Good afternoon. My name is Michał Zasępa. I'm CFO at KRUK, and it's my pleasure to welcome you to the commentary of Q3 or 3 quarters 2023 results. Thank you very much for your time and logging in, and to this meeting. I will now comment on the presentation that should be already visible on your screens. This presentation is also available on our website, and I invite you to ask me question via chat in Teams application. I will refer, answer those questions after I finish the slide presentation. Let's start. This is the best results this business have ever had. In 3 quarters of 2023, KRUK earned PLN 757 million, up 12% year-on-year.
If you look across the measures here on this slide number 2, they are all showing a very good performance. Cash EBITDA, even stronger growth than the net profit. Recoveries, a strong 19% growth year-over-year, and record high new purchases in those portfolios of close to PLN 2 billion. The company grows profit quickly. You can see here, almost PLN 40 profit per share, 10% growth year-over-year. ROE remains to be one of the highest in the industry, well over 20%, the assets are growing quickly, 30% year-over-year, while we still are one of the least leveraged companies in the market, with net cash to EBITDA at 2.3.
This is a year where we celebrated 25 years of our history, so it's worth reminding that KRUK is a story of a startup, a story of Piotr Krupa, our founder, and currently still CEO, founded that business with 3,000 PLN, and today this is close to EUR 2 billion market cap company. W e have a good track record in growing value for shareholders, as also evidenced in our 12 years history as a publicly listed company. We IPO'd, just to remind you, at 40 PLN a share. Today, it's more than 10 times more. If you invested at IPO, with the dividend, you would earn 12 times money on that business over the 12 years period of our history as a listed stock.
This year is a very good year because we continue to build on what we built so far, to continue to improve our processes, do it at steady pace, with long-term horizon, without changing of a strategy, and we take advantage of the market opportunity. This market opportunity came in 2022, but even more visibly in 2023, as many of our competitors are out of breath, are too leveraged to continue to buy at the speed, at the pace, that they had before, and that opened a new opportunity for KRUK to buy more and at better returns. This is the story of this year, also backed up by strong recoveries across the geographies where we are. If you look at recoveries overall, they were excellent.
In Q3 alone, they beat our accounting forecast by 13%. If you look at each of the markets, in every one of them, we beat accounting forecast, but in some of them, very significantly, in some of them, less significantly. The outperformer was Poland, our biggest country in terms of assets still. Also, excellent performance came in Romania, and that's one of the reasons why you see another round of significant positive revaluations in those two countries. Good performers came from other countries, Italy, Spain, most importantly, but this performance wasn't as good as it could be, and therefore, there is not much of positive revaluation this quarter.
Overall, we believe that in every of our big markets, Poland, Romania, Italy, and Spain, we stand to recover significantly more than the current accounting curve. We have ideas and plan to beat this forecast target, so in mid and long term periods of next several quarters and several years, we have ambition to show significantly more value that will come through positive revaluation through our book. How much? When? Of course, that will be dependent on actual performance, also on outside environment, but we are quite positive that we still have good ideas how to generate additional value from the big book. T hat's also why we are quite brave in investing money.
This year, as you saw, it's almost PLN 2 billion invested in the first three quarters of this year, mostly to the foreign destinations. About 20% of the investments came from Poland. This is a spectacular result, in my opinion, for Spain and Italy, where KRUK dominates the market this year for buying consumer unsecured portfolios from Spanish and Italian banks and large consumer finance organization. This is possible on such scale, possibly first year ever, although last year was also quite, quite, quite decent for two reasons. First of all, we again showed we can recover better, and we can pay for these portfolios a higher price, retaining the same expected return. S econd reason is market. There is less competition for portfolios.
There is fewer competitors, and those competitors that remained also have higher expectations for returns because interest rates went up, because they need to generate additional margins. T his is a very good environment from such a long-distance runner like KRUK, and we take advantage of that. Q4 is quite promising. We, of course, don't know yet how much we will invest, but it will be for sure, a few or several hundred million PLN. We think today that Polish market could offer more opportunities in Q4 than in the previous quarters. We think that we'll be investing less in Italy and Spain in Q4, but let's see what markets brings.
We're very excited about 2023 and this remaining two months, as there is a good number of investment opportunities. A s I said, this PLN 2 billion has been investments at quite good returns, better than last year, better than budgeted, so we are very happy with where we are today. If you look at those most important elements of PNL, revenue is growing by 20%. Within the revenues, you have this big positive revaluation, which is something we just have to do, given how good recoveries are, especially in Poland and Romania, as I mentioned, and please expect a similar situation in the following quarters.
If you look at costs, they are growing because the scale of the business is growing. We are recruiting people in Italy and Spain because we grew very significantly size of our assets there, but we are not doing it proportionally to the size of the assets. There is more automation, there is economies of scale, which we are taking advantage of, and therefore, that's mitigating this cost. On the other hand, in Poland especially, but also in Romania, Czech Republic, we have high inflation of wages, so this year, again, we will need to raise salaries to our employees by double digits, and that's reflected in the PNL. Last but not least, you have funding costs that also grow very significantly, 54% year-on-year.
Mostly, this is a result of increased value of debt on our balance sheet and also interest rates increase year-on-year. However, part of that increase is mitigated by the fact that quite successfully, we are raising money on the Polish market, issuing unsecured bonds, and then we swap them to a euro instrument, fixed rate instrument, getting very competitive pricing of about 7% of the total costs of funding, which is, I think, quite significantly below the European bond market benchmark that we would get looking at our own issue from May or the competitors' issues.
Possibly, we also have an edge, some competitive advantage in raising money from the Polish bond market, and we were quite successful in doing it over the past couple of months, raising well in excess of PLN 500 million from Polish institutional investors, our shareholders, pension funds, but also retail, Polish retail investors. We continue to be quite well-funded with that good access to debt funding in Poland, both from the bond market and from banks. Also an opportunity, if needed, to tap again on the Nordic bond bond market. We have the money if we need it. Money is not a constraint, and we have space on the balance sheet. We have space in terms of liquidity to raise more debt and use it on good investments if there is a need for that.
We continue to put a lot of focus on technology transformation, digitalization. This year is a preparation year, where there is a lot of initiatives ongoing, but there is a major project which says what the priorities should be, where is the biggest gain for us in the next 5 years from technology. Please expect that in 2024, we will be rigorously implementing our conclusions and realizing our strategy, which will lead to higher costs of IT, higher investments, but also which will promise more efficiencies and more value in the next couple of years.
We think we have a business which lends itself very well to digital transformation in the areas of automation of the process, of human-less interaction with the customer, of automatic processing of all the paperwork, which is millions, that we are doing in the legal process, but also about high personalization, about understanding better how to contact and how to talk to indebted customer in order to be more effective or just be having a better proposal, more convincing proposal, to these millions of individuals... If you look at slide number 10, that's our segments review. S tarting from the top, this PLN 2 billion is a significant growth versus last year.
It came in big chunk from Spain and Italy, where, as I said, we have a very good market share. T his year, we'll be able to show it to you for the full year at the beginning of the next year, when we'll be releasing full year numbers. Romania, decent results, smaller than last year, given the market, but Q4 offers some additional opportunities. Poland, it's better than last year. Still, we think we could add significant amount of investments in Q4. Recoveries, overall, excellent, excellent results. Our assets exceeded, for the first time, PLN 8 billion. You can see that Italy and Spain are already bigger in terms of assets than Romania, also promising further growth of recoveries in those countries.
If you look at, I'm sorry, at EBITDA, good growth in every country, and very strong Cash EBITDA across also all geographies. Overall, this is a very good situation. A closer look at Poland, as I said, excellent recoveries. We still count on better, more investments in Q4. These very strong recoveries allowed us to recognize another 50 million PLN of positive revaluation. The market has improved. You may remember at the beginning of this year, we were a little bit complaining that the Polish market remains very competitive. We couldn't buy as much as we wanted. That has been gradually changing to our benefit, and we see that in Q4. Hence, some more optimism about what the full year number of investments in Poland should be.
It should be still much higher than the three quarters you see here. Romania also a very good performance on recoveries, and as a result, very good significant positive revaluation. And we are happy with the investment that is a commanding market share that we have with this over or close to PLN 200 million investments, and there is more coming in Q4. And Italy a very good investments over those three quarters. Probably not so much will be added in Q4, although there are some small portfolios that we're bidding for, stable recoveries, although we hope them to be a little bit bigger, and because they are not, then it's a relatively small positive revaluation.
We believe in the mid to long-term potential for extracting more value is definitely there. One more comment about Italy. There is nothing new in terms of regulatory changes in Italy. This proposal to redeem debts of some of the Italian debtors was negatively commented by the Prime Minister. F rom our understanding, our understanding is this project is no longer processed. We assume it's gone. It's dead. W e are not worrying about that situation. Spain, a year of record-high investments, investments at relatively high IRRs. T his is a comfortable situation for us, as recoveries are stable. We have not recognized positive revaluation here. Maybe it will be the case in the next few quarters.
We had some slowdown in recoveries that we observed due to strike within the employees of Spanish courts, but this is something that we believe is temporary. Overall, we're very happy with the investments we made in the biggest portfolios available on the market, from the largest banks in Spain, which builds our capacity, our ability to build benchmark, build even better operations, take advantage of economy of scales. KRUK, especially in Spain in 2023, makes a giant step ahead, step forward into establishing itself as one of the biggest, most successful debt buyer in consumer unsecured space. Other markets, combined in terms of cash flow, performed very well.
You can see here, cash EBITDA in terms of EBITDA, due to some one-offs, but also somewhat lower recoveries than the ambitious operating plan, were not as good. T his business remains one of the smallest and less signi-- not, it's not significant for overall results of the group. T here is also fair to say, we don't see a much potential for growth in those markets. And Wonga & Novum, a good performance. If you looked at the details of quarterly results of Wonga, there is an accounting change, Wonga, coming from the fact that Wonga stopped selling their NPL portfolios to Kruk or the market, but entered into a long-term servicing contract with Kruk, which initially takes away some of Wonga's revenues, because Wonga will not get-...
The cash from sale of portfolios, it will recover it over the 20-year period through the servicing agreement with KRUK. Overall, this is positive for the group and for the business, with the changed legislation for consumer finance companies, that will allow Wonga to have cost of risk as tax deductible, which wasn't the case so far, which will lower Wonga's effective tax rate from before over 50% to about 20-25%. T hat's a positive change, but there is a change in how revenue is recognized and quarter-to-quarter, you see a decrease. Overall, both businesses are stable, profitable, and the challenge for the future is how to grow.
Wonga has ideas, and Novum has ideas about some new products. This is something of our ambition to provide Wonga with ability to grow at fast pace in the next couple of years. We believe there is a good potential for that, and the market eventually is stable in terms of regulations, so also hopefully on that front, we will not have issues again. If you look at funding or the cash flow, you can see here that there is not much of bonds outstanding. In 2024, it was a total of PLN 103. I believe most of this was already bought by us, so the cash flow stability is very good.
This is the data at end of the quarter, which showed over PLN 600 million of available credit, but after that, we issued significant amount of Polish bonds, so access to funding is granted for the next couple of quarters at this point. O verall, summing up, this is a very good situation, a situation in which we take advantage of the fact that we were not too aggressive historically in buying portfolios and levering the company up. That allows us to take advantage of higher returns in this market and establishing our position more firmly, where some of our competitors at least have a trouble with sustaining the level of investment.
We feel there is still good potential to grow on those four countries that we are present, but we already are preparing to enter a new market. We are already bidding for portfolios in one of the big European markets, with the intention to buy a small portfolio this year or next, or early next year. We will be just investor, while servicing in this initial phase will be done by a selected partner, local partner in that market. Through this investment, through this entry, we will be able to better assess realities of that market, and sometime in 2024, decide whether we are ready to put more money at risk and do a proper market entry, or that experience will tell us to do something else. We are also excited about this new project.
We are now in the middle of budgeting. As always, we'd like to show growth of profits for the following years. I believe the company has very good prospects because there is a stable supply of portfolios, and we feel much better in the environment of higher interest rates because there is less competition, and the money is spent, invested more rationally than before, and this is a very good environment for, you know, a solid company like KRUK. So please keep fingers crossed for us. The, you know, the next one point half of the months, I think should be good.
I don't know if very good or just good, but we are also, you know, very curious and excited how much profit overall this year will brings, and it looks like it will be a record year for us. Thank you very much for listening, and now I will look at the questions. Please send them to me, so I can also answer them, and I see some of them, and I'll answer them now. Question number now: Do you expect new NPL volumes after implementation of NPL Directive? In which countries are you planning to invest more next year? We don't know whether NPL Directive will change supply.
Our assumption is neutral, that the NPL Directive should stabilize legislation in this industry, should maybe give us some better information about the portfolios, but we don't know whether it will be a significant factor for supply. Long term, maybe, because if the industry is more stable, banks feel safer to engage in debt selling. Those who are not there may be still some, so but I don't think immediately we'll see that effect. T he good, you know, the good situation in which we are is we don't need growth of the market to really show growth. We grow through growing the market share, and that's still a possibility. In which countries are we planning to invest more next year? Well, look at this year.
This is 20% Poland, 30% Italy, 30% Spain. That may change to the benefit of Poland for the full year, I think, but the fact is that the market, looking at the market size, 1 is Italy, 2 is Poland, 3 is Spain, 4 is Romania. Then our market shares are also, you know, jumping from 20% to 60% year-over-year. M y bet would be Poland and Italy and Spain are equally likely to have significant share of next year investments. Who will be the biggest, you know, contributor depends really on competition and on the returns that we would be able to get.
The reasons why you see so much investment in Italy and Spain this year, more than in Poland, is because we have higher returns there than in Poland. In case, in terms of our expectations, Poland is, from that point of view, a more competitive market for us. If this was to be reversed, you would see that, you know, in Poland, we invest PLN 1 billion and maybe somewhat less in Italy and Spain. Another question is, should we expect PLN 2.5 billion or PLN 3 billion investment this year? I can't give you a number, but probably, you know, expect somewhere in between. Interest paid in this quarter was just PLN 33 million compared to PLN 89 million in Q2.
This must be some mistake in calculation because we definitely grew interest on credit because the volume of credit increased. You should take account for hedging mechanism, which provides a gain and should be treated as, you know, separately. Please ask this question to IR to get a precise answers, but definitely there, there's nothing in business terms that happened that would cause the interest cost of interest to decrease significantly. It did increase, although you need to look at the hedging cost as well, separately, to understand the clean interest costs. Some industry players are talking about gross 30%-30% IRRs in markets such as Spain, Italy. Are those the levels that you're seeing at the moment as well?
I'm thinking gross net now. In terms of net, we are looking at high teens-20% IRRs currently. G ross, it could be up to 30%, yes. S omewhere there, the 30% seems a bit high, but the fact is, though those returns are significantly higher than it used to be, say, 2 years ago, even there is a jump, a step up from last year, which is quite significant. And, t his is visible. We were used in Italy and Spain to compete with 5, 7, 10 bidders. Today, this year, it's 2, 3 maximum. It's a very different game this year. How many investments should we see in new markets? Are you planning to enter one or more, of which country, and of course, which?
Please expect this is still an early phase of entry. Expect low investments, lows meaning a few, EUR 10, you know, EUR 15 million investments, but not EUR 50, not EUR 100. It's one country we're talking about. It's small investments, test investments that will allow us to gather real data to say, "Okay, we like what we saw. We understand what we can do, not on paper, but in real life, and we go there step by step further." P lease expect any entry that we'll make, it will be a long-term project that will not bring significant profits in the next first couple of years of operations. W e need to believe we. It has a long-term, significant perspective to increase profits of the group. To what extent Q3 is affected by FX changes? Not significantly.
Those FX changes were there over the three quarters, but if you look at the data, I think PLN 4 million is a total effect, so it's insignificant. What are the top priorities, biggest tasks you are currently working on and will be working on in the upcoming few quarters? There is quite a few. In Italy and Spain, it's beefing up the organization, so it's ready to absorb and effectively collect on this much increase of the book that we invested in. Also, we need to strengthen infrastructure, the fundamentals. Some of them are still support from Poland. Some of that needs to be moved. For example, we'll be moving servers from Spain to...
From Poland to Spain, to be more local, to be able to react much more quickly.... So we need to follow after this increased investments, we need to follow with quality infrastructure and also grow the organization. T hat's one priority. Second priority is an overall priority of making sure in every country we have a number of optimizers, Lean thinkers, Lean management experts, and we cultivate the Lean culture, this continuous improvement cultures, which results in hundreds of improvement initiatives across the group. And that's something we'll never stop being our priority, because that's an essence of our success.
Third priority is digital transformation, where with external party, very experienced advisors, we're now making an inventory of ideas, setting priorities, comparing ourselves to the best, to the benchmark of the world, not necessarily from our industry, to say, "Okay, what we can do? What we could change in terms of technology to be faster, more efficient, cheaper, collect more?" In 2024, we will be implementing these recommendations, these findings that we will agree on with the advisors this year, at the beginning of next year. It's quite exciting. We see that there is a really big opportunity to improve there. Is there any other competitor in as good condition as you? All of them are having problems with liquidity. No, not all of them are having problems with liquidity.
You know, it's a quite diverse space. S urely there are some competitors that also have low leverage. T he fact is, we don't see today this one company that we could say, "Okay, this is our number one competitor in most of the countries, and we really strive to be like them and try to replicate some of their great ideas." There are strong competitors in every markets, but there's less of them because some of them indeed went too far in terms of leverage and need to make a step back. P lease understand, it's still a competitive market, only I would say it's reasonably competitive rather than you know, overheated like it was for years.
The big difference also is that, especially in Spain and Italy, financial investors, credit funds, put a lot of money into buying NPLs, outsourcing collection to their platforms or some other independent debt collection companies. Now, we see that this segment, as at least in consumer unsecured, is gone. This business model, I think, has finished when interest rates went up so much. I t's one of the reasons why there is less competition. You ask about Ophelos acquisition by Intrum. I don't have an opinion on that, but I'm frankly quite curious why Intrum is continuing on big M&A, because it's not the only one they... That's not the only thing they bought this year, given, you know, their cash flow constraints.
They must have a very good, very good reasons for, for that. We understand this is a technology firm. We took a look at a few, tech companies in our sector. We decided they were not worth the price. W e never look at Ophelos, so I don't have, an opinion about this particular thing. O ur conclusion was, "Hmm, we know the technology. We could do it ourselves if we organize ourselves well. Let's try to do it ourselves before we buy and spend money on goodwill." L et's see which strategy is better. Do you have any other questions? If not, then thank you very much again for your time and, and interest, into listening to our commentary. If you have follow-up questions, don't hesitate to contact our IR.
I hope to meet some of you in Prague at Wood & Company conference or some other time in one-to-one or other conferences throughout the next month. Thank you very much. All the best!