. So strong balance sheet, strong capitalization. Let's go into the last part, which relates to our potential in operations. We've set ourselves a target to get cost income down to 65% by 2021 sixty five percent. Now this may not be a smooth quarter by quarter development. Things like Maran or Getpac could certainly move this around a little bit, but the direction of travel is clear and broadly, there should be a gradual improvement towards these levels. This target is definitely doable, but it requires decisive actions. You've seen us consolidate sites in Germany. You've seen us consolidate sites in The UK. You've seen us simplify management structure. And as you've heard from Bjorn during the day, we have very specific plans for what to do next. And this includes digitalization, it includes nearshoring, etcetera. So definitely a doable target, but requires decisive action. I wish to put this target into context by touching upon three questions. So the first one is why is the current cost income so high? The second one is how should the future state look like, the end state? And the third question is what will it cost to get there? How much do we need to invest to get there? So I'll take those one by one, and maybe that will answer some of the questions we had earlier today. Starting with the current cost base then, and this is costs expressed in relation to income, so it adds up to the costincome metric. As you will see, this is a fairly people intensive business. Roughly two thirds of our employees are within operations, Bjorn's area. You will also notice that there is a considerable spend on external servicing, so this would be typically then DCAs, debt collection agencies. It also includes information services, so considerable spend on that. There is also what we perceive to be above peer level spend on indirect cost, professional services and other things in that category. So 6% of income goes towards professional services, 6%. Finally then, on depreciation, this relates primarily to capitalized IT investments at 2% of income today, not something I perceive to be very high, maybe it's even too low. With that said, on the starting point, how should the end state look like then? On this slide, you will have on your left hand side the last twelve months, and you have the 2021 go to state. So let me give you a little bit of some highlights on this one. Staff costs should come down. As Bjorn spoke about, we are aiming to have an increased share of collections in low cost channels, and we will nearshore certain functions. So staff costs should come down. Collection costs, this is actually not the largest improvement lever, but there is certainly potential. For example, in terms of how we use DCAs, the debt collection agencies, maybe we could do more ourselves. There's also potential in how much litigation we do. So if we can be more selective in litigation, this there is potential in this area. On the administrative side, I think you've heard during the day that we are taking action here. This action is about improving governance around professional services and procurement in general. There's also potential in how we cooperate within the company. So if we can cooperate in a more modern and sustainable way through less travel, there's also savings in this area. Finally then, on the theme of depreciation and IT, and you will understand why I get back to this in a second. 2% is probably a little bit too low. I think that this may even need to come up. Of course, when we look into investments now, we do so with a group wide perspective, and we aim to develop once and deploy many times. So there should not be a radical increase in capitalized IT depreciation. Nevertheless, I expect this to go from 2% to 3% of income by 2021. So if that's the future state, then how much do we need to invest to get there? So Anders has already given away the number, 200,000,000 to SEK $250,000,000 actually. That is how much we need to invest to take those SEK 300,000,000 in cost savings out. And let me give you a little bit of color to this. First off, this is for the three year period in aggregated terms, so over three years. And it is cash to invest, so it doesn't necessarily translate into cost, and you will see why. Because starting with IT investments, as you will understand, these will, to a large extent, be capitalized. A lot of our investments will be capitalized over five years. So the investments we do into IT will not hit the P and L. And in fact, the investments into IT is the biggest part of this SEK 200,000,000 to SEK $250,000,000. I want to stress as well that these investments into IT is on top of what I would call normal maintenance level. So there will always be a certain level of IT investment. If you go back in our financials, you will see roughly what that is. This is on top of that. So the normal spend will carry on, but on top of that, we need to do more. Moving on to the second piece. This relates to site consolidation and nearshoring, you could call it restructuring. This would typically not be capitalized and the timing of it is, of course, then related to our speed in implementation. Finally, there will be costs associated with making this change happen. That could be costs to acquire certain skills. It can be costs associated with speeding up or accelerating the change and other things. That's the last component there. So all in all, adding up to SEK 200,000,000 to SEK $250,000,000 in cash to achieve over three years. And I'm sure I will get many questions on that later. Now timing wise then, how will this play out in terms of timing? Well, I think as you've heard during the day, we are we're very eager to get going in this change journey. And I would expect the timing of these investments to be 50%, 25, 25 over the coming three years, so 50% year 25% year 25% year three. Now this morning, Claes Anders spoke about the financial targets, and I will repeat them and maybe I will answer some of the questions we had earlier on today. So to start off, we aim to generate a 20% return on equity by 2021. Over the coming three years, with 2018 as our starting point, we will generate 15% compound average growth rate in EPS. Cost to income should hit 65 by 2021, and we will do these changes while keeping the CET1 ratio in the range of 2.5% to 4.5% above the regulatory level. And we will also pay out a dividend in the range of 25% to 30 of net profits per year. And one of the questions that were asked earlier was on EPS growth. What about the AT1? So maybe I should just clarify that. So in the EPS definition that we have used over the last year or so, there is an adjustment for EPS sorry, for AT1 cost. So what we mean here is that, that the number that we are tracking is the one that you will find in the report, and that number happens to be adjusted for the AT1 cost. In fact, if you were to pull this out, then we could have the same target for the unadjusted metrics. So it's not nothing strange going on there. That said, I don't want to end up by finishing my presentation in the footnote here. So rather than that, I'd like to take a step back and just say that given the starting point that we have and the actions that we are taking, these targets are very achievable, and it's a commitment that we intend to keep. So with that, I'd like to open up for questions. And welcome Krasanis on to stage as well. Thank you. Thanks, Kristor. I hope that clarified quite a lot. It was an important section, so thanks for that, Kristor. So we're happy to take questions. So please feel free. Should we just start over here? Yes, doesn't matter. It's fine. Go ahead. So Ermik Herich, Nordea. So just going back to Slide 90, I'm not sure I understood it correctly, but everything overshooting your initial forecast, have you already done revaluations for that or So Slide 90, was that the vintage slide? Okay. Of course, we update our predictions for the portfolios on an ongoing basis. So whenever we see that there would be a deviation from what we expect on the plus side or negative side, we would adjust for that. So yes, the valuation of the book is adjusted based on our most recent projection for the cash collections. And does that include sort of the new investments you're expected to do in data analytics or No. No, no, no. So if we can improve operations, then we should be able to do more than we expect currently. Okay, perfect. And then also on the liquidity buffer, could you give us any more guidance on when you're saying that you need $3,500,000,000 in a buffer in relation to what do you come to this $3,500,000,000 I mean, is it just half the buffer? Or is it how does it sort of grow when you have more liquidity? Yes. So the liquidity buffer is there for a number of reasons. First of all, when you have a substantial funding through deposit, you need to have the ability to manage in and outflows. So of course, you need to have a bit of buffer there. There's also since we are hedging, for example, FX risk, there could be some in and outflows on derivatives, which we would also hold liquidity for. So it's not half of the liquidity buffer as such. You should think of it more as €3,500,000,000 So that leaves another 3.5 that we could deploy with short notice. Okay, perfect. And then a final question also. In one of the first slides, you showed that you actually included sort of a management execution buffer in your targets. Could you give any more flavor to what the main risks are? Maybe it's a question for you. Yes. No, that's a good question. We're talking a lot about change today, right? And I think the most important factor is to have the right people in place to run the change process, and you've seen the team today. So I think we have the right people. And secondly is to break down this into tangible specific initiatives that you follow-up. It's a rigorous process but a strong PMO. That's also in place. But you never know how things are, right? Something might go wrong or you get more benefits there and less there. So we thought it was prudent also to get across to you that we understand this and hence also have set aside a bit of an execution buffer. Thank you. Weger Tuberger. Just continuing then on the very interesting Slide 90. I have at least two questions there, and then maybe I can have the microphone back again later. If we compare this to the slide on vintage shares that Stefan showed earlier, You have an increased estimate in remaining collection for '14 and 15, compared to the initial forecasts, whereas he had an underperforming compared to what you expected. Could you just help us understand how that is? Yes. So I think to start with, these graphs really show two different things. So Stefan's graph shows to date, so how much have we collected to date in relation to what we expected to collect to date, whereas the graphs that I showed, showed how much have we collected to date, adding on what we expect to collect for the future. So if you have a portfolio where collections has been delayed, it would in Stefan's graph show up as being a disappointment. But if you are able to make up for that over time, it could still sort of add up to what you set out to collect in total. And just to understand it and the impact of that comment, if you have then collected less than you have hoped for this far, but still expect that to collect that in the future, it won't have any you wouldn't have taken any negative revaluation of that, right? You could absolutely have because the value of the we would have. So the portfolio is always valued on the discounted future collections. So this means if you were to push collections out into the future, it would have a negative impact on the value of your portfolio. And that value we would have taken into our P and L. Unless you increase what you expect to collect later, just to follow the So if you collect you could in theory, you could collect exactly the same amount, which means that at the end of the portfolio, you will be equally good off. But if you do it with a later phasing, from a return perspective, it would be worse. Did that answer the question? I can follow-up. Just on then on 2017, how sure are you on how do you go about so early increasing the expected remaining Yes. That's a good question. So I don't know if you maybe if you picked that up on Stefan's slide, but actually the 2017 vintage has been very strong. It's the strongest vintage of all the ones that were on the slide. So we've been very positively surprised by the quality in some of those portfolios. And that is what seven showed is realized collections. So we can already see that this upside is very tangible, And that sort of explains why we've also then increased expectations on those portfolios a bit. Yes. So there's no prioritization in that. So you're not getting the collection earlier, you're just getting more than you hoped. Yes. So this would be typically, it could be higher contact rates, less fallout in installment plans, better credit quality. Thank you. And just the last question on that slide. The pre-twenty eighteen, the remaining SEK 1,500,000,000.0. Is it fair to assume that, that will be collected now over the next five years? Or is it very, very long tailed since it's been or is remaining after ten years? It would be the first one. So it's fair to assume that this the majority of this would be within the five years. Thank you. Just Brad, one annex to your question about our procedures for the revaluations. Remember that we have, of course, the internal management processes. Then you have an independent risk review that reports to the Risk and Knowledge Committee. And then there is the auditor's responsibility to audit our work. So there are several processes, several stages to ensure that we have the correct view on these portfolios, and we take that very seriously. Yes. I think you then understood my question because then the devil's advocate would say that you could compensate for a lower performance by increasing expected and thus compensate even though you're discounting it. Yes. And then the trust in what we're doing and the stringency between the different silos, if you like, and we assess this. And I'm very impressed coming into the company from the outside. I'm very impressed by this work. It's diligent, it's accurate, it is clear procedures. So I'm very confident that this is done correctly. Okay. Thank you. And maybe I can just add. So we do disclose collection performance and revaluation separately. So it's not that we just blend them together and give you the total. We actually give you a collection performance, which is realized gross cash collections, 105%, and then we will also give you the change in net present value of the portfolios. Back there, think there's one or wherever. Yes. Michel, yes. You. Adi from Morgan Stanley again. Just three questions from me. In terms of, one, the reinvestment or the investment costs you forecast going forward in terms of SEK 200,000,000 to SEK $250,000,000. Is that just wanted to clarify that, that is all one off? How much of that is recurring? It's one off, yes. So the investment, would see this as a bit of catching up. And on the restructuring side, this if it relates to site consolidation or stuff like that, it's not something we would do year after year. Okay. And the second question is just looking at Slide 94, where you provide the margin to regulatory requirements in terms of your CET1 ratio. Yes. So currently 5%. In terms of your target, you are looking at 2.5% to 4.5%. That doesn't give you, I mean, in my own estimation, in terms of legroom for growth, does that kind of suggest that you might be raising equity again in the future? I mean, I think it's quite obvious that we're very well capitalized in relation to our targets. And the way you should think of this is that so we need to acquire SEK 2,600,000,000.0 to replace the stock. So SEK 2,600,000,000.0 is sort of no growth basically. On top of that, the earnings that we I mean, we're generating profits, so retained earnings will increase the capital base. That will allow us to grow, say, between 1015%. So in relation to the book that we have, that would be another 2 point something billion. So then you're at sort of SEK 5,000,000,000 in investments annually without having any deteriorating CET1 ratio. On top of that, then since we are now actually a bit above the target, it means that we can have an investment rate exceeding that level for some time before we would get into anywhere close to sort of the bottom range of this target. So I mean just to follow-up on that, you are kind of comfortable getting to the lower end of that target for some time, I guess, the 2.5% buffer. You'd be comfortable with being at that level for a certain level of time. Ask one more time. Sorry. The lower end of your target, the 2.5, percentage points buffer, will you how comfortable will you be to stay at that level for an extended period of time? Perfectly fine. Okay. And then just one last question from me. On Slide eighty four eighty six, you provide your gross money multiple on a one hundred and eighty month basis. Can you give, maybe the corresponding figure for over one hundred twenty months? So then what you could do is if you look in the quarterly report, we give you both the ERC over 180 month and the ERC over 120 a month. So actually, if you just take the difference, you have the amount to be collected beyond ten years. And I think that would the difference would be somewhere around 8% today. So if the one hundred and eighty month is 100, then some 90%, 92% something would be in the first one hundred and twenty months. Thank you. Yes. Thinking about the EPS target setting the level from 2018 and onwards, what EPS do you expect for 2018? No, joking aside, but just to think about you having a dilution also, just maybe sort of a theoretical approach, could we use approximate rolling twelve months from where you are today as a decent proxy and maybe add something on top of that, that you should grow earnings year over year in Q4 as So there is no funny stuff behind the dilution from more number of shares in the So calculation or something like the way we calculate earnings per share number is that we take the earnings, we adjust it for the AT1 cost, and we divide it by the average number of shares. So with the shares being issued then in sort of September, the full year number will have a part of the dilution in there but not the full dilution. So you're talking one fourth or fifty percent? One fourth. Good. One third maybe. It depends if they were issued in September. Late September. Yes. Then you've talked a lot about your collection performance, 105%. Is that also incorporated in your EPS target that you will be at that level? Or are you budgeting for 100%? Of course, we have that expectation. Think that kind of came across quite clearly, right, from all the different sections. So that's basically what we believe we can achieve. And as such, you can think about this as being reflected in the numbers. Okay. Then a question for you, Kristo. Thinking about the fully or almost fully amortized vintages, just from a profit recognition perspective, I guess those should be almost fully amortized every quarter and then you also need to revise up the value. But how is this impacting your P and L? Is it a very high margin contribution? Or is it a very low margin contribution? Just to understand that dynamic. So all our portfolios have a fifteen year cash flow projection even if they were bought way back. But of course, that would be a very small amount. And so you can say that the value of all portfolios is fully reflecting our expectation on those portfolios going forward. So there's no sort of future if we just collect what we expect, there would be no revaluations on those portfolios. Okay. And thinking about the return profile over the lifetime of those fifteen years, if we think about ROI or ROE in those terms and differing from accounting earnings and cash flow earnings because you have a higher amortization level the longer out in time you go. So amortizations as share of gross collections is increasing and depressing the margin, but you should also have a lower cost to collect. So after a few years in time, are you at negative earnings contribution but still a very positive cash flow contribution in your way of accounting? Or how is this playing out? So to start with maybe our way of accounting, I mean, we are implementing IFRS. So there's And nothing special what that means is that the effective interest rate is calculated at time of purchase, and it stays fixed. So the book will always generate its effective interest rate as income. So this of the and that's fixed over time. You will always have the value of the portfolio times the effective interest rate. That will be the interest income, which is recognized. Which I understand. But then you have a cost to collect and that is you're talking gross ERC? Yes. So if the cost to collect would exceed the collections, we would just stop, right? Yes. Okay. So there is no net positive there is no way we can see cash flow contribution being positive but earnings being negative, the way you're saying it? No. Okay. Maybe I should stop. I have a few more, but I can follow-up. Thank you. Going back to the organizational slide, really the formal presentation, Could you just remind us with the focus areas you have now, why you have an office in Benelux? Yes, to be discussed, to be followed. Thank you. And on the capital target Having said that, the Benelux area is profitable, right? It's not like it's a worry. But I agree with you from the strategy, right? It's not really one of prioritized markets, and that comes through. If I'm to be funny, I could say that also near shorting things to Russia will help the digital and self-service pickup. But that's if I'm funny. Just a question then on the capital requirement there. To understand the rating, is it so that the bottom range there around 12.5 would be where you will be potentially changing your rating? So I guess to start with, we're not the ones determining the rating. The rating agency would do that. But our assessment is that the current targets for CET1 ratio aligns well with having an investment grade rating. That's our assessment. I would think that they agree, but that's really for them to say. Okay. Thank you. Thanks. Thinking about Getback, I just have three questions on Getback. And firstly, reading about the book value from Getback, it has naturally been revised down. I think it was PLN 1,300,000,000.0 now. And you have commented that you have put placed a bid at 1,000,000,000 plus. Just to understand the haircut, the SEK 1,300,000,000.0 of face value seems to be not too distant from the bid that you have put in the on that asset. Second question on that, can you comment on if you have been able to look into that portfolio and maybe how many of those portfolios that you have been bidding for as well, where you have a fairly good sense of what the actual value is, if you have like a percentage or so of that. And then finally, if you win this, would it and in which way alter your financial targets in the shorter term? Right. Thanks for that. We find the get back situation very interesting. Of course, it's in our prioritized markets. It's in market consolidations. It's assets. It is adding financial synergies, if you like, an operational synergy. So it ticks all the decision criteria for M and A. So we think it's a perfect situation to be in. Think, Stefan, maybe you can clarify some of the technical things around the bid and also the portfolios. Yes. So I guess the first question was around the book value, the CHF 1,300,000,000.0. We completely ignore book value. We that's irrelevant to us. I mean, we made our own assessment. We came up with a number and, well, it led us to being appointed the preferred bidder and have exclusivity from the perspective of management. There's a lot of other stuff still to be happening, and the deal can fall over because the creditors don't agree ultimately with the solution and decide to run off the book themselves. I would think that's pretty risky, but well, it's up to them to decide. On the percentage of portfolios that we know, I mean, we're very active in the Polish market, so absolutely, we've seen GetBack in a lot of auctions and competed against them. So it's a good thing for us that that they're not there anymore, but we have that positive benefit. And then now also the ability to buy their portfolios, I would say roughly half of those is is what we've seen before. So there's also a number of portfolios in there that we haven't seen, but they're mostly from financial services sellers. So they fit right into our strategy. Yes. And from a financial target perspective, this is like a portfolio acquisition. It's big, but we regard it as that. Okay. Thanks. All right. Yes? Thank you. So just following up on that, you say that majority is from financial institutions. The rest of it, does that mean you're going to resell it? Or what do do with those assets? I think I'll hand over that to Stefan here. No, no, no. You do, Stefan. Maybe you better stay on stage. Yeah. I'll stay here. Yeah. So the percentage is not that big, and it's something to to be to be figured out. I mean, it's it's not like we have 0%, it's not like 100% is financial services for us. So we have a small small portion, outside of financial services. So we could potentially deal with ourselves, but, it'll also be an option to to sell it. We've been approached by other guys who've been involved in this process, and they've already said, like, look. We're very interested in in this sort of utilities and telecom side of things, and, we're happy to provide a bid to us. So it it's absolutely an option. And then also just a follow-up on your funding. So I mean, with the deposit funding, you have a shorter duration than most peers. Would you find it fair to assume that initially, if we see rates going up, you would actually be hit first? And then over time, when your peers need to refinance in the bond market, then they'll catch up and you'll see the effect on rising IRRs on portfolios? Well, think actually some of the graphs shown here today indicates that it's the other way around. So, so far, we haven't seen much of a pickup in the interest rates on deposits. But in fact, if you see the high yield interest rates, they've already gone up. So it seems like that is actually not the case. And I'd also like to add that we do hedge part of the interest rate risk to give us a little bit more time to adjust. So up to onethree of our interest rate risk is hedged, which will then gives us more time as this plays out over time. And how easy would it be to, for instance, shift more towards euro deposits if it's Swedish market rates coming up? So with the euro deposit offer has been in the market for a year, and we've attracted some EUR 400,000,000 in deposits. So we're very happy with that. I think that's a I mean, that's a pretty good pace. I wouldn't necessarily count on us being able to sort of swiftly shift things around here. I mean, there's a it's a big number of depositors, right? Thank you. All right. I think we're approaching the end of the Q and A session. Are there any burning issues out there? And is the bid rest now? I don't think the web is very active either, so Michel is shaking his head. If not, I will thank Christopher, of course, and we will move into the wrap up session. So I hope it's clear that today, we are trying to get across to you that we see the market as very attractive, that we see big growth opportunities in particularly in these newer asset classes. We also tried to get across that our business model provides us with a unique and sustainable competitive advantage, having the lowest cost of funding in the industry. I hope that the whole sort of common theme has also come across to you that we see great potential to improve operations, that we have specific actions now in place to deliver on this and to close in on that performance gap. And now we have a great team in place, committed, dedicated, professional, enthusiastic and we are also very committed to delivering on our promises. I think our strategy is clear. You heard us say this over and over again. We are in few markets rather than many markets. We want to be top three in those markets. We like mature markets. We think it's a great place to be. We are focused. We are specialized. We do financial institutions in those few markets rather than trying to be everything for everybody everywhere. And we need to take those big steps in digital. We are behind, but it's not rocket science. It's bringing about the basics, introducing that into the organization, taking the best practices that we have, for instance, in The UK and employing that across our markets. And we have in place now an operating model that Victoria and I have talked about, which we think is fit for purpose. And I strongly believe that what we're doing now is the right thing. We are going to be different than the rest of the industry because of this. And I'm convinced that it will pay off and so that we can deliver on the value creation. We see EPS growth over the years to come now in the order of magnitude 50%. The buckets are identified where the sources of value really is. And everybody here in the team have presented how they will deliver on this. And I think we have a balanced set of financial targets. We've gone through it a few times already: return on equity at 20% annual EPS growth of 15%, cost of income down to 65%, strong capital ratios and dividend payout 25% to 30% of net profit. So with that, I would like to thank everybody here in the audience here in Stockholm and thank everybody also that follow this on the webcast. I wish you a great afternoon and a safe journey home. And hope to see you soon. Thank you and goodbye.

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