Hello and welcome to the KRUK Full Year 2022 results. My name is Elliot and I'll be coordinating your call today. If you would like to register a question during the presentation, you may do so by pressing star o 1 your telephone keypad. I'd now like to hand over to Marta Jezewska-Wasilewska. The floor is yours. Please go ahead.
Good morning or good afternoon to everyone joining. My name is Marta Jezewska-Wasilewska, and I represent Wood & Company, hosts of this call. Today, we have a pleasure to listen to Michał Zasępa
Marta, thank you. Good afternoon, or good morning, everyone. Thank you for your interest in hearing, the commentary to this year results. I will use the presentation, that is, available on our website about the results and refer to the Slides, I'm looking at.
Indeed, this is, the best year we've had in many respects. I'm looking at Slide 3, record high net profit of PLN 805 million, record high cash EBITDA, record high recoveries from net purchase. It's, even more important that on retail unsecured, which constitutes 90% of our assets, all of the markets performed according to plan or above plan. Also, last but not least, record high investments in debt portfolios at quite decent IRRs.
You can read in the report and presentation that we expect 2.2x money on the investments from 2022. These results come with the high ROE of 25%. If I'm not mistaken, it's 1 of the highest in the industry among publicly listed debt purchasers, and also a relatively low indebtedness at 2.1 net debt to EBITDA. The business grew to about PLN 7 billion of assets.
If you look at Slide number 4, a few highlights that we'd like to bring to your attention. We continue on the path to become more digital, and there's a significant increase in the number of e-Kruk users.
Predominant majority of our repayment plan settlements are now paperless, there's significant efforts to become more digital in many areas. More about that in a moment. It's been a good year operationally too. We are now measuring ourselves according to ESG. I think more, we know more how quite balanced we are.
For example, we are quite balanced in the gender equality. 60% of our top management is women, something we are proud of. It's also a year where we became a blue-chip, now officially in Poland, part of the top 20 WIG20 index, and we intend to stay there.
Looking at Slide number 5, this is, you know, a view as of end of 2022, where we are and what we want to do. If you look at us today, if you look at our history, please remember we are a company that succeeded, I think, quite significantly in growing organically, building from scratch, making small acquisition of relatively small organization and then making them bigger businesses, which are
KRUK-like businesses, replicating the culture and the mode of thinking about how to manage business, but building local businesses, local strong businesses. You can expect that will continue.
Meaning our preferred route for growth, which historically proved to be very good in creating value for shareholders, is preferred, is organic growth.
It is, it is not to say we'll never do an acquisition, but the first mode, the first approach would be why don't we do it ourselves? Because we think it will be more value creative than buying some, you know, big competitor with all the problems associated with that. That strategy proved, I think, quite successful if you look at our ROE and the growth of value we've had for this past 25 years. Our focus is consumer unsecured portfolio purchases.
They represent about 90% of the total investments we have. Please expect this will continue. We have a limit of maximum 25% of other asset classes that we could have in the balance sheet if there are compelling opportunities. Why so?
Because we believe we can do better margins in consumer unsecured, and we believe they are also more stable and less risky asset classes. Our history of 19 years of investing in NPL shows that clearly most of the upside we have achieved over this past 19 years in debt purchasing has come from consumer unsecured.
When you hear big problems in our industry, usually they are about exposures in secured. This is also our focus. Our focus and strategy also is to be concentrated on large European markets where consumer finance industry is large, and to have a very strong operational presence there rather than be dispersed on many more markets like some of our competitors are, but really having profitability, superior profitability in some others.
Please expect us to continue to concentrate on operational excellence, especially in unsecured consumer debt, for which we are focused on our organization culture and Lean this method of continuous improvement. Don't expect us to enter many more markets.
We will still concentrate on getting bigger and even more profitable in all the 4 big markets where we are. In the midterm, we may enter 1 or maybe 2 more markets in Europe, looking at the biggest ones, if we feel there is a good chance to succeed.
Still, of course, we are more diversified. If you look at Slide 5 at the table, at the bottom of the Slide, you see in some countries we are also buying mortgage loans or corporate and SME NPLs, and also in some countries, we are doing the credit management servicing.
We have cash loans in Poland and Romania. If you look at the map of Europe on this Slide 5, you see we already are quite balanced. If you look at the organizations, though, these are sizable organization capable of managing hundreds of thousands or millions of cases annually. There is also substantial balance sheet on every 1 of these 4 other main markets already.
You also see a number there in the box. 2022 within the year, where in all of those 4 big markets in Europe, we have 1 of the leading market shares in buying portfolios, consumer unsecured portfolios. You can see that the market share varied from 25% in Poland or Italy to over 75% in Romania.
The goal is to continue on the path to become a leading European debt management company specialized in consumer unsecured, but opportunistically also doing business in other asset classes, especially that in some markets, portfolios are sold as mix of different types of these assets.
We would like to excel and have great majority, this at least 75% of our assets in consumer unsecured, as we have currently about 90% of this asset class. If you look at Slide number 7, please take note, take a look at the pie chart there on the right, in the top corner. Recoveries from Poland constitute less than 50%. There is a growing share of Italian and Spanish recoveries. This trend will continue.
If you look at the portfolios investment structure, this record high PLN 2.3 billion of investments come quite evenly among those 4 big markets, with Poland representing only 20%. I'll jump to other elements of our results.
Record high net profits and relatively high ROE. This is a result of very good performance on recoveries on the portfolios we have built historically. Apparently, we can do it more effectively than some of our competitors. Even though we have a lower net, which we can still have higher ROE. If you look at revenues, they were based, of course, on very strong recoveries. Those recoveries significantly exceeded the conservative accounting ERC curve.
They continued on the trend. Therefore, we were obliged to recognize the upside and reflected in this revaluation. Again, this revaluation concerns mostly the next few 1/4s. 70% of it concerns the period until Q4 2023.
Again, if the trends of recoveries do not change meaningfully negatively, please expect to see further upside, further positive revaluation in 2023, and also in following in following year, few years at least. In terms of costs, you see also a significant increase in operating expenses. This is driven by 2 factors. 1 is increasing scale of the business. Please note, in the past 2 years, we've invested PLN 4 billion in portfolios, which is roughly 40% of our total investments in portfolios over the last 19 years.
We significantly increased scale and of course, costs needs to follow. On the other hand, yes, we are under some inflation pressure to increase salaries or some other costs which are going up because of inflation.
If you look at the efficiency of the business, if you look at how much people do we need to collect PLN 1 million, I think this is a nice level of efficiency, the number of FTEs with this big growth-Of scale of the business is only about 7% year-to-year. Our financial costs are of course, also going up significantly.
This is the results of first bigger scale of the business and, as a result, higher debt level, but also a significant increase in the Polish interest rates and the euro interest rates. We managed that increase to a certain degree over 2022.
We have made significant transactions which swapped Polish debt into euro debt and at the same time fixed the rate. As a result, about 60% of our debt outstanding is today at fixed rate, which limits our exposure to further increases of interest rates.
The cost of funding went up, and they will continue to go up as we continue to see the full impact of the increases of interest rates, and also the increased level of debt that already happened in 22 or 2022 to finance this record high investments. I think where the debt level will continue to increase in 2023. Why? We are, we believe, in a good situation where the supply of portfolios is relatively stable, but some of our competitors are more constrained to buy aggressively because they have higher leverage level.
The high interest rates in Europe mean less demand for NPLs, or at least higher expected returns for NPLs, which places group at a relatively better position as 1 of the least leveraged companies in the industry. It may be we're entering a period of bigger opportunities to deploy capital at higher expected returns than in the past couple of years.
This is maybe, of course, it is not certain, but look at 2022. The investment of 2.3 billion PLN at 2.2x return is also a sign of more favorable market conditions. On Slide 10, we are very Well-funded. Equity represents 42% of our funding. We are prepared to continue to grow.
Of course, we need to add new debt, to be able to realize further growth in investment level. On Slide 11, we give you some more detail into how we approach technology development. This is 1 of the areas of focus for 2023 and beyond.
We got more talent, and I think more visibility of what we want to achieve, and that should result in further increase in our effectiveness, higher measure of possibly acceleration of some of the operational processes. We plan to invest significant time and effort into becoming more effective, thanks to digitalization.
If you look at Slide 13, our results by segment, again, very good recoveries across all the lines in consumer unsecured, which promises stability and, for the next at least couple of months. Again, I can tell you as of March 10th, we don't see any negative effects of this slowdown of GDP growth that we are experiencing in the countries where we operate.
Those worries, and possible threats, have not materialized, still. Of course, I don't know what will happen, but I have here no sign of change of the trends as of mid-March or 10th of March. If you look at the profitability, this is all great apart from Spain.
Spain is a case where it suffered in 2022 because of a write down on corporate assets. This is over, meaning the write down has been significant. The value of the assets outstanding is quite small. I don't expect any more issues on that, on that asset. Also at Q2, at Q4, sorry, we decided to write down by PLN 7 million the goodwill of the servicing company because it did not deliver on the planned EBITDA. That, again, is not a big problem, although of course it's a PLN 7 million of non-cash loss. But this servicing business is proving to be very helpful for us to better understand what we're buying on the market.
Many of you, maybe recall our biggest investments in that portfolio in 2022 was-Spanish portfolio of BBVA Bank, a large portfolio, actually the largest portfolio we have ever bought, consumer unsecured. We felt more comfortable buying it because our servicing business in Spain has been for many years a servicer for BBVA and also a part of the portfolio we bought.
Whatever we lost in the write-down, I think, was worth it, looking at, the purchase we just made. If you look at Spain, we think 2023 should be a much better year, because we increased the size of the business quite significantly. Look at the carrying value of that purchase.
It's already over PLN 1 billion. We more than doubled the size of the business in Spain in 2022, and we did that at quite attractive expected IRRs from the purchases. You may also look at the split of investments, and you can see here a comparison for 2021 and 2022. This record high investments of PLN 2.3 billion come with very high investments in Italy and Spain, also a significant increase in Romania, but drop in investments in Poland.
This is not a problem, as this PLN 465 million still represents 25% of the market. You will see in a second that the market somewhat dropped in Poland. Secondly, in 2021, we had very high market share. It was over 50%.
It seems that it's we see now that it is very difficult to sustain it as our competitors had high motivation of going back on that market and buying something. In this 2022, because of interest rates increase in Poland, we increased our expectation for returns on that market. Because of that, likely we resigned from some of the portfolios we lost to our competitors because we didn't need to lower our expectations as other markets offered us very good investments opportunities at higher IRRs.
That also show our flexibility and already the benefit of being diversified into 4 big European markets. Now, let's take a look at each of the 4 big markets. You see on Slide 14, Polish market. As I said, it dropped somewhat year-to-year.
PLN 7 billion worth of nominal value of portfolios, PLN 1.6 billion. That shows that nothing really significant happened to the supply year-over-year. There is no growth. Actually, there is some drop. We expect relatively stable market going forward also for 2023.
We don't see that Polish banks has experienced any significant increase in default rate, which is a stable, good situation. KRUK on that market, we made a leader, but our market share, again, is 25% for 2022. We hope this year will be better, you know, let's see the beginning of the year shows, and I'm looking at Slide 15 now, that competition stays quite strong, this is beginning of the year only.
You can see very good results on Slide 15, a long history of positive revaluation showing you that we continue on achieving significantly more than the accounting curve that is continued. Again, you know, this PLN 465 million is not a bad result if you look.
If you take a look at the last couple of years, of course, 2021 was a record high year and also quite good investment. Nothing spectacular and changing, you know, happening here. Romania, growth in the market, when you look at Slide 16 to PLN 2.7 billion of nominal value. A very successful year for investing, for KRUK investment, 75% market share. We're very proud of that. Once again, we did that.
If you look at Slide 17, you also see this continues to be our most profitable business, 50% profitability here at the last line. Another very good 1/4 where we exceeded expected recoveries in the accounting plan. We once more were able to reflect that in positive revaluation. The outlook is that this will continue in the following 1/4s. Italy, here in Spain, we have maybe not full visibility on the market, but the data we provide you here is something we saw, is something we took part in. Our core focus, our hotspot here, is consumer unsecured portfolios, not mixed portfolios.
Here we saw about PLN 15 billion nominal value of these portfolios, which according to our best knowledge, may have been worth about PLN 2 billion. Out of that targeted market, KRUK had about 25%. I'm not exactly sure which position it gives us, but it's definitely top 3.
It has been a very successful year for KRUK, which concentrates on this part of the market, and what we want to be a market leader there in that asset group. There's also a huge corporate portfolio market you see here at the bottom of Slide 18. We will hardly touch it. You know, we target some smaller deals and more SME corp/corporate deals.
We show our market share. We may be increasing our investments level there because the market is so big, and the market should be a smaller part of our business in Italy. Still, we've been doing that. Actually, the results for the past 5 years on these corporate and SME assets have been very good. Quite different story than in Spain, where we suffered some losses.
This is the Italian results. Take a look at how good this business turned out to be in 2022. PLN 150 million of EBITDA. PLN 255 million of cash EBITDA. Portfolio profitability on a level already quite close to what you see on the Polish market. We can say we did this. We did it. We are profitable in Italy.
It's not 1 1/4, it's already a few years. Take a look at history of positive revaluation. This is again, you know, 7 or 8 1/4 of positive revaluation, which shows you the stability of the business and the solid trend of exceeding our accounting curve recoveries and gradually increasing profitability. We're not done yet. We believe there's more potential.
We can still continue to improve the process. Looking at the results and the fact that we were able to double the investments year to year, I can say it looks like we already are at a level which is at least as effective as the most effective companies on the market historically. Because this 25% is already at least up to progress.
It's been a great year for Italy, and we are excited about 2023 and following years because we know it would be quite difficult for us to see some significant deterioration of results. We are on a path to improve results in the future.
Last of the big markets is Spain, a very big market if you look at nominal value of retail portfolios offered over PLN 30 billion zlotys but a low price. The investment level lastly was PLN 2.5 billion. KRUK has been very strong and thanks to this 1 big transaction finished, realized in December, but also a few smaller ones before. We have as much as 32% market share on that market.
Again, I don't know exactly how its positions are, but I would expect it's at least number 2, if not number 1. Position understood as this share of retail unsecured portfolios, which is again our focus. This is how we define what we want to do with maybe some smaller deals in other asset classes. As you know, we've had quite difficult experience with them, so we are not really excited about some bigger exposures.
However, Spanish market offers more of the mixed portfolios, so we need to be on that market too. I think we will be much larger in the future than historically. Again, this is a very important year for Spain in 2022. We very significantly increased size of the business.
The volume, value of our balance sheet in Spain increased to over 1 billion PLN, which means we already crossed the point of decent profitability. The size of this business is already big enough to have good profitability, and if only we deliver on the expected recoveries from the investments we made in 2022, you should see a stable, profitable business in the future.
Of course, it's too early to say whether, you know, we'll make 100% more or less of these plans, but I can only tell you in March, the beginning of March, things are good. We have stable results as expected results in Spain.
I expect 2023 results, you'll see decent profitability, significant increase and improvement over still difficult 2022. It seems that there is quite a few market opportunities to buy portfolios in Spain this year. Other business, other countries, Czech, Slovakia and Germany perform very well. You can see here a very nice profitability of 37%. Small positive revaluation. Expenditures on new portfolios of about PLN 50 million.
We ticked all the boxes, and we were quite happy with the performance. The scale of that business of course is, it's limited. Other business lines, which is cash loans and Credit Information Bureau, you see on Slide 23. Wonga had a very good year. They more than doubled or exactly double the EBITDA year to in there. We're quite happy with that.
However, since legislation changed in December 2022, Wonga needs to come to the market with new products which will replace gradually the older, less profitable products under the new law. This is a major development, major IT and operational change. Of course, there is some uncertainty as to how successful Wonga will be with sales of this new product.
The very good 2022 results are not a promise of further success. We still need to change the business to adopt to this new regulation. 2022, 2023 is still a year where we entered with a high profitability balance sheet. The results of this year should be okay. The question is, what about 2024, 2025? We will realize our business plan, which calls for further growth, profitable growth of the business with the new products.
Please remember this uncertainty remains because of the legislation change that took place in December. Novum had a very good year. You can see here PLN 9 million EBITDA. ERIF had a difficult year, but it no longer is part of the group. Sometime in 2022, we decided that strategically it was too small for us to continue to be the owner, and we could leverage on this, the synergy cooperation with ERIF, not being its owner.
In beginning of this year, we concluded the sale of ERIF to CRIF Group, an international player in the Credit Information Bureau. A successful transaction that should contribute some profit for Q1. A few more comments to financial results.
I draw your attention to deferred taxation. It is an important position in our P&L, which is prone to significant variation depending on how much we plan and realize transfers from our investment components to KRUK S.A., on which there is a taxation in Poland.
There is additional description and sensitivity analysis which we included in our financial statements. Please take a look at this. In 2022, the effective tax rate was, as you see here, about 7%, as a result of big investments, which meant some lower transfers and as a result, lower effective taxation rate. 1 more element I want to comment in our results is the FX.
Part of the profits in 2022 was thanks to Polish zloty depreciation. On the other hand, you of course had an effect of interest rate increases on the financial costs, which we partly mitigated by those contracts of swapping Polish debt to euro, which offered us not only greater stability or versus the FX, because beginning of 2022, our net exposure P&L to euro was about 2 billion zloty.
We had net assets of 2 billion EUR, more than liabilities. We reduced that to about 1 billion EUR at the end of the year. Our results are less prone to change if the foreign exchange changes.
Doing that, we also swapped the Polish interest rates for euro interest rates, which we fixed, which also lowered our financial costs, and also increased profits for 2022 and will increase profits for 2023. It lowered our blended average cost of debt. If you look at Slide 29, you see the new ERC curve, which calls for PLN 13.8 billion.
You see increase of that curve, but you see also that in the next 15 years, this curve is steadily going down. This is a conservative plan. Look at Slide 30, the vintage recoveries for the past several years. You see here that these curves do not go down as fast, have not gone down as fast historically.
This may lead you to conclude that if these trends continue, we will continue to exceed on the ERC curve that you see represented on Slide 29. If you look at Slide 31, please take a look at how profitable that business has been. We already have 19 years of debt purchase experience. You can look through those vintages and see that we significantly exceed.
There's roughly 2 times money expectations that we have when buying portfolios. It's not just the portfolios we bought 15 years ago, it's also the portfolios we bought a few years ago that likely will contribute significantly more than 2 times money in time. Already on portfolios bought in 2015, you see that this is exceeding 2 times money. Look at the trend.
The trend is quite flat compared to the to the purchase price. For example, if you look at the 2015 vintage, you can see that for the past few years, we continue to recover roughly on a flat curve. Sometimes it's even increasing, if you look at the vintage of, for example, 2016, where from 24% we went up to 27%. That shows resilience of the business.
That shows improving operating improvements we have implemented. That shows the effect of greater amount of cases being sent successfully to legal process, implementation of hybrid process.
Also the fact that we find out and we collect more because the nominal value of these debts that we have bought several years ago have grew, and we are able to benefit from that. In terms of debt funding, now I'm looking at Slide 30, 33. You can see that at the end of the year, we only had about PLN 400 million available under our RCF.
That means that we will need more funding going forward. In this year, we are quite active in placing bonds on the Polish market this year. It may be that Polish market will be too small for us, and we will tap European or Nordic bond markets. We want to be ready for that.
When time is right, we may decide to tap this new stream of debt funding. The decision has not been made yet. Overall, this is the situation. Oh, maybe last but not least, you have some Slides, but those are Slide 35, 36, where we in more detail tell you about our ESG strategy, specific targets that we adopted in 2022 for the next 2 years, and on what we have been doing in terms of sustainable growth.
For those of you, which feel this is important, please see that we are more active, and we will put effort into becoming even more balanced and sustainable company. Even though that when we look at ourselves, it seems we already done quite a lot in terms of sustainable growth.
Thank you for listening, and I'll be very happy to take your questions.
Thank you. If you would like to ask a question, please press star followed by 1 on your telephone keypad. If you would like to withdraw your question, please press star followed by 2. When preparing to ask your question, please ensure your device is unmuted locally. Our first question comes from Robert Bonte from Millennium. Your line is open.
Good afternoon. Thank you, Marcin, for the presentation. I have taken the question. Just wanted to understand again, I think your, the collection. You've purchased quite a lot last year, especially in the second 1/2 of the year, your collections curve, the expected collection that in that Slide, is it Slide 29. It's quite a large number.
Expected collections are what, 13.8 billion, up 38% year-over-year. I think all the vintages have grown very strongly. This is the expected collections, just to understand it, this is the expected collections, the expected cash collections? Remind us, you always usually collect more.
Yes. Robert, the situation is as follows. This is cash measure. That means we expect PLN 13.8 billion from this portfolio we collected, we purchased in our entire history. You may see this ERCs. The older portfolios, older for me is more than 2 years older, on which we say we have a long history of beating our targets.
Look at the vintages that we show in, on Slide 30 from those older investments, and please see that possibly, quite likely, we'll continue to recover more than has been assumed and, you know, 1/4ly adjusted in this ERC. This is a comment which is true for the older portfolios with already a few years and more of history.
For the newly bought portfolios, newly bought meaning everything we bought in 2022, majority of we bought in 2021, the plan here is our plan because this is a plan from the moment we made that investment. We are not sure how much of the upside or if there is any upside in these portfolios. We will need to see in some time.
Hopefully, there also will be some upside, but it's not something we know. Currently, what we know is that on the older portfolios we have historically achieved much more, and we have reasons to believe there will be even more in the future, and we are slowly, gradually with some delay, reflecting that in our ERC for those older portfolios.
In practice, it means that we expect in the next couple of years to beat these numbers you see here on Slide number 29, showing this, you know, 2.18, 1.89, 1.75 by something. Also please take a look that when we do revaluation, we mostly do revaluation, we increase the curve level for the next few 1/4s. Some of these upsides which we're referring to is more towards the middle and the tail part of this curve, not for the next, you know, 2, 3, 4 1/4s.
I hope we can still beat these numbers here, but this potential to beat these numbers is in % much lower than it is in year number, you know, 5, 6, 7, 8, 10, and later. There, the significant potential can be much bigger. Which also shows you the logic we have from this conservative, is that we are much more certain about what will happen in the next 4 1/4s, but we really don't know what will happen in 10 years, not to mention, you know, 15 years.
Hopefully, there will be much bigger numbers, but it's so distant in time that we don't want to be, you know, too fast in recognizing this offset.
Yeah.
Again, it is.
Understood. The total here in that chart is, you know, PLN 13.8 billion, essentially 5 years of what you collected last year already, basically we're sure of. You know, there's upside from that going on your historical record. Two questions again. Now that your collection model has shifted more and more to the legal process, does that mean that your outstanding receipt will have a much lower discount rate than the previous unsecured ones without the legal process? The legal process was a much smaller part of your collection process.
Yes. Well, you know, probably a little bit, yes. You know, what happened in the market is that if you take our oldest market, Poland, is that competition has increased.
Right.
Price level have increased, but our curves were supplemented. They became flatter, but they became overall much thicker. You know, a similar portfolio, which we would price in Poland, say 10 years ago, would, yes, would have much shorter curve. This curve would be more tilted toward the beginning years, but it would also call for significantly less collection overall. What happened is that we increased the collection.
We never decreased collection in any category. We increased the legal collection, and therefore the curves became more flat. On the other hand, we pay for these portfolios today significantly more as a percentage of nominal value than before because competition increased and therefore also, you know, discount rate is somewhat lower. You know, look at 2022.
The discount rate on everything we bought in 2022 was 20%. That's not IRR after cost, that's below cost. That's just cash invested and divided by cash expected, and then that translates in about 2.2 times expected gross return on the investments. I would say that's still decent.
Yeah. Yeah. I guess the strong cash flows again are quite interesting to investors. Again, can you give us a bit of help? Any chance that you can return some of the cash to shareholders with dividends or a dividend policy? Again, you're generating quite a lot.
Yes.
Yes. The,
Yeah.
The interest rates have gone up. Your balance sheet is very strong. If I compare your balance sheet today, the debt to equity today versus last year or 2 years ago, you're in a much better shape. In theory, there should be room for more dividends.
Yes. Yes. You know, please expect we will abide with the dividend policy that we have published last year, which calls for at least 30% of dividend payout. Please don't expect a significantly higher dividend than this 13%. 30%, I'm sorry, 30%.
The decision has not been made by the board. Board has not yet recommended, so it's, you know, still pending. The reason for me saying that is that we are in situation where we have had record investment in debt purchase in 2022. 2023 looks quite promising. It may be that we are again able to put to work PLN 2 billion of investments or more, and the debt funding continues to be, you know, quite challenging.
I mean by that the cost of funding is higher, but also the availability of that funding on the Polish market is more limited than it used to be historically. That is some uncertainty which tells us, first, we can reinvest this money at quite a good return going forward.
Maybe those returns will even be better than historically. Second, we don't know how easy and at what cost we will be able to source debt funding for that market. For that reason, I don't say we would recommend a very high payout of dividend above the minimum that our dividend policy is calling, is stating. Understood. Thank you for taking the questions. Sure.
As a reminder, to ask any further questions, please press star 1 on your telephone keypad now. This concludes our Q&A. I'm gonna hand back to Michał Zasępa for closing remarks
Well, thank you very much for your interest in KRUK. I hope to meet some of you on the road. I'll be in London on PKO BP conference next week on Tuesday and Wednesday. As I said, the year starts very well. The recoveries for the first months of 2023 are good.
After the 1/4 ends, we'll also tell you about the exact numbers and also investments. This should be a good year, I believe, for KRUK. We want to grow profits this year. We see still significant potential to increase effectiveness and also scale up the investment in the next couple of years on the markets where we are.
Possibly within the next couple of years, we'll also add 1, at least 1 more market, in Europe. We're excited about the opportunity. We see today that we are 1 of the most profitable and best-funded businesses in industry, and we want to, you know, slowly, gradually continue on that path to become even better, even more profitable. Thank you for your time again.
Ladies and gentlemen, today's call is now concluded. We'd like to thank you for your participation. You may now disconnect your lines.