Earnings Call: Q3 2017

Oct 26, 2017

Warmly welcome, everybody, to the presentation of our third quarter financial results for 2017. I'm very proud that we, quarter after quarter, can continue to show a healthy growth of our bottom line profits. Compared to the same quarter last year, our profits before tax have increased with 40%. And we continue to show a strong growth, stable margins and increased efficiency, which is a reflection of the stability and the predictability of our business. Our EPS growth also shows a strong development and is up 34% year on year. Our portfolio continues to show a healthy growth and is up 14% seen over the last twelve months. This quarter investments amounted to approximately SEK780 million, which corresponds to nearly 30% higher investment levels compared to the same quarter last year. During this quarter, we also launched a second deposit taking scheme in Germany in euro and thereby complementing the deposit scheme in Swedish krona. We also repurchased €100,000,000 of our outstanding senior debt and issued another €250,000,000 with longer maturity and at very favorable market rates. The settlement date for this transaction was October 4. Both these initiatives on our liability side led to a better currency match between our asset and liability and also improved financing structure in relation to our long term assets. Of course, this also prepares us for future growth opportunities and makes us more resilient to a potential interest rate volatility. During this quarter, we also got our self-service portal for our U. K. Customers up to speed. It has gathered momentum quickly and is already delivering significant value. And for that purpose, I invited our Chief Information Officer, Anders Walim, to present our progress but also our way going forward during this morning's third quarter presentation. If we then look at the first nine months, 2017, we continue to show a growth momentum in our business. Excluding the cost associated with the buyback of our Tier two tranche during the second quarter, our profits for the first nine months has increased with 42%. Earnings per share has increased with 37% during the same period. And I am, of course, particularly satisfied that we continue to deliver a stable return on equity of 20%, which is in line with our promise to the market. This is also the third quarter this year where we have been at or above our financial target of an ROE of 20%. The market continues to develop favorably. And as we now enter into the seasonally strongest quarter in the industry, we see a significant increase in the number of potential transactions coming to the market. We believe that our long track record, operational efficiency and solid funding structure puts us in a strong position to capture growth opportunities, both in the fourth quarter and onwards. As we have said previously, we see that the market keeps developing in line with our expectations. And additionally, during the last couple of weeks, both ECB and the European Commission have proposed guidelines on how banks should provision nonperforming loans, and we believe that these changes should act as a catalyst for even stronger growth in the years to come. Many of you have heard me talking about this increased regulatory changes and the effect that, that would have on banks' willingness to divest nonperforming loans or CME performing loans from their portfolio. Now we have those changes, I. E, the implementation of IFRS nine just around the corner. And I'd just like to show a very simple picture to give you an example of what I've been talking about. On the top hand, on the right hand side, you see exactly the environment that we work within today, I. E, the bank has made a certain provision, and we go to the bank and make a certain offer. And there will always be in this bid ask gap that not only us, but many other actors have talked about. That unpleasant discussion, you can say, is now taking over by the regulatory authorities, which they're forcing the bank to fully provision for a nonperforming loan. And you can see on the lower chart there, on the right hand side of this picture, we it's almost stupid to say, but we come in with a pleasant position towards the bank because we come in and propose to them that they will have a positive P and L effect or something that they have provisioned to 100%. This will be an effect to the market. And you have heard me say this before, this will be a catalyst. This will be an eye opener for more volumes coming to the market. Before handing over to Ponto then, let's have a look at our financial development and our financial targets. We continue to invest prudently and at levels to secure our promise to the market of a return on equity of 20%. And as mentioned before, the first times, we are at an ROE of 20%. Our EBIT margin has improved both compared to the third quarter twenty sixteen and to the second quarter this year and now stands at 37% compared to our target of 40%. Our capitalization measured as our CET1 ratio remains above our own target level of to be between two point five and four point five percentage points above the regulatory requirements. But we are now entering into the fourth quarter, which seasonally is the strongest in our industry, and thus, we expect to show a better balance in terms of capitalization when we release our fourth quarter results. And with that, I hand over to our superstar Pontus to guide us through our financials. So then I do the normal then. Thank you, superstar, Jorgen. So let's go to the next page. So I'd like to start taking a few steps back and reiterating some of the things we've communicated earlier. So as you know, we prefer to purchase rather than service. And for that reason, we also decided to terminate a servicing contract in Poland late last year. And this affects obviously fee and commission income, which is down substantially compared to same period last year. This is to a large extent, obviously mitigated by cost reductions as well. Also in Poland, we when we did our entry into Poland, we invested in a joint venture in a closed end fund together with another party, high basically a competitor to us today. We are not reinvesting into this structure since many years back. It's a very good investment, but it continues to run down obviously in the phase of us collecting within this, which is then also down substantially compared to same period last year. Taking these two things into consideration, they are obviously the main driver for us showing a flat revenue number compared to same period last year. This is as I said, this is mitigated to quite some extent by us being able to reduce the cost. So cost in absolute numbers are down 3% year on year, leaving us with an EBIT, which is up 6%. Also on the funding side, as you've heard, we've continued our efforts to make us even more competitor and to further be able to reduce our funding cost. So funding costs are down substantially compared to last year. This brings us down to a profit before tax of SEK182 million, up 40% year on year. A note on the financial items is that there is, to some extent, items that affects the comparability. So during this year, as you might recall, we expanded the scope within which we can do so called hedge accounting. This moves items from the P and L to the so called other comprehensive income, I. E, it's not part of the profit before tax. This affects to some extent the comparability between the years then. Return on book remained stable in the ten percent ballpark, which we've seen now for many quarters and many years going back. And again, to reiterate the levered return on equity adjusting for the items affecting comparability stands also this quarter now at 20%. So if we turn to the next slide. As mentioned, we continue to show a growth over the last twelve months. Portfolio growth is up 14%. And this is before again entering into the last quarter of the year, which is normally the busy quarter of the year. Revenues, I've talked about, revenues are flat year on year, but mostly then affected by both the joint venture in Poland as well as our servicing revenues from our Polish operations. So if we go to the next slide, return on book, as I mentioned, stands stable at the level around 10%. It's a little bit it come down a little bit further in the third quarter. And I'd say there is two there is mainly two things that affects this. Firstly, the third quarter is the quarter where most of our employees and also actually most of our clients will take holiday. This affects our collection levels to some extent, I. E, it suppresses those to some extent. Also, we've had some costs that are of some one off character, both some restructuring in our Western region and also some additional and further investments into our Spanish operations. So it's two things that affect it. But as you see, it's not a major drop compared to what we've seen previously. Again then adjusting for items affecting comparability, profits remain at a stable level compared to what we've seen previous quarters this year and with a substantial uptick year on year 40%. So if we then move on to our regions, we'll start with the Region West. We've seen a very strong portfolio growth, up 24%. Main drivers for this is The UK followed by Spain. EBIT increased with 11%, of course, primarily driven by the strong portfolio growth, but also to some extent then held back by further investments into building out our operations in Spain as well as some portfolio revaluations in the region that negatively affected revenues. These items, of course, also affect our other metrics such return on book, so they compress the return on book in the third quarter. Adjusting for those, we've stayed at stable levels compared to previous quarters. Looking ahead in the region, we are certainly here moving into the last important quarter of the year and we're seeing good opportunities across all the jurisdictions. Mainly, I'd say, Spain and mainly UK and also Spain then. So we believe that we should be able to continue to grow and expand in this region. If we go to region Mid Europe, this region was a slow quarter in terms of portfolio acquisitions. So if we read some seasonality into everything from people being on holiday and the collection levels, this certainly also affected our acquisitions in the Mid region during quarter. But again, here going into the important last quarter of the year, where we've seen a lot of investments throughout the year, and we expect that trend to look similar to what we've seen in previous years in the region. Portfolio, in spite of not having invested much in the quarter, the last twelve months portfolio growth is very solid of 19%. We have revalued portfolios in Italy positively. This has a large impact on EBIT on the margins and on the return on book. The reason for that is that we've bought and expanded as you know a lot in Italy and we've seen very strong and solid performance and we can now conclude that this performance is going to continue for us into the future. So then finally, Regional Central East Europe, we had a strong quarter in terms of portfolio purchases, where we invested just over SEK200 million, which is a substantial uptick compared to previous quarter, same quarter last year. Though the return or the book remains fairly broadly on the same level as when we started the year. So, we haven't built further book in the region, but we've been able to maintain the book. Also here, moving into a last interesting quarter where we're working on a number of interesting opportunities in both Poland and Germany. We've seen some drop in the margins during the quarter, which is primarily explained by negative revaluations of million in the region. Adjusting for that, they remain fairly stable to what we've seen in previous quarters. Then I'd like to spend some time on funding and funding costs and we've introduced a new slide trying to visualize what's going on here. So here we're looking at our funding cost in relation to the portfolios that we're funding. So we're basically blending the funding cost towards the portfolio book value. And as you can see, we've had a very good development in continue to drive that funding cost further south over the last five, six quarters. We have, as you heard also, successfully bought back and issued additional bonds in the market at longer tenures and at more favorable conditions as well. So this will help us further improve currency matching, further improve the ratio matching and also obviously most importantly support us having a competitive funding situation as we go forward as well. So if we then move to next slide, capital and liquidity ratios, we remain with solid and strong capital and liquidity ratios, which is the way it should be moving into the last quarter of the year. We're just above the targeted level for CET1 ratio and also we stand very strong on the liquidity side. Obviously, we expect these ratios to the leverage to improve and these ratios to come down during the fourth quarter when investing more into portfolios. Then before I hand over to Anders, last slide again, operational efficiency. So over the last eleven quarters, we've shown a good development measuring our expenses in relation to our gross cash collections. They've been showing a steady trend coming down. In the third quarter, they were flat compared to the second quarter. This is mainly an effect of two things. Mean, firstly, seasonality to some extent affecting this and also some of the costs that I mentioned earlier, both of one off character in terms of restructuring in the West Region and also the build out in our Spanish operations. So with that, I'll stop here. And then before we go to Q and A, I'll hand over to Anders Falim, our Chief Information Officer, who will enlighten you on some of the developments we've had on the third quarter in terms of technology. Thank you, Pontus, and good morning, everyone. I'm really happy to be here to talk about our accelerated digital transformation. So it probably doesn't come as a surprise to you that we invest a lot into information and data and those technologies. So we have put a lot of efforts and investments into data driven sorry, solid data science technologies, state of the art the last couple of years. This has resulted in different things, but most importantly, we have an enterprise set of warehouse that is central and handles all this information, all this understanding and knowledge. This is the base for our investments. It's the base for our operational excellence activities, but it's also the fundament for us to understand our customers. So now we have come into a phase where we're moving this understanding of our customers into the web, into the apps, into the digital sphere. So we're rolling out a common system platform throughout the group based on these solutions. The solution not only enable us to become more efficient internally, it also enable us to be more in line and implement the next generation of tools for our customers. And that will help to empower them to a larger extent than ever before possible. This is an illustration of a customer journey. It's not the customer journey. Because we have this setup now, we can tailor the customer journey to the person in need or the person that is actually using our tools. But in basics, it always starts with us contacting the customer. It could be through a letter, we're talking about a physical letter here, or through an e mail, depending on what kind of contact we have them. But to start with, we normally just have the address or the phone number. Today means you get a letter. We tell them that you're going to call them up, and we do that. But now from now starting and onwards, we are actually giving them a way to go into our webpage to control their own destiny, put in their income expenditure, get a suggestion of a payment plan and from then on, we have a relationship. As mentioned before, I don't know if we mentioned it before, but we have been rolling it out in The U. K. In July. And on the next slide, I'll go into more detail about that and the results from there. So we went live in July in The U. K. With this. And following this launch, the self-service website had gotten mounted quickly and is showing significant results. Actually, the proportion of plans that are set up on the web today is about 30% overall. And it's getting higher and it's way higher than our initial expectations. But more importantly, coupled to that, we see that the consistency, the sustainability of the plants are way better when it's been through the digital site, through the website compared to the installment that is done through the phone. They are stickier. The initial results are very encouraging and provide us with a further confidence that our customers want to engage with us across digital media. And with the concept now proven, we'll continue to roll out this concept throughout the group. So looking ahead, we will continue to enhance the customer journey the next coming years. We'll start with the website. We'll continue with apps. We'll continue with relations through IVR, IVM and other techniques. But the important thing is that we're making it easy for customers to engage with us, and we also expect more installment plans to be originated through the platforms. And benchmark studies in all kind of industries have shown that better customer experience also correlates with higher revenue growth. This is one of the effects we expect. The other effect is that customer engagement through our digital platform will lead to better performance, better cost efficiency generally ongoing forward. So to summarize, we have a very strong start in The UK. We are rolling this out throughout the group. We're creating a very strong bond with the customer. We're increasing the payment stability and sustainability and reducing costs. Thank you, Anders, for that. And with that, we hand over to our moderator today, Victor Lindbergh from Carnegie, to open up our Q and A session. Perfect. Thank you, Jurgen. So I'll kick off with a few easy and a few impolite questions before I invite the audience and also the telephone conference. And starting with the quarter, we look at some impairments in Spain. Can you comment a bit more on that given that Spain is a fairly new market to you? Yes. I'll let Ponta take Yes. No, I'll comment on that. So as I mentioned throughout the financials, I said, I mean, we've been building out our presence and our operations in Spain, that has had an impact of on the collection in the shorter run, how they've pushed out in the future. So it's driven by kind of time shifts. We haven't reached the full results yet, and they haven't been lost, but It's predominantly one portfolio or is it the No, the entire we don't have hundreds of portfolios in Spain. We've done a few investments there. It's both of the portfolios that have this impact certainly because, I mean, we're operating both of them partly internally and partly by outsourced partners. Is this something that makes you more cautious on Spain in the short, medium term, would you say? Yes. I think no, not more cautious, I'd say. But I mean, I think it makes us we need to go in tandem in terms of building out our operations rather than chasing volumes and hopefully they're going to be good. And that's where we're putting a lot of the effort now. So that's some of as I mentioned, some of the investments we've done is really on that theme then. So we've recruited quite a lot of people in the Spanish operations and trying to build that out. And we'll continue in Spain, I'd say, as we've done in most of the markets with a cautious approach, a stepwise approach and not risk anything. And that's actually it's related to another question I had, capacity on the collection side of the business going into the seasonally important Q4. Looking where you are now in terms of capacity, can you comment on this when you take on new volumes on a more of a group level? How can you handle this? Are you fully equipped? Do you have enough free capacity, sort of speaking? Yes, the simple answer there is yes. And we have shown them historically during the last six years on a quarter by quarter basis. Because as you all know, some portfolios are linked with actually that you take over people as well. And that is also the case with some of the transactions that we look in the market. So we don't foresee that as any problem at all today. And we have some overcapacity already as it is today, so not undercapacity. And you know that we have an established network of local DCAs as well in most of our jurisdictions. So we don't see that as a hindrance in continued growth. Okay. And then continuing on Q4, you've been if we go back a few quarters, you quantified the full year outlook in terms of volumes, billion to SEK4 billion. You don't mention that very explicitly today. Should we read anything into that when looking into Q4? Absolutely not, Victor. So we are firm and comfortable with to reiterate that guiding for the full year. Okay. That's comforting. Any questions here in the room? No? Should we try the conference on the telco? Our first question comes from the line of Arun Mamani from Macquarie in London. I had two. One was on portfolio acquisitions. I mean what kind of sort of returns are you seeing? Are you seeing some of that compressed? I mean you talked about the book return, but that's a function of cost, etcetera. Can we talk a little bit more on competition and what's actually happening to return IRR, return portfolios that you're picking up in the market? That was one. And two was, I'm just looking at the dynamics of ERC growth over the last few quarters, and that's sort of a little bit slowed, but your balance sheet number is sort of picking up in terms of portfolio acquired. Could you just talk a little bit about the dynamics there and the amortization? And how do you see that grow over the next few quarters? So let's start with the first question, IROs. I mean, certainly, we're operating in a competitive environment, which is obviously very good for the industry. I think what we've seen, I mean, are a number of things going on. I mean, one thing that's obvious for all of us is that we're all able to fund ourselves as more competitive rates. So on a net basis, our levered returns stay the same. And this is not the case only for us, it's the case for competitors as well. And then we're all becoming more efficient. So we're all being able to offer better prices to the customers in terms of operational efficiency, etcetera. And thirdly, sellers will also become more skilled in terms of sharing information and data with us, which also gives a higher certainty in terms of the business that we're underwriting. We don't explicitly steer the business as such towards an unlevered IRR. We steer the business towards our financial targets, which is both EBIT margin and the return on equity. So that's how we look up on the business. And we wouldn't comment and share explicitly what unlevered IRR levels we would underwrite in any single quarter. And then as you say, the function of that is the return on book, which is a good proxy of looking at it. And certainly, would look at our business considering cost as well. On the other question, it's a correct observation. So there is a lot of seasonality in this business where we've said this many times now throughout this presentation. The fourth quarter still is the by far the most busy quarter of the year where we could see up to even 40% of the annual purchases happening. So when you look at our 14% growth, a lot of that, of course, comes from last fourth quarter. And then the third the first, second and third quarter, we broadly maintained our book, I. E, we kind of reinvested what we have been amortizing in the book. And but then again, we're now moving into. So if you look at the ERC chart, I think what you will see on it, you will see typically a fairly flat development through three quarters and then you see a step change in the fourth quarter. This year hasn't been very different to any other year on that note. On the amortization side, they remain fairly stable as we would share these numbers with you on an annual basis. So there is nothing particular that has shifted as such in what's being brought to the balance sheet and what's being brought to the P and L. One last question. Thank you for those two. In terms of the NPLs that the European banks need to sort of provision, the slide that you talked about at start of the presentation, how much of that is old stock and how much of that is new book that comes into or new NPLs from new lending that comes that looks forward from now. I mean are you seeing a change? Because I presume that the regulation is largely for new NPLs rather than old. But are you seeing that the banks are actually provisioning the old NPLs down to narrow the bid offer spread? Shall we fight about who should answer? Yes, no. Okay. Well, I'll start there. I mean it's you won't get a scientific answer on that. Of course, no banks will disclose that either. And but we all in the market, we try to do our best to follow that development. But to simplify it, it will be a combination of both the final provisioning of old NPLs but also a more prudent provisioning of fresher defaulted claims. We have seen that because, in general, the market pays a higher purchase price in terms of percentage versus nominal and face value, but that is not only a reflection that prices are higher. That is a reflection that is fresher and fresher claims coming to the market. I think that if we see we will see any common driver of this effect, 2018 and onwards, is that is that it will be more of fresher claims than connected to lower collection costs, but usually with a higher price due to the competition and the knowledge of the selling banks as well. So a combination. I'm sorry, I don't have a better answer. No, thank you. That helps. Cheers. And our next question comes from the line of Adidas Adidaso Ogontadu from Morgan Stanley. Please go ahead. Your line is open. Yes, thanks for taking my question. I just have two questions here. Just number one, I was wondering if you could just give additional comments on what you are seeing in terms of pricing across your various regions, particularly in The UK. Where are you seeing more of the pressure? And then also number two, in terms of the acquisitions you've made in The UK in Q3 'seventeen, was quite solid. But are you seeing any signs of the market reaching a state of maturity or any slowdown in NPL sales, especially given the falling stock of NPLs with U. K. NPL ratio now close to about $1.8 Just so I make sure that I understand the question, if we've seen any slowdown of volumes coming to the market in The U. K, was that the Yes. No, we don't see that. U. K. Continues to be a good and stable outflow from the banking system. It continues to be the most mature market by far in the Europe, meaning that you have a more regular sale, you have fresher claims, more structured auction processes. You have quite structured systems in general with buyers' panels. It's a price competitive market. But as you've seen from our segment reporting, we are very capable to produce healthy profits also in that region. And we look favorable of the continued development in The U. K. Market as we see it now. And I think maybe some further we've talked about that before as well, some further comment on pricing and pressure and stuff on that. It's I mean, it's a very harmonized picture in all the jurisdictions where we're operating. So I mean, we're not sourcing opportunistically and we're not seeing tremendously different return requirements or return levels in any of the markets. I mean, most of our competitors, they're operating across multiple jurisdictions. Most of our sellers, they are present in multiple jurisdictions as well. So there is intel across the borders. Thank you. Thank you. And there are no further questions at this time. Please go ahead, speakers. Okay. So we have two questions from the web. I'll just read them up and then hopefully you can answer them. The first one is from Owen Jones from Citi. And he's asking what collection rates are you experiencing in Italy currently? Yes, it's a fairly No, but yes, is that a number or a percentage? No, I don't answer the question. I think what you saw of the Q3 numbers were that we posted positive revaluation. And as I mentioned, that's been a factor of we've been operating now for five, six years in Italy and we've been gradually building out our presence. And quite a few other portfolios that we bought has performed ahead of our expectations, our initial pricing curves. And now we're seeing that, that's going to be sustainable because we've been able to create more installment plans that are holding up as expected or even a little bit better. So that's the function. So I guess you could say we're seeing strong performance in our Italian operations in the books that we bought. Okay. And the second question is from Anthony Dacosch from Pequent. And question on U. K. Can you talk us through the competitive environment in The U. K. Given that it is a mature market, but hoist still sees good growth? So nothing has happened in The U. Respect to competition. I mean we don't have any big new player. Nothing has been disrupted. We have there have been different smaller M and A events and upcoming larger M and A events, but nothing that has affected the competitiveness of the market, and that is confirmed by any player that you would ask in that market. We continue to be competitive, and we continue to gain volumes on the return levels that we require, as you can see. So we don't see any trend shift in The U. K. Market. A solid market with good supply continues. All right. I'll continue with a few questions of mine. And I'm looking at your financial targets. You have return on equity. You have an EBIT margin. You've been talking about return on book and then also dividend distribution targets. And how should we look at this from which financial target is superior to the other ones, if you had to choose one when we look at the different metrics? The return on equity is obviously superior to the EBIT margin. And I think we've talked a lot about this in the past that there are so many things that can affect the EBIT That doesn't necessarily mean that the efficiency is better or worse. It's more a function of what type of business we're doing. So we've talked a lot about also you can underwrite sort of fresher books with lower cost to collect and you can have stuff that is harder to work. I think what we're seeing is obviously that it's fresher and fresher claims that's being sold. So they're lighter to work, they're easy to board at larger tickets, etcetera. But ROE is the most important one. Then next to that, that's also a function of the capitalization, which is obviously a super important one because that's all about the regulatory status. So I mean our ability to lever the balance sheet, that's designed around the capital requirement for us as a regulated institute. So those play together, let's say. But now you have a very strong balance sheet. Yes. Maybe overcapitalized given the current growth rates. But how should we think about that in terms of dividends going forward and that you are well above the capitalization required and also your own So internal the question is, of course, relevant due to the fact that how the balance sheet looks today. But can we please come back to that question after the fourth quarter? So because, I mean, we first of all, we want predictability and stability. Hence, the buyback of the senior and the new issue of the senior. Hence, the restructure of the Tier two in the euro currency, also prolonged and at better rates, of course. And all of that is primarily done to make us prepared for continued expansion. So that is the goal why we do this with the balance sheet. Then, of course, I mean, if we should be the case that we should be continued extremely overcapitalized, then of course, we need to address that. But it's premature now, especially in front of the fourth quarter. Yes, that's quite clear. I think we have another question on the telco. Yes. We have one more question from the line of Emmanuel Figuero from BB Asset Management. Yes. This is Emmanuel from LBV Asset Management. I have three questions, if I may, related to this new form you're rolling out and you've started in the EU. The first question is what sort of risks exist on the execution? I mean how disruptive this platform could be on your day to day if, for whatever reason, things do not go as smooth as possible? If you can provide a little bit of color on that. Secondly, is there not a risk that, for example, Italians will react very different to English people in using a web based platform? And thirdly, in a year's time, how will we know what sort of KPIs, How will we know how successful this initiative will be? So I will address this question to Anders Wallin. But before that, I ask everybody to look at the long history that we have in our company with not only presence but also entrance and expansions in different jurisdictions. We are comfortable in our historical experience of both different legal environments, different business behavior, different banks structure, how they originate and how they work with the clients. So it's not that we are now exposed to a new trend on how will clients behave in the future. The question is actually much more related to the general subject about digitalization or artificial intelligence as such. And there, of course, we, as the majority of the company in the world, we need to be on our toes, on the forefront of that development to make sure that we can capture those development as well. But Anders, please make some comments specifically about the platform and the stability of that or the new Yes. I mean, if you don't mind, I would like to start where you ended, which is basically how can we make sure that the Italians using the web platform will get the best user experience compared to what we're doing in The U. K. So I need then again to emphasize that we have a data driven technology. We're not programming it specifically for a certain customer or a certain country. It's driven by the same processes and the same data that today is the basis of our collections in the collection centers. It's only self serve. I mean, we are still doing this with technology again in Italy, UK, in Poland, wherever, what have you. So that was the first one I would like to address. And then the first question, I think you have to correct me if I understood it wrong. How can we make sure this is a secure environment? And if it goes down, what kind of implication would that have? First of all, it will be part of our environment, and it is part of our environment. We secure environment very carefully. And IT security, which this is part of, is one of the most important things that we work on. It's security first and availability second and so on, and then functionality in that order. And that's the way it have to be. I don't know if that answered your question on that subject. A little bit. Will we know like in a year's time how many people use this process versus yes, Sorry, I forgot that. Yes, I mean, we know that all the time. And I tried to say that earlier, maybe it wasn't explicit enough. But we know exactly what they do, how they do it, when they do it, and we also have the results of that. So today, after four months in The UK, already 30% on the web setting up installment plans, not contacting our centers, not talking to our agents. If I can just add some more flavor on this. So this is again, this is nothing that is new. Just because we set up a self-service platform, we have always been working with follow the trends of our clients. That means that today, when we now open a self serve platform, we know which clients that has been originated from which banks in which way they originated that use the self serve platform most. I mean so we don't just we don't see that 30% of all the payment plans is now done by the self-service platform. We know why they're choosing the service platform because that is dependent on how they've been originated that credit. So it's not that we randomized to see percentage number. And this is part of our history. We follow down to the each individual client when we track our data scoring. Yes. Again, we're using the same system components that we have already today, which is changing dependent on the user's behavior, social status, data that changes in the finances for the customer, etcetera, etcetera. It's not that someone is doing this in a strict fiscal way somewhere. It is actually following the customer. Did we manage to sort out most of the stuff there? Yes. Just one very quickly. So on The U. K, where you've been four months on with this, and you say that 30% are using the web already. This should, course, increase the productivity. Yes. And again, I mean, it's 30% of new payment plans that is coming in, so it's not 30% of all the client base that are using the self serve But yes, that is the case. And Pontus addressed that earlier in his presentation because it's not only funding perspective that improves prices for the selling banks in the market. It's also each and every company like Horiz Finance, our operational efficiency. And in operational efficiency, of course, includes more automized processes, etcetera, which Anders also addressed is one of our largest investment areas in this company. So yes, it's a constant operational efficiency development. Okay. Thank you. Thank you. Thank you. And we have a follow-up question from the line of Adidaso Gontazei from Morgan Stanley. Please go ahead. Your line is open. Thank you. Just one more additional question. Just looking at your portfolio acquisition so far this year is up 24% year on year. If I should take the midpoint of your guidance, that will be roughly SEK3.75 billion. This would imply pretty much flat growth in Q4 twenty seventeen year on year. So should we be looking at maybe the upper end of your guidance of towards the upper end of your guidance of billion for the whole year or at least above the midpoint level? So we just reiterate what we said quarter after quarter. It is impossible to give a certain number, not at the in a single quarter, not because the volatility of business. And even though fourth quarter is important, we have seen examples previous years where some fourth quarter deals actually have slipped over into Q1. So we are firm and comfortable with the outlook for the year of SEK 3,500,000,000.0 to SEK 4,000,000,000, and it would be it would not be serious to deviate from that now guidance. Yes, okay. Thank you. And we have a next follow-up question from the line of Arun Milmani from Macquarie. Please go ahead. Your line is open. Good morning, gentlemen. Just a follow-up on technology. I mean this has always been a sort of human intensive collection business since I've done it. I mean so when you sort of put in technology, how does it affect your I mean, have you seen any change in terms of gross cash collection on your business? And then the second point is when people self serve, if they've missed a payment, what procedures? Do you put them back on intensive care in some ways where your agents start to contact them and get them back in line? So how would you deal with slip ups in the technological process? Because I presume you still need a lot of human interaction to get customers to pay and stay in PIM plans. So it's a lot of questions in one. But first of all, if someone drops out, there are plenty of different strategies to contact the customer. And it's I mean, strategies are dependent on the customer, the actual debt, etcetera, etcetera. One could be actual a phone call, but it could it's not the only way to contact and remind them about the payment plan. Okay. What was the other one? No, but I think you were asking on if we've seen results on the collection rates. I mean, again, this is early days. We've shared some of the experience so far in terms of being able to migrate customers and set up their own installment plans via the website. So I think you have to look up on this from a multichannel thing. So I mean, of course, we want to offer the client the best solution for them to engage with us. So it's we can't conclude as such whether we're collecting more or not, but I think we're offering a better service to the client. There are elements of efficiency, etcetera, in it. So we're happy to come back on that, obviously, as we go along now and gain even more experience. Thank you. Thank you. There are no further questions at this time. Please go ahead, speakers. Okay. So I'll just finalize with two questions from my side, and then I'll leave the word back to you. I'm looking at your Polish and German operation in your that's your East European operation. I think collections are down double digits now. It's also quite fierce competition in Germany and Poland. So in light of this environment and your financial performance, you need to reinvest to maintain your OpEx base or cut costs. So how should we think about this for that very specific region now, margin erosion or take out costs to defend the business? Yes, that's you should not start by thinking of that. I think what we've said I think what we've experienced in the German and Polish market is, as you say, I mean, we've been on a stand we've been able to maintain our volumes, but we've also been able to improve and maintain our efficiency as well. So I mean, we've been able to extract more collections out of the setup we've had. So I mean, if you look profitability wise, they've been very good profitability wise, probably the strongest region in that sense. I think what we've been lacking, as you correctly point out, is we haven't seen growth in terms of being able to source additional volumes there. We don't have any view on Germany or Poland that we've had in the past. We believe that those market, there is still a lot of untapped potential. The banks are increasingly engaging, but it's moving fairly slow. And obviously, as you say, I mean, again, on the efficiency point, obviously, yes, I mean, we want to manage our efficiency in one or another way, whether that's improving our collection rates on existing cost base or the other way around. Of course, that's constantly on the agenda in any jurisdiction. So it's not a concern for you right now looking at the volumes in the market relative to your book value that you need to defend? Okay. Final question from my side. Jorgen, you mentioned in spring that you are stepping down. Yes. Can you comment on the recruitment process? Yes. Mean, if we were standing here 2024 and have the same question, then of course, I would be a bit worried. But I announced June 9 that we will seek for a new CEO replacement. It's five months soon since we launched that. But we should remember, I launched that just before the summer months. Then we don't have a normal CEO recruitment. I'm actually a huge investor in this company and with own money, as you know, and I care a lot about this company and the platform that we built up, and there's nothing that I intend at any way to throw away. So of course, the CEO process looks a bit in the same way than that. I'm picky, but I'm very comfortable that we can present a very good candidate within not too distant future. But we should not be surprised if we see here on Q4 presentation as well. I mean, I comment on the day when we present the new CEO, but it's nothing that worries me that either. Okay. So if there yes, Yes, do we I think we have one final question here from the webcast. No, not from the webcast, but from the web. So does your book contain much unlikely pay assets? Does your book contain much unlikely? No, doesn't. It mostly contains NPLs or written off claims. Okay. I leave the word back to you guys. So then I thank you all for listening in to us today, and I look forward to a continued fun quarter this