Welcome to Hoist Finance Q4 report for 2025. For the first part of the conference call, the participants will be in listen-only mode. During the questions-and-answers session, participants are able to ask questions by pound key five on their telephone keypad. Now I will hand the conference over to CEO Harry Vranjes and CFO Magnus Söderlund, please go ahead.
Thank you very much. Good morning, everyone, and welcome to this Hoist Finance earnings call for the fourth quarter and full year of 2025. With me, well, so I'm Harry Vranjes, CEO of Hoist Finance, and with me in the room here is Magnus Söderlund, our CFO, and Karin Tyche, our Chief Investor Relations Officer. So thank you again then for logging on this morning and showing your interest in Hoist Finance. We will try to run through the presentation in some 30 minutes to leave ample room for any questions you may have. But before we get going on the quarter and the year itself, just want to take a minute on some perspectives on 2025. 2025 was an action-packed year, again, with lots of activity on the funding side of the business in the beginning of the year.
But when it came to investments, we started the year slowly, with a sleepy first quarter, with a pipeline that then gradually grew and eventually culminated in Q4, and especially in December. So we booked about SEK 4 billion in the quarter, which is 40% of our 2025 volumes, and most of that in December. So this has been a drag on the interest income development in 2025, but will give us a great start in 2026, especially if we have already, as we have already secured about SEK 1.4 billion for the first half of the year. But I guess in quarter four, our core business really, really delivered. 108% collection performance is a new record, certainly for the time I've been here.
Just to put those percentages in perspective, so the fact that we collected 108% instead of 104%, which we had done Q1 to Q3, added SEK 105 million profit to the quarter. A big thank you to the whole organization for an incredible finish of the year. We also launched our new internal HoistSpar platform in Germany in Q4, in November. The reception and the uptake has been significantly above our expectations. In the first three months, we've onboarded more than 4,000 new customers who've deposited the equivalent of SEK 1.5 billion. We're very happy about that. This will help bring our funding costs down over time. On top of this, as we announced two days ago, we are now a specialized debt restructurer, and we will now have a larger addressable market. We will become more competitive on the margin, and especially for unsecured.
We will also have more firepower going forward. Now let's go through the highlights. Some parts here might be a little bit repetitive. I apologize for that in that case. Profit before tax came in at a strong SEK 492 compared to SEK 281 last year. The main driver of the result, as I just mentioned, comes from the very strong collection performance in unsecured as well as secured. Yeah, both came in higher than ever in the quarter. That brought a return on equity to a record 21.8%, driven by stable IRRs, very strong collection performance, and good cost control. On the investment side, we closed, as I mentioned, SEK 4 billion at good returns. And yeah, as we talked about basically all of 2025, it has been a very backloaded year, with sellers waiting almost until Christmas to close the transactions and transfer the portfolios.
Q4 was a mostly unsecured quarter, with only smaller investments in secured, great geographical spread, and our German colleagues can now claim the largest portfolio in Hoist, beating Italy by a few million. I'm sure they are happy about that. After the quarter closing, we have signed an additional SEK 1.4 billion, which we aim to close in Q1 or Q2. So our portfolio now stands at SEK 33.4 billion. Compared to last year, that's a growth of 9%. But if we adjust for currency, which has had significant movements, the growth is underlying 15%. So we are inching ever closer to our ambition of having a SEK 36 billion portfolio by the end of 2026. I think the real driver, again, operations, very strong collection performance, 108%, and the SEK 105 million I've already spoken about.
Now, on the SDR, we are now a specialized debt restructurer as of the 4th of February. With that, we release SEK 1.2 billion backstop reservation. And after deducting the SEK 6 total dividend, our performance CET ratio is then 13.5%, which leaves us plenty of firepower to invest for 2026 and beyond. I think as a well-capitalized SDR, we will now strive to increase our market share further in Europe. If we look at the full year, nice growth there as well. Profit before tax, SEK 1.5 billion compared to SEK 1.3 billion in 2024. 14% growth or 16%, excluding FX. And I mean, this is despite taking increased cost to qualify as SDR compared to 2024 when we had a significantly smaller liquidity buffer. Now, return on equity for the full year, 17.6%, well above our externally communicated targets compared to 16.8% last year.
It is the underlying business that is driving this profitability. Now, continued high investment pace with 9.9, a little bit irritating that we couldn't get that to a 10, invested in new portfolios in a very, very backloaded year. And the portfolio is SEK 34 billion, as I already SEK 33.4 billion. For the year, we had a strong and stable annual collection performance at 105%. That is now two years in a row. We're very happy about that level, although it fluctuates between quarters. Cost control, solid. They were, of course, helped by the FX, so they dropped 6%. But if we exclude the FX effect, it's still a drop of 4%. Earnings per share for the year, EPS SEK 11.59 compared to SEK 10.1. This gives us a growth of 15% against tough comparables. Finishing the year, strong capital and liquidity positions, well above regulatory requirements.
Also earlier in the year, in July, Moody's adjusted the outlook for our rating to positive from stable. This year, we entered Finland through a co-investment to strengthen the footprint in Northern Europe. In 2024, we opened Portugal, and they've had a fantastic development now in 2025. With that, I will hand over to Magnus to take us through the quarter in more detail.
Thank you, Harry. Good morning, all, and thanks for calling in. So we concluded the year with a very strong fourth quarter, both in terms of earnings as well as in the new investment volumes and collection performance. A profit before tax at SEK 492 million, so that's a 76% increase year-over-year. An annualized ROE of 21.8% compared to last year's 15.5%. So starting with the interest income, including the co-investments, we see a 2% growth year-over-year. Since the income from co-investments gradually impacts the P&L more and more, we should note that this is a netted income. So this means that the SEK 55 million we see as interest income is coming from SEK 91 million of interest income and SEK 36 million of costs.
This is obviously also true for the SEK 28 million we see from last year, but the cost part has grown by SEK 29 million year on year delta. So considering this, we have an underlying growth of 9%, which is more in line with our portfolio growth. We do also have an impact from the majority of the investments coming in during December, meaning we don't see the full impact in interest income coming from these new volumes in the quarter, whereas Q4 of last year was more front-loaded. We also see the full cost of the NSFR requirements, where we had a lesser impact in Q4 of 2024. The net interest margins overall remain stable and aligned with the previous three quarters of this year or 2025.
Looking at the net interest income adjusting for the built-in costs coming from the co-investments and the FX, the growth is positive by 1%. This is not taking the timing impact from later investments into consideration. We are seeing favorable returns in the market and very good return levels in the SEK 4 billion of new volumes we acquired during the quarter. As Harry mentioned, we saw a record strong collection performance in the quarter at 108%. This combined with the positive revaluation triggered by the good health of the book brings a strong impairment gain for the quarter. Furthermore, we sold two portfolios, bringing a net gain of SEK 64 million in the other income line. If and when we see an opportunity to sell certain segments of our book with a favorable outcome, we will obviously explore it. It is part of our everyday business.
This was two very successful transactions for us. In other income, we also see gains from real estate sales in Spain and a small portion of servicing revenue in Germany. Looking at the costs, the direct costs are flat year-on-year but are also impacted by a provision coming from an OVAT case related to Poland. That's SEK 65 million. Excluding for this and FX, we see a 6% drop in the direct costs, which we are very happy with. For the indirect costs, Q4 of last year included SEK 57 million of restructuring costs related to Spain. Adjusting for this, the costs remain flat-ish year-on-year. All in all, we are very happy to conclude that our efforts in controlling the costs remain successful. All of this leads up to profit before tax of SEK 492 million.
We are obviously very happy with the strong outcome of this quarter. Move to the next slide. Looking at our investment portfolio acquisition. So after a slow start of the year, we see a sharp bump in the last quarter. As mentioned, we closed these deals at attractive return levels and a healthy geographical spread. No single market represents more than 22% out of the new investments in the quarter. Considering the somewhat slow start of the year, we end up at a strong SEK 10 billion for the full year. This, in combination with the favorable returns we have seen over the years, is a clear result of the quality of our investment organization and acquisition capabilities. All in all, a very strong investment year. We are well on track to reach our ambition of a SEK 36 billion portfolio book value during 2026.
Moving to the asset class mix. So as we're growing, we're also improving our geographical spread, no market representing more than 16%. The split of unsecured and secured remains similar to previous quarters, where we do see a gradual increase of secured over the last couple of years. And this is something we are happy with as both asset classes offer great opportunities and bring us a diversified risk spread. We can move to the next slide. Looking at our funding, the mix remains similar. We have a competitively priced and stable funding base, which is supporting our growth. The average cost is going down, and we are now at an average 3.4%, where the funding cost in relation to our NPL book value remains at around 4.4%. And this is clearly an edge for us.
We issued one senior preferred bond for the quarter, and our own deposit platform in Germany is off to a flying start with roughly EUR 150 million of deposits since the start in November. Over time, this will improve our funding costs even further, and we are now in the planning phase of setting up the next one. Looking at the five quarters cost trend, we continue to deliver on our ambitions of having the direct costs move in line with collection and the indirects to stay flat. The non-recurring part indirect costs in Q4 is coming from the VAT case I mentioned. Underlying, we remain at the same level of cost to collect as the previous quarters. We see an uptick in legal costs as the courts in our southern markets become more active after the Q3 summer vacation period.
All in all, we are very pleased with the developments. Our capital position. The movement from last quarter's 12.2% to the 10.8% now in Q4 is mainly driven by the large volume of new investments and also the 6 SEK per share dividend. The performance section shows the sharp impact coming from the backstop release, providing a very solid base to keep growing the business. We basically see the 2.5%-ish increase that we have guided for in earlier calls. Can move to the next. Yes. LCR and NSFR at stable levels compared to previous quarters. NSFR of 143% with a good margin to the regulatory required 130%. The size of our liquidity reserve in comparison to the portfolio book value, the NPL portfolio book value, remains at lower levels than before.
The increased use of our own platforms will enable us to keep tightening this ratio over time. Then if we look at the full year of 2025, so in short, we're achieving roughly SEK 1.5 billion profit before tax to be compared to the SEK 1.3 billion in 2024, a 16% growth excluding FX. If we include the impact from the increased underlying costs in the interest income from co-investments, this means a 20% growth year-on-year. This is with a full year of SDR costs where the interest expense increase is mainly driven by the SDR qualification and then obviously the growth of the NPL portfolio. Return on equity of 17.6% compared to last year's 16.8%. All in all, a very strong year. We managed to reach a collection performance of 105% and demonstrated a strong cost discipline throughout the year.
We collected almost SEK 1 billion more in 2025 versus 2024 at lower cost. Our operational capabilities have become more flexible and hybrid between insourced/outsourced collection activities, and this will continue to be a benefit for us also during 2026. So in short, we have established a cost base and structure that will create a strong operating leverage as we continue to grow the business. And despite the slow start of the year, we aimed strongly to reach the SEK 10 billion invested. And now we move into this year with a strong pipeline and many interesting opportunities and also ample capital and a bigger addressable market. So all in all, a really, really strong year with an exciting 2026 ahead of us. So with that, I hand back to you, Harry.
Thank you, Magnus. Let's see if I'm there. Yes. So how are we tracking against our financial targets? Well, if we look at our core target on which we are all measured on, the ROE is at 18% for the full year, driven by the underlying business, as you can see in the graph here. In terms of capitalization, with a 13.5% CET1 ratio post-SDR or as SDR, we will have ample purchasing power for this year and beyond. Over time, we will, of course, strive to get back down into the gold corridor. With the regulatory stability that the SDR gives us and the growing size, we will be able to use the capital more efficiently going forward.
Looking then at earnings per share, CAGR over the last three years, 28%, but also very, very proud of the fact that we managed to do 15% growth year-over-year against really tough comps. And finally, as communicated, SEK 6 per share dividend, out of which SEK 3.26 is the ordinary and SEK 2.74 the extraordinary on the back of the SDR status. So doing well against the targets. So then key takeaways, as you've heard many times during this presentation already, the core business is really delivering solid investments, solid collections for the quarter, but also throughout the full year. Continued profitability improvements, increasing the ROE. And then in terms of the market, we do see rising NPL ratios across Europe, especially in France, Germany. We also see certain asset classes in Spain.
We expect that the NPL market in 2026 to be at least the same or larger than 2025. With all these benefits that we get with the SDR status, we will strive to take market share, as always, though, provided that it is at attractive and accretive returns. With that, it's time to open up for questions.
If you wish to ask a question, please dial pound key five on your telephone keypad to enter the queue. If you wish to withdraw your question, please dial pound key six on your telephone keypad. The next question comes from Björn Ölsen from SEB. Please go ahead.
Good morning, guys. With the CMD in Q3 next year, can we still expect you to target the 36% by year-end next year and for investments to be sort of in a similar fashion as this year? Or should we view the sort of momentum you're into now, including the SDR capital addition, as an upgrade on investment pace for this year?
I think I mean, we're indicating that we want to increase our market share. So I think we will try to beat the investment level of last year, obviously. And we expect to reach the SEK 36 billion ambition at the latest by the end of the year and hopefully before.
Great. On the funding side, could you give some flavor on the inflow in the German deposit platform and how that, in combination with sort of possible trimming of the NSFR, might impact your funding costs?
Yeah, I can take that. So hi, Björn. So as I said, we have taken in roughly EUR 150 million of deposits so far, which is an amazing start with the platform. And I mean, the core purpose of this is obviously to make us more NSFR efficient. So we will be able to attract a wider range of products and still keep a very high NSFR efficiency. And it will definitely help us tighten all of the metrics related to the funding of the company. So yes. And also, we are soon going into the Spanish market to further increase this capability.
Great. And just final question on costs. A non-named Swedish peer of yours recently talked about cost savings as a potential to improve margins, including in the collection side of business. You talk about keeping the indirect costs flat and the direct costs going upwards. Do you think that this is maybe even a bit a cost area where you could find improvements? Or do you differ in your view of how costs develop?
No, I think we've spent many years now working to get the cost base down, and we can now see that we are delivering on this. And we have behaved in a very disciplined way also in 2025. Could we be more efficient? Potentially, yes. But keep in mind that we are collecting SEK 1 billion more in 2025 versus 2024 at a lower direct cost. So I think we are at a pretty decent efficiency level as of today.
Great. Thanks, guys.
The next question comes from Marcus Sandgren from Kepler Cheuvreux. Please go ahead.
Good morning, guys, and congrats to a good result. I was thinking about your collection performance. Is that just natural volatility between quarters, or is it related to that it's easier to collect in certain markets that you've gone into and what do you expect going forward, basically? So that's the first one.
Hi, Marcus. I would say Q4 is sort of traditionally a strong collection quarter. We have the activities in all of the southern markets sort of coming back to life after a vacation period. And then in some markets, we have an additional salary, etc. So we have some upside coming from that as well. But the 108% is an exceptionally strong outcome, and we're obviously very pleased with this. But I would say Q4 is normally a strong quarter. I don't know if that answers your question, Marcus.
Sort of, yeah. Okay. And then moving on to costs, the VAT thing you had in the quarter, is there anything else that might be coming in the coming quarters in terms of extraordinary costs?
Not that we expect at this point. We have a provisional amount for ongoing cases, and we have contingent liabilities to the tune of SEK 60 million roughly, I think, now. So no, nothing of this size that we anticipate at this point in time or in the near-term future.
Okay, great. And then lastly, at least I expected some buybacks, and apparently, you didn't announce anything about that. Is that related to that you need or want the money for growing the business, or is there anything about that the capital buffer has not yet been on the higher-performer level that we will see in Q1?
Hi, Marcus. No, this is obviously, and as we've communicated before, we want to keep as much capital as possible for growth. The board is proposing this extra dividend now on the back of the SDR and the one-time release. If and when we decide to complement that with share buybacks, we will let you know. But prime target.
Okay, very good. That's.
Is growth.
Okay. Yeah, very good. Thanks. That's all from me.
Thank you.
The next question comes from Ulrik Zürcher from Nordea. Please go ahead.
Yeah, thank you. So two questions. I would just have one clarification or thoughts about how long you can keep indirect expenses roughly flat, basically how many years, or is it constrained by portfolio size at all? Secondly, just if you could tell us a little bit about your win rate because obviously, you can run at a very high leverage and very low funding cost compared to basically all other peers. So are there any threats you're seeing with other players becoming SDR-approved or thoughts on the competitive environment, basically? Thank you.
Maybe I can answer the competitive environment question. Well, win rate is not something we typically communicate. But with the outcome of the fourth quarter, I think it's clear that we had a high share of wins during this quarter. There will be other SDRs popping up. Will they be able to address our asset classes and our geographies? Well, I guess time will tell. So far, we continue operating as we operate and like the asset classes that we like. And we will continue to compete in those areas. And the other question was, sorry?
Oh, yeah, on the indirect costs. Yeah, yeah. There is obviously a limit to how much you can handle. I mean, if we grow the book radically in the coming years, the indirect costs will probably move up a bit. But we don't foresee any sort of sudden upticks in the near-term future, not for 2026.
Got it. Thank you.
The next question comes from Eivind Garvik from Carnegie Investment Bank. Please go ahead.
Good morning. Thanks. Maybe continuing on Ulrik's question to some extent, you mentioned that in Q4, you mainly acquired in unsecured. Was that mainly a coincidence? Do you have more appetite for unsecured now that you're in SDR, or do you expect it to be kind of in line with your overall book mix the coming years when you think about your acquisitions?
I think it is not intentional. Let's say we still have the same appetite for secured. It was just that what was out there on the market was a very high share of unsecured portfolios. The secured portfolio market, let's say, has opened up actually during Q4, but then for, let's say, Q1, Q2 transactions. So I expect we will see more secured in the first three quarters of next year. Typically, that's what we've seen in the last years in terms of split. But no sort of bias towards unsecured in any way. We like them both.
Got it. Then I know SDR, that's not an application process, but have you had any feedback from the SFSA on your actual notification?
Well, I think we have, during the year, kept a very close dialogue with the SFSA. So after each quarterly report, we have discussed sort of we've showed how we live up to the criteria. We did so also for the fourth. And so we feel comfortable that what we have notified is also valid.
Nice. The last is just on your capital range. Clearly, you want to use most of the excess capital to grow more. Could you provide any sort of timeline for when you expect to be within your range or how we should think about it?
Yeah, I think what we can say is that I'm sure you've done the math. We expect to have a strong investment year, or at least that's our ambition for 2026 as well. That is, of course, the first priority. We want to make sure that we also have capacity left for 2027, 2028. Should we see that there is capacity or, let's say, excess capital, we will trim it down to the goal period. I cannot say if this is going to be 2026 or 2027.
Fair enough. Thank you very much.
Thank you. Thank you, Eivind.
As a reminder, if you wish to ask a question, please dial pound key five on your telephone keypad. There are no more phone questions at this time, so I hand the conference back to the speakers for any written questions or closing comments.
Okay, so we have a written question here around AI and how we are using that across the organization.
Yes. Let me try to answer that one. So I think we are using AI actually most well, first of all, in the portfolio onboardings, etc. We're using a lot of AI tools to sort of find what belongs to what, basically, right, so that we have the data as good as possible, as complete as possible before we start collecting on a portfolio. So there, we use various tools out in the markets to make sure that we start off the work with a portfolio in a good way. Very, very valuable contribution.
And then I would say during this year or, let's say, 2025, we have been starting using it more, actually, in the support functions or at head office, where we see a lot of opportunity, right, in legal compliance, in, yeah, basically sort of checking on various items and efficiency improvements through Copilot and so on, right? So I think that's where we are now. We are not in a stage where we will be rolling out large-scale any agents to talk to our client base. I think so far, the complexity we have a little bit larger cases than most competitors, and they are simply too complex for the agents at the moment. I'm sure they will improve over time.
Okay. Another question here is where we see the biggest opportunities for efficiency gains or value creation going forward.
I think that was the AI. I think it's the next one, Bloomberg. Well, I think biggest opportunity.
For value creation going forward in investments, I guess?
Yes, absolutely.
Investments across Europe?
Yes, in portfolios, absolutely.
Okay, good. And then there is a question here on our tax rate. What we see will be our tax rate going forward. It's a bit high in this quarter.
Yeah, I think excluding, sorry, the SEK 13 million extra we booked, I think we ended up at 24%, which is perhaps a bit on the high side. But there are also impacts coming from where we do our business. We have some, I mean, it's a blended tax rate, right? And I would still say we're fairly consistent now when we apply DTAs and DTLs. So I would expect the tax rate to be at around 22%-23%. That's the best guidance I can give.
As it has been the previous years as well?
Yeah, yeah.
Very good. That's all the questions we have.
Excellent. Then thank you all for listening in at this earnings call, and have a great Friday and weekend when you get there. Thanks.