Good afternoon or good morning, ladies and gentlemen. My name is Michał Zasępa, and this is my commentary to Q1 2024 results. I'm sharing a presentation of the results that I will be commenting. You also have this information available, this material available on our website. There is a chat function here, and I encourage you to ask questions through the chat during and after my presentation, and there will be Q&A. I'll be answering those questions after this short presentation. It is my pleasure to tell you this is another very good quarter in KRUK's history, actually the best quarter we've ever had in terms of net profit. The profit was PLN 338 million, and that's a positive surprise for us compared to our budget assumptions.
You may remember that at the beginning of the year when I was commenting final results for 2023, I was telling you that these very good investments and large investments that we made in 2023 may temporarily slow us down because of the high operating costs, mostly legal costs that will come later, and therefore, you know, the 2024 should be a year of possible slowdown. Now, this turned to be not exact because, in Q1, recoveries are somewhat better than planned.
Costs are below the plan, and operating and general costs, and also, given what happened over the past six months, in relation to our frequent issues of bonds on the Polish markets, and our taxation that is linked to transfers from our investment entities to the mother company, our tax position now is better than planned and likely we'll see lower than expected tax corporate income tax for this year, and you see that already in Q1. So overall, this results. It's a beat. It's a positive surprise for us, and it raises our expectations for 2024 final result. It should be better than planned. It means, without giving you a precise guidance, it means faster growth that we anticipated at the beginning of the year. Of course, the most important thing is the backbook recoveries. These are good.
These are quite solid, over the four main countries where we are. Also, I can share with you that we're very happy with how April closed. Because these recoveries are high, you also will see high positive revaluation in our accounts for Q1, and please expect that to continue throughout the year. In terms of new investments, it's a slow start with this PLN 335 million invested, but we already have won a few times more than this than this value. However, these are not yet booked transactions, so this looks positive, but we are not changing our guidelines from the beginning of the year, meaning we are targeting about PLN 2.5 billion with some more upside than downside from this number, but let's see how Q2, Q3, and Q4 will pan out.
But we see a lot of portfolios, good supply, all across the four main geographies that we are. We are continuing to be very profitable, growing. We grow the asset base. We have a moderate level of leverage, that dropped quarter-over-quarter after Q1, but likely it will increase when we speed up the investments in portfolios. Any additional important information, we are awaiting tomorrow, annual shareholder meetings, decision about the dividend. The board recommended 18 PLN per share dividend. This should be the ninth year of our dividend payments and the record high dividend, so tomorrow we'll know about this decision. We, you know, continue to grow. We continue to be the largest in terms of market cap, company in the world, in the industry, which doesn't mean we, you know, we have lower expectations to grow.
We see still a lot of potential to grow on the four more main markets where we are, and also, as you know, we're investigating new markets, and specifically, we put a foot into the door on the French market, and we hope to make a positive decision about the future for our business there in the second half of this year. Now, looking more closely at some of the key metrics in the business, recoveries, as I told you, were very good for Q1. They were 14% above the accounting forecast, and that should continue even though we are increasing this forecast through positive revaluation. You see that we, with every quarter, are more diversified in terms of recoveries. Poland represented only 41% of total recoveries for Q1.
If you look at the investments, the split is as shown here in the bottom, right part of the slide. Poland and Italy contributed most of the investments, which is just a reflection of supply, which was not strong in Spain yet, but we expect some good supply in the further months of 2024. Net profit is record high, and there's a few reasons for that. Of course, very strong backbook, good recoveries, good revenues, lower costs, and here we are less people than we anticipated and planned, and this is the results of some of the improvements, but also partly, tight labor market where we were slow to recruit as many people as we would like to. The costs are growing, though.
They are growing because the in the inflation of wages, especially in Poland, Romania, continues to be quite high, although we see some signs that there should be a slowdown for those cost increases coming in in the further part of 2024. Finance costs are up, of course, as our indebtedness grew significantly year to year. On the other hand, we are happy to see that the bond markets in the Nordic countries and Poland are quite strong and are offering us a possibility to go down with the margin versus previous period if we choose to issue debt in the future. The company, as I told you, is well capitalized. We are currently at 2.3x net debt to Cash EBITDA, so we have place to grow, and we want to grow investments, but also as a result indebtedness over the next couple of quarters.
This is something we expect in with this plan of, say, at least PLN 2.5 billion of investments this year. Let's take a look at the segment analysis. As you see here, just PLN 335 million of investments came mostly from Italy and Poland. As I told you, this is what we booked, but we know already of a few times more investments coming because we won already auctions for them, and some of them are forward flows. Some of them are spot transactions that we will be booking in the next couple of months, so this looks good. But of course, the majority of the investment is still ahead, and we'll see how competitive this market will be.
Our expectation and the budget was it will be somewhat more competitive market in 2023, hence lower investments expected this year than last year, but let's see what the reality brings. Here, we don't change our view, but also we don't, we don't know, what, what exactly the situation will be. The good information is the investments we made at this point, this booked PLN 300 million and more, were done at expected high, 10% IRR, I mean, operating IRR after direct and indirect costs. So, so we do not lower down the expected returns. We keep on we keep the investment discipline, and, and so far, the market allowed us to do so. Take a look at EBITDA. It's a nice improvement, and, and results, in my view, for every of our four, four markets.
Poland had an excellent Q1, and so, so did Romania, and also you see a very nice performance in Italy and Spain, especially Spain is a very nice change from the last year here from PLN 20 million-PLN 60 million. The other markets, which is mostly Czech and Slovak assets, but also some German and French, are performing positively, although just to remind you, we made a decision some weeks ago to discontinue investing in new portfolios in Czech and Slovakia and to withdraw from this market in the midterm of the next couple of years, but we keep the assets. We keep the organization, although we plan to gradually decrease it, and we'll be managing the assets until they significantly decrease. An option could be that we sell part of these assets on competitive auctions at good prices.
So this is a scenario for Czech, and the main reasons for our decision was limited market potential. Look, we earned PLN 3 million out of PLN 400 million EBITDA. This business could be an opportunity to earn, you know, 1% to 2% of the total profit for the company. We'd rather focus on bigger markets and put the accelerator there, and we think it would be better use of our resources. Anyway, we are profitable on EBITDA or Cash EBITDA on every one of our markets. Now, let's take a look at the 4 big markets. Poland, excellent performance on recoveries. The consumer continues to be strong, in our view, the consumer that pays to KRUK. We see no sign here of deterioration.
A good start of the investments, PLN 130 million in a quarter that usually is quite calm, very good recoveries, which allowed us to recognize significant, one of the highest in history, positive revaluation for this quarter. Expect more positive revaluation in the coming quarters and very good profitability at 36%. Romania, a similar situation, excellent recoveries, PLN 160 million zlotys that were also a basis for significant positive revaluation. Slow investments in Q1, but we expect better quarters for the remainder of 2024. So again, a very comfortable situation, highly profitable business. Italy, very good recoveries, recoveries that allowed us to recognize one of the highest positive revaluations in many quarters. You see here the PLN 17 million zlotys, which is also always a good check how the business is doing in a given quarter.
So we're quite satisfied with the results. A good start for the calm period of Q1, PLN 134 million of investments, and hopefully more coming up in the next couple of quarters. And Spain, we also are happy with the level of recoveries. You see here, first in quite a few quarters, positive revaluations that we were able to recognize. Significant growth of the business happened over the past year. You can see a 50% growth of asset base, and an improving profitability. Not much investments yet, but there was not much supply in consumer unsecured. We expect more portfolios to be offered in the next couple of months and the remaining quarters of 2024. So again, a stable and improving situation.
If you look at the other markets, that is mostly Czech and Slovakia, but also some assets in Germany and a growing base of assets in France, is profitable. The only investments we're making was some last forward flow commitments we had in Czechoslovakia that will be soon zero, and what will be left is just the French forward flow agreement that we have, and we buy every month a new batch. Recoveries are very good in those segments. In France, this portfolio is performing above our expectations, although this is a test period. This is a learning exercise, so it's, I think that's the key, the output, not just the margin, from this portfolio. A few comments about France.
As I told the market already, we are expected to make a decision about our firm commitment to the French market in the second half of 2024. Until then, we're still analyzing, learning the process, the market, the competitive environment, but so far, I can tell you at this beginning of May, things look good. The more we understand the market, the more convinced we are, we have a place here, although, of course, it's a long way before we get established, build a solid business, and grow scale for it to be the fifth big business of KRUK.
But so far, we didn't really run into any major troubles or obstacles that would prevent us from developing the business, which is very positive, and we also are looking forward to making another investment, small midsize investment this year, but that will depend on opportunities that we have. As we are limited, we don't have operations. We rely on third-party servicer, so we are here naturally very selective of what we can buy. Our lending business in Poland performed quite well. In Q1, you can see here PLN 20 million of EBITDA from Wonga, PLN 3 million of Novum, so we're also satisfied with this business line. And a commentary about the funding. We are happy to see that the funding environment improved in the beginning of 2024.
If you look at how our bonds, Nordic bonds, are trading, they are traded with an increasing premium, which shows that the market says today, if KRUK enters the Nordic bond markets, the margin will be much lower than a year ago when we did the first issue, which is very good news. So today, my expectations would be that maybe about 4% of margin would be the right margin for the KRUK's bond on the Nordic market, which is the lowest in quite some time. But on the other hand, we also continue to have very good access to the bond market in Poland. We don't issue over the past two months.
We don't need that, and we also expect to see some of the banks to raise their commitments to KRUK, and we should know exactly how and who in the next couple of weeks. But the situation looks really good. The access to debt is better, and it's cheaper than it used to be a year ago, and we have a few pockets to which we can look depending on, you know, what's the most optimal cost for us. The company has space to grow. We are at 2.3x net debt to Cash EBITDA. We could grow to see close to 3x. Possibly, we would not be interested to cross 3x for a longer period of time. I think this is the most important news.
Maybe one confirmation at this point, we don't see any new negative regulatory issues. We see that across all the markets, the NPL Directive is being implemented. We need to adjust somewhere our operations, but it's not looking like a big problem. Overall, we expect positive impact on the industry and business from this directive. So things look also here quite calm and comfortable. So overall, it's been a very good quarter, promising us higher than expected growth in 2024, and the trend of recoveries continues to be strong also in April, and so we're quite positive. Thank you very much. This is my summary, and I'll be now very happy to take your questions. I see there are a few questions already. First question is, how much do we expect to invest this year in particular markets? Do you see changes in competition across markets?
Let's take a look at this segment analysis. Okay, this is giving us a one-quarter data. So, you know, from my head, if we assume the PLN 2.5 billion is the right number for this year's investments, we have three big markets, which may take, you know, about one-third each. Poland, Romania, Italy, let's say they would make, you know, 80% to 85% of the total investments, and the remainder, 15% to 20% of total investments could come from Romania. That would be, you know, a guesstimate, but it really will depend on the competitive play in the specific situations, and it may be, you know, a bit different mix between those three main countries.
The great, you know, situations we're in that we are on three really big, you know, markets and one midsize market, Romania, but with a very strong position. So each one of them can, you know, provide us with the investments of several hundred million PLN a year, but, of course, Romania, a bit less so because the market is not so big. Competition across the markets, you know, we are discovering as we go into it, our expectations was then there will be somewhat higher competition than last year, because last year, there really were tenders where there were not very few competitors, especially in Spain, sometimes so in Italy. So we expect that some competitors with us will benefit from it.
It's my view on the market is that, yes, it's a market where a few big competitors are over-leveraged and are less active in buying, but on the other hand, there's a handful of other competitors who are in a relatively good position like KRUK. So there is no vacuum here in that market. Yes, it can be a less competitive market still than, you know, some years ago, but I don't expect the market would allow us, you know, to do investments above, say, 20-something percent net IRR, net after-operating costs. I think it will be a market of 10% IRR. What, 10%? If it will be 19 or 15, we'll see. We'll see. Our target is higher and closer to 20, but let's see what the market allows us to do. So far, I would say the beginning of the year is quite promising.
We keep, as I told you, quite high percent high 10% of IRRs that we expect from the deals that we already want. Another question. Please comment on French portfolios and recoveries. Did you already make a final decision which and we should expect to see more investment, but also more costs there? So this first portfolio that we bought is a forward flow contract from BNP Paribas Personal Finance. Every month, we get another batch, so far, we received 5 batches. The performance of those four batches has been very good. So we have here nothing to worry about, but also, please understand, it's a very short period. We haven't even started the legal process there. It will start for some of the cases in the next couple of months.
So it's really early days and not so much conclusions other than positive that amicable process is working well, that this servicer that we retained is doing a good job.
And I think this is the most, you know, most important conclusion that we have, but this good beginning also means we are open for new investments, and we could add another portfolio, not a very big portfolio, so small, midsize portfolio sometime during the next couple of months, still with the same setup that we don't have operations there yet because only when we build a business case and, you know, the board and our supervisory board will approve that France is to be our new market, which should happen sometime, possibly sometime after summer, only then we'll have a plan. Okay, we need to build the organization, and then we'll start incurring the cost base, and that will be also, you know, a moment sometime, possibly in the fall next year when we'll be, you know, telling also investors about our intentions.
Could you comment on the latest legal changes, especially connected with NPL Directive implementation? So there is no news really other than in each of the markets, there is an internal process, legislative process, and in some countries, it's more or less advanced. Overall, it's going in the right directions. In some countries, there are some clauses in this law that requires us to adjust. For example, in Romania, the NPL Directive says, the money, the cash, can only be collected on the account of the owner of the debt, which requires us to set up separate bank accounts for InvestCapital, our investment company in Malta, which holds the portfolios, whereas KRUK Romania is the agent, is the servicer, and so far was collecting cash as well.
This is a job to be done, and we are doing it. So we have not met any major, you know, obstacles, but some, yes, overall, because it's up to the local, you know, jurisdiction, local governments, and then parliaments to set some of the specific rules within the frame of the directives. Overall, we repeat that this the NPL Directive will bring more transparency, and we believe better business for NPL trading in Europe. Okay, and next the next question is, in the markets that you're planning to scale back, Czech Republic, Slovakia, Germany, what would be KRUK's market share in the stock of NPLs in the target segments? Is the scale back due to the market being small, or is it due to this market not fitting KRUK's model?
So, I think it's a different answer for some of those markets. So, Slovakia and Czech, the market is small, and even if we had a high market share, it would still be a small business for us. Although it is also true that some of, especially, the Czech banking market is dominated by local players who pay really high prices and possibly accept low IRRs, but in any case, this is a small market. Now, Germany, it's a different case. It's a different legislation, and this is a different market environment where there's a big servicing market for long-term servicing. The banks like to outsource for many years that collection for legal reasons and for cost reasons rather than sell.
As a result, the remaining debt-selling market is relatively small, is a few times smaller than the Polish market, and it has been quite competitive. So the returns were quite low compared to other markets. So this different structure of the market actually makes it less attractive for a debt buyer, mostly like us, who does not want to accept low returns on the debt purchased. Another question, do you still plan to invest PLN 2.5 billion in 2024? Yes. Yes, we don't change that that view at this point. How many years do you need to be sure that France is profitable and you want to invest more more heavy there? Well, we need several months to make a decision to commit ourselves to France, and then, you know, we will be realizing an entry plan.
It will take us a few years for France to succeed and be significant, we think. We, of course, would like to do it much more effectively, and, you know, especially to the P&L than the entry to Italy and Spain, which were very costly and where we made some of the mistakes that we don't want to repeat. But it's too early yet, you know, to talk details as we have not come up yet with this business plan. And please be aware, there will be, of course, as always with market entry, a third degree of uncertainty about the results for France in the first couple of years before we will say, okay, we have established, we have built, we have bought and built an organization that is an efficient, is doing an efficient collection process.
We're doing it with good profitability. We are competitive. That will take a few years for sure, but we are prepared for that, and we were, you know, happy to do it better this time and faster this time, but still, it's a process that will last a few years. Another question, when you acquire NPL portfolio outside of auctions through direct deals, how do you ensure excuse me, how do you ensure that the portfolio you get is not the worst of quality of NPLs in terms of projected recoveries? Wouldn't they be discredited wouldn't the credit institution from whom you're buying be incentivized to keep the NPLs with higher potential for recovery from themselves? Well, fortunately, you know, it's very rarely the case.
Usually, we buy portfolios at competitive auctions, but, of course, competitive auction doesn't, you know, you always can go wrong with competitive auction, but, you know, we have our internal analysis and our benchmarks, and, you know, we have bought over 1,800 portfolios already, and on few of them, we lost money. We didn't recover the principal. On the great majority of them, we made profit, but, of course, it's a risky business, especially if this is a new market, especially if this is a client you've never bought from. This risk is higher.
Now, if you refer to France, of course, France will be a higher risk purchases, but what we see now is that the French banks, at least those that we talk to, are interested to give us some additional comfort to establish ourselves in that market, so are not interested, you know, to trick us into buying something for a high price so that we make money because if we do, the chances are we'll withdraw from the market, and they need us. They tell us, listen, we need more competitive buyers for our portfolios. We have few or a few. It's too little. We want you there too. And it also means more transparency in trading, and that also helps us to avoid some of the some of the mistakes.
Of course, investment risk is, you know, a key element of that business, but I think we're one of the most experienced buyers in the world having bought those 1,800 portfolios, so we usually look at the right things, but every, you know, once in a while, of course, we also can make a mistake. But, you know, another comment from you would be, in our, you know, 20 years' history of buying, in retrospect, we really had very few cases where this risk would materialize that would mean, you know, we lost money. Even on those first investments in Italy and Spain a year ago, we already see nice 10% IRR expected. As we changed the process, the problem was not that we overpriced the portfolio. The problem was we were not understanding the curve.
We didn't understand what the proper process should be, but we do now, and we follow on a better trajectory, a different trajectory of recoveries, but the business is already profitable. Do you have any other questions? Because I don't see any at this point. If not, then thank you very much for your interest in KRUK, and I wish you good investment decisions, and please keep fingers crossed for us. The business so far is going really well. Have a good day. Thank you.