This call is being recorded. Welcome to Hoist Finance Q4 report 2022. For the first part of the conference call, the participants will be in listen-only mode. During the questions- and- answer session, participants are able to ask questions by dialing star five on their telephone keypad. I will hand the conference over to the speakers CEO Harry Vranjes, and CFO Christian Wallentin. Please go ahead. Thank you. Good morning, everyone, thank you for joining this call. I am Harry Vranjes, and I'm here with Christian Wallentin, our CFO. During the next 20-30 minutes, we'll take you through the Q4 and the full year 2022. After that, leave some time for Q&A. I've now been with Hoist for a little bit over a month, and I must say it is a very interesting time for the industry and it's an interesting time for Hoist in particular. I've spent my first weeks, bit of handover and diving into the strategy and of course this rejuvenation plans. I've also started getting to know the organization and managed to visit most of the offices by now. It is clear that it has been a busy 2022, and I think the team has done an amazing job. 2023 will continue in the same pace. Now, with regards to the report, apologies for a slightly messy report with many one-off items. However, those one-off items, they spring out of this Rejuvenation Programme where we go through our entire book by market, by asset class, by vintage and portfolio to in detail understand the true return levels per segment. The outcome of this analysis leads to some optimizations of structure, processes, organization, but it can also mean divestment of that segment, like for instance, in the U.K. during last year. Now, this analysis of course also tells us what and where to invest next. I think with the SEK 2.8 billion that were invested in Q4 and SEK 6.9 billion for the full year, Hoist is on the way to refreshing and basically reshaping the book. We are now halfway through this program. One-off and restructuring will continue into 2023, although the largest issues have now been addressed. In terms of the headline numbers, all of our KPIs are affected by one-offs, Christian will take you through them in a minute. Before I hand over to Christian, I just wanna close with a message that Hoist Finance has made good progress on the new strategy during 2022. Our financial position is stronger, our sourcing is more focused, we are now in bilateral discussions to a much larger extent than before. We've grown our share of secured claims, both in terms of share of the book as a whole, but also in geographical distribution. In order for us to continue focusing on growth, the board of directors is proposing not to pay out any dividend for 2022. With that, I'll hand over to Christian. Thank you, Harry. Good morning, everyone. As Harry laid out, we believe we have made substantive headway on our journey to become the leading NPL asset manager in Europe during 2022. I'm not sure if you see the slides. We don't here from our end, but we'll try to sort it out in the background. We believe we have made substantive headway during 2022. We've gone through successful structure efforts, most notably the U.K. divestment during the year. The operational improvement plan is well underway. We're not done, as Harry pointed out. However, we have gotten a fair bit on this. That has left us materially in a better financial and a risk position than when we came into 2022. I'll walk you through Q4 and also the full year. The investment activity, the profile of the book, the P&L, and the key items on the balance sheet. We'll go into a cost overview as there's quite a few one-off items that will include some indirect cost development. Hopefully you're seeing a slide which is portfolio acquisitions currently for the year for the last three years. Regarding the investments, you see that 2022, our structural and focus investment has yielded results. This is one of our most active years to date in the history of Hoist. We invested SEK 6.9 billion during the year, which is almost twice the number of in the volume of investments that in 2021, and clearly a strong growth from 2020. It's also higher returns in 2022 than what we saw in 2021. Notably, you can see that these are lumpy investments in 2022. We are focusing on slightly higher and bilateral transactions, and that can make us draw into different quarters. You saw that in Q3, there are a few investments that go into Q4, and that made Q4 become really successful versus on the back of a, quite a low investment level in Q3. During this year, we've been much more proactive and structured. We know what we aim for, and we go proactively to find it. Which has meant that we are having a higher secured mix and more bilateral transactions, meaning one-on-one discussions where we can add real value to the sellers, so the selling banks. Also, we've tended to have a larger number of larger size deals in 2022. We believe we have invested a good vintage this year, so we see strong performance in both the 2021 and 2022 performance so far. We particularly invested into Spanish security investments, secured portfolios in Q4. We have established a third secured market in addition to France and Italian markets. Now we have three real secured markets: France, Italy and Spain. Of course, we have secured investments in other geographies, but not to the large extent that we have in these three markets. Go to the next slide, please. I hope that you see the slides. I still don't see it on our screen, but I'll speak to this and describe the slide as we go as well. This is a slide laying out the continuing operations portfolio book value. You see that we've grown the like for like book 26% continuing operations. This is excluding the divested U.K. unsecured portfolio. In Q4 2021, we were around SEK 17 billion, and now we're at roughly SEK 21 billion. That is like for like, excluding the U.K. unsecured book. Next page, please. This is the asset class mix. We believe we have acquired a solid vintage in 2022, the overall size is SEK 21.6 billion. This has been led by large investments in Greece, U.K., France and Spain during the year. That's also of course taken down the divestment in the U.K. Now we're on Page six in the pack. It's a higher share of secured. We have now 29% versus 21% last year. The win rates in the deals that we've been looking at has been consistent over the last years with regards to value. This is our mind, something we track to not become too aggressive, but disciplined regarding risk return, which we absolutely believe we have been. Overall, the IRRs we invested in 2022 are slightly higher than in 2021. This is a combination of our focus, where we're looking for deals, so the bilateral situation where we can add more value than what we can do in tenders. Also what we see is a sign as the industry is starting to move to reprice as well. We have addressed three specific issues in the book in Q4 with negative impact in the quarter. One, there was operational issues. The key driver so was not getting legal documentation, which has caused a shortfall in collection for this particular portfolio. The second one is two in seven CBOX. The key driver was that we prematurely positively revaluated a few years ago. We now had to reverse this. The third one is that a legal process is taking longer for a large secured book. The value is unchanged, it just takes a longer time, so there's a timing difference in this. This is not driven by significant macro impact, but it does have a negative impact for the quarter. We are continuing to deal with the risk and issues we encounter in the book with the aim to build a conservative value book that delivers stable collections over time. In general, we've been highly conservative regarding positive revaluations. We haven't done any in the quarter, particularly with the number of unclarities we're all living through. We see a large, as we call it, Positive Tilt in the book. Of course, we have to deal with the issues that we see as well, but we haven't positively revalued these during the quarter. If we go to Page seven, which is the P&L. Q4 wraps up the first Rejuvenation where the number of one-off items in the P&L, so it leads to a overall 2022 ROE of 17% and the Q4 ROE of 20%. The net profit for the year is approximately SEK 800 million, coming from a loss in 2021. Structurally, we believe that we are materially better off financially and risk. The operational improvement has improved during the year. I'll talk you through the details of the P&L now. This is the continuing operations of the P&L., and the main impacts of the U.K. divestment is in discontinued operations. However, there's some in the P&L. as well. Overall, we started 2022 investing a lot. The health investments in 2022 is around SEK 7 billion. It takes the book to SEK 21.6 billion overall as I mentioned. This is the underlying book growing 26%. This results in income growing mainly from that portfolio growth, but also slightly higher IRRs. The Q4 sees also higher interest expense. This is overall rising interest rate levels and also the deposit volumes increasing given the high investment volumes we had in Q4. Net interest income is up 27% quarter-over-quarter. We have overall stable collections. We have not seen any material macro impact, and we are closely monitoring this. As we mentioned previously, unemployment has historically been the best indicator for the industry to this. This is, as you probably have picked up elsewhere, holding up. We don't see unemployment raising, going up at this point. The underlying collection performance has also improved materially during the year. To give you a sense, if we include the U.K. for nine months, which was the case last year, the book was roughly flat. More or less SEK 21 billion. During the year, direct costs, so direct collection cost was up to SEK 200 million, and that was including legal fees increasing and also one-off items that I will come back to. With that in flat book and increasing costs of SEK 200 million, of which half was the increase in legal fee, collections were up SEK 900 million. We have seen real collection performance improving during the year. We have addressed issues, as I said, in the book, which impacts the quarter negatively. Investment results from the financial transactions is affected by the U.K. divestment and FX. We locked in gains from the U.K. interest rate swaps, so we had a positive value in those and of course we closed them down as we divested the U.K. unsecured operations. We also have some positive and negative FX impacts in the liquidity portfolio, the AT1 and other items. All of those are netted in that line. As we pointed out in Q3, we now have hedge accounting on the interest rate swaps. We don't expect large swings from the interest rate swaps going forward. We also have some positive and negative one-off items. The cost increase is due to higher collections and one-time costs. Legal spend during the pandemic slowed down, as you all know. This year, so 2022, was the first more normal year with legal collections. Compared with 2021, legal collection costs were up 26%. Underlying indirect costs are down year-on-year, which we will come back to on a following page. We'll also read these one-time costs on the next page. Of course, the U.K. divestment has a material positive impact in the quarter. Again, to summarize, the ROE for the quarter is 20% and for the year 17%, backed by a strong investment year, stable collections, and successful structural efforts during the year. Next slide, please. As headline costs have gone up, we want to spend some time explaining these numbers in more detail. This is operational expenses in Q4 compared with a year ago, the quarter a year ago. On the furthest to the left, you see a number of 15, which is SEK 50 million cost of U.K. employees that were sitting in the divested entity, and we moved them into the group because they were working with the group. This was not part of last year. We've added that for comparison purposes. In the first box on the right, on the collection costs, the variable collection costs have gone up, this is primarily legal spend normalizing year-over-year after the pandemic. We also have legal provisions related to one portfolio in which we have a dispute in court with the seller regarding actions that happened before we owned the portfolio. We have now provisioned for the compensation for something we don't believe we are responsible for. Hopefully, we can get back some of this once the court case is closed. However, we have now provisioned for it. The second point is in the personnel costs. This is variable pay increase in Q4. We're in middle of rejuvenation, so we didn't expect to land successfully on the ROE as we did. Due to the real ROE, or beating the ROE target, we have taken up the variable compensation for the year. This will of course not happen if we don't have a ROE meeting the targets. We also have taken a number of operational decisions in the rejuvenation work, which entails cleanup and write-down on a number of smaller balance sheet items. The largest is a write-down of Polish IT platform, which is roughly a third of the admin costs. Apart from this, we have some consultancy costs we don't expect to come back related to rejuvenation work as well, and also some other IT costs we don't expect to come back. Overall, the underlying costs sees some growth due to mainly higher legal spend. We have a number of Rejuvenation related one-off items during the quarter. Next page. We want to give you a sense how our indirect costs are developing overall and also pro forma for the U.K. unsecured investment. When we started our Rejuvenation work, we used Q2 2021 as a baseline. Back then, roughly 50% were direct and around 50% were indirect costs. Direct costs are operational costs, meaning collections using collections. The rest is indirect, including IT, central ops, investment team, and the other group functions. If you analyze that Q2 number in 2021, it was around SEK 1.2 billion. We performed some savings in the second half of 2021. The yearly number, as you can see on this page, landed on SEK 1.125 billion for the year. In 2022, we have a number of SEK 1.065 billion. If we normalize for FX, then we're down 8% year-over-year. Also normalized for one-off items, as discussed on the previous page and a few others earlier in 2022, as those I discussed previously was just in Q4, for example, a decommission of a system, a U.K. lease write-down, we moved offices, then we would be at 11% down. The last pro forma adjustments we do in order to illustrate the impact of the U.K. sale is if we clean out the U.K. platform costs that we don't carry any longer now in Q4, then the year-over-year impact would be down 13%. We continue to work really hard to optimize and take down the indirect cost going forward as well. It's a central part of the Rejuvenation Programme that we are running. Next page, please. As you can see here is the capital development on Page 10. We're in a financially much stronger capital position now. We continue to build capital in the quarter, and we believe we are well-positioned for continued growth with significant purchasing power. We also initiated the dialogue with the Swedish FSA regarding Pillar Two guidance in the quarter. We will let you know when we get formal feedback for this. Next page, please. Here, you can also see that we have a strong capital level enabling growth for us. We also see that the U.K. divestment built significant liquidity in the quarter, we did invest a large volume in the quarter as well, that's taken it down towards the end of the year as well. If we go to the next page, please. It is Page 12. We believe we have a really competitive funding model, particularly in an environment when the interest rates are trending higher. As you are probably aware, we are 71% deposit funded. We're not depending on capital markets to the same extent as the overall industry. We managed down liquidity ahead of the U.K. divestment, and therefore you can see that the average funding rate went up in Q4 when the funding levels required us to take in fresh deposits in Q4. With that, I would like to leave back to you, Harry, for a summary, and then we go into Q&A. Thank you, Christian. In summary, we will continue to execute on current strategy. We are in a better financial and risk position. Rejuvenation activities will carry on into 2023, which means that we will continue with active asset management. That in turn means that if we find a segment or an asset class which we believe where we can deploy capital better in other areas, we will take action on that as well. We will continue to be disciplined in our investment strategy, working constantly with improving our collection performance and also working on reducing the indirect cost as part of this Rejuvenation Programme. Yeah, the higher interest rate environment, we believe, makes our funding mix or funding model very attractive. I think, we'll close with that and hand over to the operator. Thank you. If you wish to ask a question, please dial star five on your telephone keypad to enter the queue. If you wish to withdraw your question, please dial star five again on your telephone keypad. The next question comes from Jacob Hesslevik from SEB. Please go ahead. Good morning, everyone. Maybe we could begin to go through the one-offs, please. On net result from financial transactions, you write that the greater part is attributable to the closure of U.K. Could you give us a more exact number? Do I understand it correctly that we won't have any future income from this contract going forward? These are contracts that we closed down because they were related to the assets that we sold, and they had a gain when we closed them down. That's the key driver behind that number of, I think it is 105. We saw during the first half of the year that when we didn't have hedge accounting, this was moving quite a lot when the interest rates moved during the year. We want to avoid this, so we implemented hedge accounting. Previously, we hadn't seen a need for this because of the volatility not being there. Going forward, we don't expect this to be a volatile post, meaning the interest rates for us. We will always have some FX volatility coming from liquidity portfolio and then also the AT1 where we cannot have hedge accounting. Sorry, one more time. The 105 is completely attributable to the closure of the U.K. contract then? Did you get anything from the Polish- The key driver is the closing down the interest rate swaps in the U.K. and locking in gains. We have some FX in there as well from the liquidity portfolio in AT1. They're both ends of the spectrum. For example, if you have SEK assets, then you will have a positive FX impact, and vice versa if you have a euros. It's a net position there. The key driver is the closing down of the U.K. interest rate swaps, yes. Okay. Thank you. Slide eight is great to see as well. I mean, a question on admin expenses. It came in at SEK 191 million for Q4, but you highlight SEK 58 million of these to be a one-off. It's underlying actually SEK 133 million in this quarter, or how should I see it? Yes, that's the. That is correct. I mean, we have taken a number of operational decisions to change the operating model. One of them, the largest one is that we are not going with a IT system in Poland that we prepared, and we had capitalized a large amount on the balance sheet, and that we're now writing off since that we've taken that decision. There's a few others like that as well. It is rejuvenation actions leading to this. Okay. Perfect. Moving over to interest expenses. I mean, it increases following the rate hikes, as, you mentioned. How strict is your deposit base? If, for example, Resurs or Collector hike the deposit rate, do you see a slowdown in inflow, or do you see capital being transferred? This depends a little bit. We are building matched funding throughout Europe. We come from a history of being funded in SEK deposits. Over time, over the last 10 years, we gradually moved away from being only a SEK deposit base. We now have in U.K. sterling, euro, and in SEK. They're quite slightly different characteristics of this. We run our own deposit platform in Sweden, which makes it slightly stickier, so to speak. Then in Europe, we are using a provider called Raisin, and that's a more transparent marketplace. It becomes quicker at pricing if we move our prices. This... Of course, we have term deposits, which are what they are, and then you have overnight deposits, which move when we move our base rates or the interest rate that we want to offer. That reprices whatever we have in overnight, that reprices the whole book if we raise or take down the deposit rates. That is, it's a very deep deposit market in Germany, in particular, because of savings patterns, and they're quite sensitive to changes in this. It's both if we raise interest rates or deposit rates, then we can attract a lot of deposits in the short to medium term. Vice versa, if we take down interest rates, then we will push out deposits. Okay, great. Should you also share the split between overnight deposits, and locked in? I don't know if we published that, but let's see if we can. We have quite a few things in the fact book. I'm not sure that we published that split, actually. Okay. Let's come back to you in, individually if we have that published, and I'll get it to you. Perfect. Thank you. Just one last question, and it's on capital. I mean, you're very well overcapitalized at the moment. I was just wondering, what is your plan to optimize your capital structure? Is it to increase portfolio investments, to do buybacks or even do a dividend? Do you have a preferred order? We have built capital during the year, and we're really well capitalized, as you say. We have a high purchasing power, and that's what we intend to see. We see a healthy pipeline. We believe in the growth of both the industry and ourselves over time. The board has taken a decision to propose to not pay dividend for 2022, enable the growth. All right. Thank you. That's all for me. The next question comes from Ermin Keric from Carnegie. Please go ahead. Good morning. Thanks for the presentation and for taking my questions. Maybe if we go back to the cost again, how should we think about a good underlying cost base to extrapolate from when we head into 2023? Obviously, you gave us the eight. It's very helpful in Slide nine as well. You also mentioned that you do expect to have some continued cost for the Rejuvenation Programme and so on. Could you give us any color to what to expect for 2023? We have two. I mean, if you start from the top, we have two large cost buckets, so direct and indirect costs. The direct is easy. That's also variable. We really manage those on a cost to collect. We try to optimize cost to collect. As you could deduce from my comments during the P&L walkthrough, we have taken that down during 2022. We are becoming better at collecting, so getting more for less. This cost bucket, of course, depends on the amount of portfolios that we buy. Then we have an indirect cost base, which is then both, it's IT, central ops, the investment team, and all other group functions. Those we are trying really hard to optimize. Way back in Q2 2021, it was 50/50, and we see that it is creeping down over the plan to maybe 40% of the overall cost. Then we will have some one-offs. If we see that more structural. We said that we have an active asset management strategy. That means that we can, we both buy, of course, portfolios, but we can also sell portfolios. If we have any enabling costs to do the right thing and create value, then of course we will take these costs. As part of the Rejuvenation Programme, we can see that a few things like gates will come in 2023 as well. We prioritized, of course, the biggest topics we tried to deal with up first, and that was the U.K. divestment of the unsecured business and changing that operating model to be outsourced model in the U.K. Thanks for that. Moving over to your investments. You mentioned the prepared remarks that you've seen return levels slightly higher than 2021. Is that on a full year basis? Did you see any larger shifts, let's say, between Q3 and Q4 when maybe the rate hikes we've seen in the market have become more pronounced also for your peers? I think, I mean, overall, we hear the industry talking about repricing. It is difficult to say if that's happening with force or if it's happening. What we have seen in our own book is that it's gone slightly up the IRRs. Given that we have changed our investment philosophy or strategy or however you want to position it to be much more proactive and go for what we want to invest in, that kind of driven that. Also it can be the industry that has moved as well. We have seen a slight improvement in IRRs over the year. Thank you. With regards to collection performance, do you still see that one of settlements is a bit tougher, is that kind of it? The payment plans are still very resilient as previously. We commented on this in Q3 to refer to indirectly, and this was in Germany. Germany have since the rest of Q3, we saw that slightly turn around. Currently, we don't see any material impacts on macro in the portfolio. Thank you. That's all for me. As a reminder, if you wish to ask a question, please dial star five on your telephone keypad. There are no more questions at this time. I hand the conference back to the speakers for any questions from the web. There are no questions from the web. Okay. Then, I just wanna thank everybody for calling in and looking forward to speaking to you in after the Q1 at the latest. Thank you, everyone, and have a good day. Thank you.