Welcome to Hoist Finance Q4 2023 report presentation. For the first part of the presentation, participants will be in listen-only mode. During the questions and answers session, participants are able to ask questions by dialing pound key five on their telephone keypad. Now, I will hand the conference over to CEO Harry Vranjes and CFO Christian Wallentin. Please go ahead. Good morning, everyone, and welcome to the Hoist Finance earnings call for the fourth quarter and full year 2023. I am Harry Vranjes, CEO of Hoist Finance, for a year now. And next to me, I have our CFO, Christian Wallentin. So together, we will take you through the results and highlights of the fourth quarter and the year. And before we dive into the material, I just want to very shortly go through who we are and what Hoist Finance is. So essentially, we are a performing financial institution working with non-performing loans. Those of you who have followed us for a while, as you know, we are a bit of a different animal compared to the rest of the industry. Hoist Finance is a regulated credit market institution, supervised by the Swedish FSA. As such, we have a different regulatory environment, obviously, and also a different funding model, compared to our peers. Our main funding source is about 70%, coming from savings accounts from the public, the remaining 30%, various types of bonds that we hold to ensure a balanced funding mix and reliable access to the debt markets. Now, this mix gives us a considerable funding cost advantage compared to the rest of the industry. As you also may know, many peers are now going capital lighter, and focusing on third-party servicing. We are and want to remain, capital heavy. So with that, let me start by taking you through the highlights of the fourth quarter, and then we'll go through the full year directly after that. So there we have the highlight slide. Yes, excellent. So profits before tax came in at SEK 265 million. Obviously, a significant improvement compared to our last year's result, but Q4 2022 was still a rejuvenation quarter and difficult comps, but Christian will take you through the comparison later. Return on equity, our core financial target, reported landed on 12%, and if we adjust for the normalized capital levels, we reached 15% in the quarter, achieving our main target there. We have a strong capital and liquidity position with a CET1 ratio of 13.89%, just below 14, still significantly above regulatory requirements. In terms of investments, we closed portfolio investments of SEK 2.4 billion in the quarter, a solid investment quarter. We had planned for even more, but as the deals we are involved in nowadays are larger and larger, the outcome becomes more binary, and we maintain our pricing discipline. At the quarter closing, we've signed portfolios of SEK 1.2 billion in addition, and typically, seasonally, quarter two and quarter four are our strongest quarters. Collection performance for the quarter came in at 105%, same as for the year, with solid performance across Europe. We still see very little impact from the macro environment, and this also includes the Swedish market. As you saw, we are of course happy that Moody's affirmed the company's Baa3 senior credit rating and changed the outlook from negative to positive. We also launched our HoistSpar platform in the quarter in Poland, expanding our European deposit base and enabling increased currency matching between the asset and the liability side. Now, the last topic here is a little bit trickier, but I will spend some more time on it later in the presentation. But basically, the agreement on the banking package, which contains the status of specialized debt restructuring, this was formally signed off by the Council of the European Union, Coreper, and yeah, the expected ratification by the European Parliament will take place in April. So this basically means that, if you qualify for that, you are exempt from the backstop regulation, and you need to live up to a certain set of criteria. And I will talk more about that later in the presentation. Moving on to the full year. So for the full year, we delivered a profit before tax of SEK 869 million, compared to 490 last year. If we now adjust for the rejuvenation costs, we are actually delivering a profit just over a billion SEK, so SEK 1,020 million compared to 345 million last year. And again, our core financial target is to deliver a return on equity above 15%, adjusting for normalized capital levels and rejuvenation costs. The return on equity for 2023 was 17%, compared then to 7% in 2022. Portfolio investments for the full year ended on SEK 7.1 billion, generating a significant growth, 12% growth, book value growth over the year. And this means that we have invested SEK 14 billion in the last two years, and grown the book considerably. Also for the year, collection performance came in at 105%, strong across the board, across Europe, and very little volatility between quarters, as you may have seen, if you followed us earlier this year. Our income has grown substantially, from SEK 2.6 billion-SEK 3.5 billion, primarily driven by the larger book. And of course, the rejuvenation program that we have been running for the last two years was closed according to plan at the end of Q3. All targets that we set have been met or exceeded. This includes, for 2023 itself, a reduction of about 80 people from central areas. And for 2024, we will continue focusing on strengthening efficiency and profitability in markets that do not meet our profitability targets, as well as continuing to work on central costs. So as part of the rejuvenation program, we identified some IT savings that we could not action at the time. We needed to wait for service contracts to end. We will now address these in the first half of 2024, and we expect to have higher IT costs of about SEK 50 million while we switch the delivery model of the IT services. And when this change is implemented, we expect annual savings about SEK 40 million. And as announced yesterday, Hoist Finance will repurchase shares of maximum SEK 100 million, and up to the AGM on the 7th of May, where we will see what mandate we get then. Earnings per share for the year ended at 6.20 SEK per share. And with that, I'll hand over to Christian to take you through the numbers. Thank you, Harry. Good morning, everyone. We go to the next pages. So here is the Q4 financial summary. I'm delighted to say that we continued to see a robust Q4 performance to round up what we think is a very successful 2023. So earnings before taxes came in around 265 million SEK in Q4, and normalized ROE is in line with the financial target, in with 15% in Q4. We also saw the credit portfolio growing 12% quarter-over-quarter. We invested 2.4 billion SEK in Q4, and we're also on track to meet the long-term growth target that we set in by the end of 2026. One really important point to do here, which is very encouraging for us, is that the strong margin trend is looking to continue. We see that the market repricing is continuing. We also see that the first indications of deposit interest rates having peaked now in Q1. It's slightly earlier than what we expected, and it's the first indications. We haven't seen any real benefits, but this has happened after Q4 closed. We also note clearly that parts of the industry is facing issues, and debt markets are not necessarily open for all of the industry as it is for us. So, our conclusion is that it's a highly internal focus for a lot, a large part of the market, and not necessarily on investing as it has been in the past. So, given goals for the industry, portfolio demand from certain parts of it is going down from historic levels. And this is happening while we see an underlying market being stable and us growing. So we're in a good position to support this repricing that we've seen over the last two years. The book that we have is delivering a collection performing solid collection performance. It's 105% driven by the quality of the book and also investing in the new attractive investments. There's a few markets where we're still not fully satisfied with the performance, so this is a focus area for 2024 to continue to improve and make sure that we get to where we want to be in all our markets. As you can see, there's some FX contribution in the quarter. Overall, given the growth of the book and the growth in net interest income, and the solid collection, operating income is up 43%, We also have in parallel clearly taken down a lot of costs in 2023 to keep inflation and costs under control. And this quarter, the operating scale is unusually evident, which is contrasting the income and profit growth with the overall cost growth. So we saw the operating income growing by 43%, while the total costs grew 3% quarter-over-quarter. And in the same period, same comparison, the indirect costs were down 7%. So, this was driven by the rejuvenation efforts that we have concluded in Q3, where to remind you, we cut 23% the indirect costs during that period. So the operational scale benefits are particularly driven by the more fixed nature of these indirect costs. And you can see that you will-- I will go into slightly more detail in a later page, but you can see that the direct costs grew by 9%, and this is driven by the size of the book and higher collections. And also during the year, we have established a new secured market in Spain. We did a lot of investments into secured portfolios in Spain in Q4 in 2022, and that has also added cost to the overall cost. We're also working very hard to ensure scale advantage in direct costs overall, in addition to the indirect costs, and hopefully we can see even more of this going forward. We saw some we haven't classified them as one-offs formally in the accounting, but we saw some what we would see more as one-offs in Q4. We had a large couple of very large portfolios not coming to fruition. We will continue to look at this opportunity, and this time it didn't work out. We also looked at a potential new market entry. We're still very interested in going into very closely related markets to us up in the Nordics, in the Iberian Peninsula. This is something that we have taken some costs to explore in Q4 as well. As you can see, we had some JV income now in Q4 as well. This is the Polish JV, and you shouldn't expect this to continue. This is the last quarter that will yield financial results from Poland. We have another JV down in Greece, which is more lumpy in nature in terms of the income. So that can be zero one quarter, and then it might be something in the next quarters. But the best JV that we had was the more continuously performing, so to speak, continuously contributing JV that we had. The other one is more lumpy. So overall, if you look at the underlying net profit, it grew strongly. So we have normalized year over year, not in this quarter, but you can see it on the next page on the yearly. So we grew in Q4, normalized net profits of SEK 18-SEK 187 in this quarter. So overall, the key message is that we now have business that in Q4 delivered 15% normalized ROE, and we're also on track to meet our growth targets long term. Next page, please. If we take the slightly longer perspective, 2023 and also 2022 clearly was another large step to build a leading NPL asset manager. And we believe we have now built a solid foundation to grow into the next chapter of Hoist Finance, particularly with the specialized debt restructurer status being a strategic option to us in 2025 and beyond. You can see during the year, we have normalized ROE, which is materially above what we planned a year ago and also above our financial target. It was 15% in Q4 and 17% normalized ROE for the year. We did conclude rejuvenation during 2023. Just to remind you, we met or beat all of our targets that we set up. We also grew capital to where we stand today at 13, almost 14%, 13.89%. We also delivered on our ROE targets during both these years, which we are very satisfied with. One thing that we haven't highlighted previously is that the shareholder equity since Q2 2021, when we started the rejuvenation period, has grown till today with 32%. Overall, the portfolio are on track to grow. The portfolio book size and repricing is driving the higher net interest income. We have seen a net interest income growth of 25%. The collection performance is 105%, which is driven by the quality of the book, and we haven't seen any material macro impact in 2023. The quality of our credit portfolio and operating scale is contributing to this profit growth that we see. So total operating income was up 40%, while cost only grew at 16% overall. So the underlying profit before tax grew to over a billion, so SEK 1,020 million from SEK 345 million. So tripling the profit before tax of 2022, which we're clearly very happy with. So all in all, we are highly satisfied with the rejuvenation years, and going forward, we believe we are very well positioned to, in 2024, continue to deliver well. We plan to and believe we can meet our financial targets, given where we stand and what we see today. Next page, please. So this page lays out the portfolio acquisitions that we've done since Q1 2021. So we see a stable and supportive overall market, which is also leading to what we believe is a strong fourth investment quarter.... The supportive repricing is continuing, and we believe that this will continue, given the macro and market dynamics that I touched on before. We also see significant market participants, as I mentioned, pulling demand from the market, given the internal focus. As Harry mentioned, we have, in addition to what we closed in Q4, another SEK 1.2 billion signed to date. Next page, please. During rejuvenation, we updated our investment and sourcing strategy to be much more proactive and broad as we touched on in previous quarters. We know what we like, and we go for it. The sourcing efforts are broadened, so previously, we were primarily focused on the originating bank sales. We now have broadened that to include market colleagues in the industry and also financial NPL investors, such as hedge funds and private equity type of players. And you see this change of investment strategy yielding strong results. We are on track to deliver our long-term portfolio growth target, which is SEK 36 billion by the end of 2026. You can see, looking back, before we started the updated investment strategy, we were quite flat. If you compare with 2020, clearly impacted by COVID as well, and since, we have grown 29% over two years. We also see continued growth potential enabled by the strong capital levels and also the cost efficient and ongoing access to funding that we have. So we have a flexibility to go after both the flow business, which is more the bread and butter of the business, so the primary market originating banks, but also larger deals, what we call elephant deals internally, if the right opportunity arises with the right return and risk. Next slide, please. With this comparison, we want to show that we are seeing the clear benefits of the quality of the credit portfolio that and how operational scale are also contributing to profit growth. You can see that if we had 40% operating income growth versus average book value growth of 25%, direct cost increased year-over-year with 25% in line with that book growth, and also increased level of collections year-over-year. Total cost increased 16% if you disregard the rejuvenation costs, so after the successful close of the rejuvenation program. The costs also include, as I mentioned before, the secured market entry into Spain and also other material business development costs, as looking into large elephant deals and also new market entries. So the result, result of all of this is that we tripled our normalized profit before tax in 2023 compared with 2022. Next page, please. We've been actively managing our book the last two years to become what we believe is a largely repriced-- to have what we believe is a largely repriced, high-quality book. It's a well-diversified credit portfolio consisting of granular exposure. So we see that we are more spread across geographies than we were two years ago. We also have the benefit of being investing over time, and then we have the asset class diversification on top. One important point that we probably haven't brought out historically as we should have, is that we only invest in highly granular exposures. So what this mean is that, in all the portfolios we buy, all the exposures are very small to the size of the portfolio. The largest exposure that we have is in, if you compare it with a mid to large-sized villa outside Stockholm, is that sort of size that the largest exposure we have in the whole book, no exceptions. So which has enables us to really be highly granular, really well diversified in the portfolios that we buy, and also being able to trust our track record when we price things with the data access that we have for more 25 years of experience across these markets. The book has largely been repriced. In 2022, we sold our lowest margin, highest risk portfolio with a profit. We also, since then, have divested the back books. So in the last three years, we have invested in 2021, 2022, and 2023. So 60% of the book is now from those three years. And the three years that I'm talking about in 2021, 2022, and in 2023 are very disciplined investing, so the right risk at the right price. So we will see, on top of it, we see very strong performance overall in these vintages. We also have broadened the sourcing footprint, covering a larger part of the European markets. So we have access to a larger size of the market currently than we had two years ago. Overall, secured is now at 30% of the total portfolio. We want to grow that somewhat going forward. This is depending on the investment opportunities, clearly. Again, I want to highlight that we haven't seen any material macro impact, and interestingly, we, when we run our internal statistic analysis, we see very inconclusive and weak correlation with macro indicators such as GDP and inflation. We see slight correlation, but still inconclusive, depending on geography with unemployment. So sometimes it's positive, sometimes negative. So this means that, in other words, the strongest correlation we see is with the state of the portfolio, so the quality and returns that we have in the portfolio, which is clearly very encouraging as we see the current state of the portfolio. And then this also explains that, but why we haven't seen any material macro impacts to date. Next page, please. We are in a strong capital and liquidity position, so this enables both growth and flexibility to take advantage of all the attractive investment opportunities that may arise, may that be elephant deals, as we call them, or more flow type investments. We're looking for the right opportunities and sourcing broadly, as I mentioned. On top of it, it also enables share repurchases that we announced yesterday. Also related to capital, we want to mention that the supervisory review and evaluation process restarted in Q4, so we have no indications of the Pillar 2 guidance yet, but the Swedish FSA has now restarted that process. It's a quantitative and qualitative assessment. We are clearly, in our regulatory reports, such as ICAAP and ILAAP recovery reports, communicating that we're very different from other banks. We see that if we face any issues of any sort, the most effective way to both build capital and liquidity is fully in our control. We can stop buying immediately, which immediately builds capital and liquidity. And we're trying to be as clear and as transparent with this, with the Swedish FSA. And it worked well in practice during COVID, when we did this for a short period. And given this effectiveness that are not the same as other banks in the industry, then the quantitative analysis we're doing internally is indicating that there is no need for Pillar 2 guidance. However, that is interpreting the methodology that the Swedish FSA is using, and also there's a qualitative assessment, clearly, that the Swedish FSA is doing. So, we have no indication of where they will land. But our internal quantitative analysis points to that there's no need for this. So we have to wait and see, and we will clearly let you know as soon as we hear back from the Swedish FSA on the Pillar 2 guidance. Next page, please. We continue to see that the interest rate environment is strengthening and keeping our funding advantage. We believe that this is stable, and we will have the benefit of this going forward as well. The funding base is stable and also highly competitive. Throughout the last two years, in the ups and downs of overall banking markets, particularly last year in the US, it's been... We have had full access and managing it fully as we normally do. We have access to all funding products that we have, and we are improving spreads that we see in the market funding. We also see, as I indicated before, the first indications of the peak of the interest cycle in deposit pricing. So this is also a contributor that we see that we're in a strong position to deliver good performance in 2024. So just before I hand over to Harry, I just want to conclude on all of this, say that as long as I have followed Hoist and worked here, I've never seen us be in such a strong position, both strategically, operationally, and financially. And in addition, with the strategic solution to the backstop regulation, which is both supporting the overall banking industry, in our view, meaning, meaning that it's really supportive to the secondary NPL markets in Europe, and also, our business model fits very well with this. So I think it, it makes the regulatory environment for us much more transparently, when this starts in, in 2025, and our role in the banking sector much more defined in our view. So we are in, we are looking into this as Harry now will discuss as well. Harry, please. Yes, thank you, Christian. If we exactly switch the slide. Yes, so, I guess, since 2019, basically, so as a banking-regulated entity, we act in the same regulatory context as our clients. Now, this is appreciated by the clients and also the regulator. But in 2019, the regulators introduced a banking package, which had the purpose of ensuring that European banks would stand strong in the event of a new financial crisis. This meant, among other items, changing risk weights and from non-performing loans, and introducing the concept of the so-called prudential backstop. Now, this backstop regulation was designed to force banks to offload non-performing loans, and we, of course, at Hoist Finance, fully support this and believe this is a very healthy regulation. The backstop regulation drives significant volumes from banks to the NPL market, de-risking the systemic banks. Now, being banking regulated ourselves, however, means that we are also subject to this regulation. And of course, for a performing financial institution holding primarily non-performing loans on its balance sheet, this poses an issue. So, the regulator has been working on adjusting this, and they see the benefit of having also the non-performing loans and consumers of those loans treated under the same banking regulatory supervision as the performing ones. So, to support this, the regulators are now introducing this status as a specialized debt restructurer. This will be a new form of specialized banking-regulated institutions that will have to live up to a number of distinct requirements. The regulation is in progress right now, and as we mentioned, it was agreed in the council in December. And we're looking forward to the ratification in April. And in the meantime, we are in discussions and dialogue with the regulator and the Swedish FSA on this topic, and we expect to have more clarity around this during the first half of 2024 as the process moves on. And so in the meantime, of course, we continue to manage the backstop through our two other options. And that is, as you can see on the slide, it's the co-investment. This is not a way to manage the backstop primarily, this is also a strategic solution. It gives us access to additional volume, and additional basically, sales channels. But the thinking here is that there is a structure where Hoist Finance owns 50% or less. It's capital efficient, of course, and this achieves the deconsolidation and exempts us from the backstop. So, this is a very attractive setup, and we are currently in the process of discussing this with a number of partners at the moment. Now, the other option, as you have seen from us before, is the securitization structure, which achieves so-called significant risk transfer. We have 2 of those structures up and running, but as with everything, they have advantages and disadvantages. On the disadvantage side, of course, it's fairly expensive compared to, regular on-balance sheet investing, and it's, complex to set up. We are very, very encouraged by the way this updated banking package regulation is moving, and, we will continue to keep you all updated, as that goes through the process. Now, then, just to reiterate the highlights from the fourth quarter, and I will not run through the whole thing once again, but 2023 and the fourth quarter has been very, very strong for Hoist Finance. As Christian mentioned before, we are entering into 2024 with a larger book, great momentum, a leaner organization, with a new governance and steering model, where local P&L responsibility is the primary driver. We have a strong capital position and firepower for further investments. Of course, with the profits that we have now delivered during 2023 and the fourth quarter, we add on to that. So I think that it's time to open up for questions. Thank you very all for listening. If you wish to ask a question, please dial pound key five on your telephone keypad to enter the queue. If you wish to withdraw your question, please dial pound key six on your telephone keypad. The next question comes from Ermin Keric from Carnegie. Please go ahead. Good morning. Thanks for the presentation and for taking my questions. The first one would be on the returns you're seeing on new investments. You're mentioning that they are quite attractive. Could you give us any flavor to what IRRs you're underwriting at and how that compares to, you know, recent years and the book overall? Thank you. Good morning, Ermin. Thank you for the question. So we are seeing I mean, if you look back two years ago, we have repriced our book with the new investments that we're doing approximately 40%-50% upwards. So this is the level that we're seeing. So overall, I think we see net new IRRs being up to 15%. It's ranging from risk asset class, and then we see that in the new investments, this is creeping up and has been creeping up over the last two years. So on average, it's not 15%, but it's not on average either 10%. Thanks. That's, that's very clear. And you also mentioned that you've been looking at some new markets. Could you give us any indication to where that would be? And is that purely for diversification or do you see that you need to be active in more markets to be able to invest all the capital you would like to at attractive returns? I think the markets that we are looking at as potential are very closely related to the existing markets. So, for example, the Iberian Peninsula, we're clearly growing our presence there, and Portugal wouldn't be a large step to add to that portfolio. And the same evident example is the Nordics. And apart from those, we see that those are the most obvious ones to us. So they need to be really close to home, and also the risk in the portfolio that we look at would be exactly the same. So it's to broaden clearly the sourcing and access to portfolios that we're doing this and to support our long-term growth. Great. That's helpful. Then the last question was just on the IT measures that you're expected to have now during 2024. Did I understand it correctly that you will have about SEK 50 million in implementation costs, and it's gonna be about SEK 40 million in savings from it? So, is that those SEK 50 million, are they a run rate going forward, or is that just implementation that then falls off, and then it's SEK 40 million down from current levels in total net? Hi, Ermin. Sorry, then we were unclear. No, it's, it's SEK 50 million implementation and then SEK 40 million annually. In savings, In savings, exactly. Okay. Thank you. That's operating. As a reminder, if you wish to ask a question, please dial pound key five on your telephone keypad. Any- There are no more questions at this time, so I hand the conference back to the speakers for any closing comments. Clearly, if what happened in Q3 happened again now, if you have more comments, please reach out to our investor relations email, and we will make sure to answer those as well. Yeah. Now, so, yes, if there are no more questions, as Christian said here, yeah, as we mentioned, right. And thank you for taking the time to listening to our earnings call here today. Just to reiterate, we go into 2024 as a very strong company with a larger book, great momentum, and a strong capital and liquidity position, for that matter. And we will continue this journey towards becoming the leading NPL asset manager in Europe, and look forward to keeping you abreast of how that journey develops as the year progresses. Thank you all very, very much, and- Thank you, and goodbye. Have a good day. Thanks.