I'm here at Carnegie Hall for today's Capital Markets Update with Hoist Finance. My name is Ermin Keric. I'm an equity research analyst here at Carnegie covering Hoist Finance, and before we kick off and I hand over the word to Harry Vranjes, the CEO of Hoist Finance, just a few quick housekeeping instructions, so everyone in the room will have the opportunity to ask questions. We'll have a Q&A session by the end of the day that I will host, and if you want to ask a question, you just raise your hand and ask a question, and then I'll repeat it so everyone at the webcast can hear it as well. And then for those of you that are listening in through the webcast, you can actually already try or start to send through your questions in the little text box in the browser, and it will come through to the tablet here next to me. So with that, I think it's time to kick the event off. So Harry Vranjes, CEO of Hoist Finance. Thank you very much, Ermin. So welcome everyone to this Capital Markets Update for Hoist Finance. It's great to see the room is packed. We've taken in extra chairs. Really good to see that there's so much interest for us and our company. And also a big welcome to those of you who are joining us over the web. We'll try to make this day as interesting as possible so that you get the maximum return for the time you are investing this afternoon. Now, we realize that there's a big breadth of sort of pre-knowledge of Hoist Finance and the NPL industry in the room and on the web from people who are new to Hoist Finance, new to the industry, to more experienced ones. And then, of course, on the other extreme, it's Ermin, basically, right? Ermin level. So we will try to balance the message. Some of you are more interested in the debt. Some of you are more interested in the equity. We'll try to make this good for both of you or for both crowds or for everyone. Now, but before we kick off, I would very much, well, actually, normally you see or hear myself and our CFO, Christian, going through the quarterly numbers every quarter, very much into the details on the various KPIs. Today, we will not do that, right? So we will go through, we will start on a very high level, and then we'll sort of go through what's our philosophy, how do we think around the industry, and how have we sort of derived our strategy, what are we doing differently, and how did we get there. And yeah. And then I would also then like to then present all the people who are actually doing this work. If we start with the management team, could you please stand up? Instead of sending around a mic, I will do this quickly. Starting with, we have Miguel, Country Manager, Spain. We have Sarah, Country Manager, Greece. We have Andrea, Country Manager, Italy. We have Katys, our Chief People Officer. We have Enok, Regional Head of the Growth Markets. We have Cecilia, our Chief Compliance Officer, Simone, our Chief Risk Officer. Then I'll start over here again with, well, Christian, you probably know since before, our CFO, Fabien Klecha, our CIO, so Chief Investment Officer, Misha, our COO. Here we have Makram, who is our Country Manager, France. Then we have our Chief Legal Officer, Pontus. We have one more member of the team, Mateusz, Country Manager of Poland, fantastically successful unit. He is doing the same thing that I'm doing now. He's speaking on a conference in Wrocław, so he sends his apologies. Now, of course, in addition to this great management team that is doing all this work, we also like to present our Board of Directors, which we think is the most senior board in the industry with lots and lots of NPL experience, banking experience, and actually also real estate experience, which is important when we buy secured portfolios. So if our Board of Directors could also please stand up. So we have Peter, we have Chris, we have Rickard, we have Camilla, Bengt, and over there in the corner, Lars, our Chairman. Great. Now, so we will start on a high level and then basically gradually come down to the ground level where we will go into nitty-gritty of how we do portfolios and how we sort of manage liquidity and capital. Without further ado, and to sort of take us up then to 36,000 feet, I'm now going to hand over to Lars Wollung, our Chairman, to kick us off. Welcome, Lars. Thank you, Harry. And just the translation, that 36,000 feet means this guy doesn't know much at all these days. So just bear with him for a couple of minutes and then the program will continue, right? But thank you very much. So this is the challenging hour, right, directly after lunch. So I thought we'd kick off with a little role play so we get going, right? And there are three roles in this place. First, we need a famous European bank with top-notch ESG. And I think, Ermin, I think you look like a banker. So I think you will become the famous European bank. And then we need a debtor. A debtor is someone who has taken a loan. And I guess most of you have experiences of being a debtor, but I have a special actor in mind, which is Chris Rees. So here's the debtor. He has taken a loan from Ermin, EUR 100, a couple of years ago. Then Chris has overspent, expensive wife and the new pool and whatnot. He can't pay Ermin the EUR 100. There is a situation here. Then the third role is myself. I have the role of Hoist Finance. What I do is I go to Ermin and ask him, "Well, Ermin, this loan of EUR 100, what's the value to you for this loan?" Then he will say, "Well, I tried to get paid and so forth, and I will get paid a little bit, but it's going to take a long time, a lot of costs. It's not my core business. It's a hassle." When I do all of that into my business case and the net present value, because it's going to take years, this maybe has a value of EUR 5. And then I tell him, "Ermin, can I buy it for EUR 10?" And then, "Ermin, are you happy with the EUR 10 instead of the EUR 5? It's better than nothing, for sure. Yeah. You're an actor, I say. Yeah, yeah, you have talent. He's happy. He's happy because EUR 5-EUR 10, that's 100% increase. Then I go to Chris and I say, "Chris, you owe me EUR 100. But here's the proposal. If you pay me EUR 3 per year during seven years, in total EUR 21, I will write off EUR 79 and you are free. You're back on track. Are you happy, Chris? Wow. Now I can live in my house. I can pay my bills. I'm really happy. Thank you very much. They both are happy. Am I happy? Well, could be better, but I paid EUR 10, I get EUR 21 back. So it's a money multiple of two. So I'm not disappointed at least. This is the core business idea of what we do. Is this easy? It sounded easy, right? But I know what you're thinking. You're thinking, "Yeah, well, yes, EUR 21 is less than EUR 100, but isn't there a risk? Will I really get - how do I know I get the EUR 21 back?" So isn't the - I mean, he couldn't pay Ermin. So isn't there a risk? How do I know I get the EUR 21? Well, I don't know exactly which of you who's going to get unemployed, a serious disease, a divorce, overspend. I can't say you, you, but not you. So in a way, the answer is no, I cannot know I will get the EUR 21 back. But I know very well how many of you that will divorce in seven years' time, how many of you will get a serious disease, how many of you will become unemployed. I know that extremely well. Hoist Finance idea, we have a strategy or a risk appetite, investment risk appetite document. It's very short. It says no single risk exposure. No single risk exposure. So we are a statistical business because I don't know who more you who cannot pay. But if the loan you owe me is so small, so it doesn't matter because the single risk, your loan divided by my total loan portfolio is zero, then I can play a statistical game. That's what we do. That's how we produce good enough return on equity without taking some kind of major risk. We don't take exposures. We could double IRR on portfolios if we would take on non-performing loans related to a shopping mall, cinemas, real estate development projects. The IRR would be at least twice as high as the stuff we buy. So why don't we do that? We don't do that because we don't like risk at all. So we have chosen a strategy where we use numbers. So it's a data war. And the player with the most data points and best algorithm to take decisions on those data points wins the game. That's why I know that we will get the EUR 21 back. And the question, is it easy or not easy? I mean, it's just after lunch. Have you ever bought ready-made frozen meatballs? Yeah? Some of you have done that. So I bought frozen meatballs. I picked the most expensive package. It was a big Swedish flag, et cetera. I went home and said, "Well, believe it or not, but I can assume responsibility for the dinner tonight." "Turn the package around and read," was the comment, so I did that and I said, "Well, it's packaged in Sweden. The meat is from Belgium." I assumed that I was bringing home meat from happy Swedish cows because there was a Swedish flag on the package. That's how I behave privately. At Hoist, we do not behave like that. We assume nothing, so we know from which city tube system and what part of that tube system this rat meat comes from, and then we say no, so this is very difficult. It's not easy at all, and that's the good thing because if it's difficult, we can build barriers of entry. We can build competitive sustainable advantages, and that's what we do. That's basically a summary on the 36,000 feet level of what this is all about. With that, I guess we're done. But I have a few slides too. Let's go through the slides. How do I click? Okay. I thought I'd say a couple of words about what we do, why we do it, and the winning formula, how we do it. The market itself, debt, credit, is a fundamental value driver of society. There's always going to be a demand for credit because it's efficient and effective. As long as there's going to be debt, there's going to be debt problems that someone needs to handle. We don't need to create the market. The market is already there, like it or not. The originating bank who takes a credit decision and decides to issue a loan, most of those loans are okay forever. It's just a little fraction, maybe 3% or so, that becomes nonperforming in one way or the other. And what can the originating bank do then? Well, then the bank can internally manage the nonperforming loans. They can outsource the servicing to someone else. They can sell the loans to someone else. They can keep it but lower the risk level by transferring part of the risk to someone else, like securitization, to take an example. So that's what they can do. There are fundamental drivers for why step by step it's less attractive to internally manage the NPLs and rather externally let someone else manage it. That's what EU, ECB, EBA wants. That's why they do all these regulations to try to stimulate the European banks to not do this internally, but to ensure that they have a top-notch balance sheet and let someone else deal with the problems. So there's regulation. There is also specialization and focus. To do this well, it's very complicated. And I think you will hear a lot about that this afternoon. So if this is not your core business, this is 3% of your business, you're better off focusing on the 97% of your business. So a good part of this business volume will go externally. So if we then are an originating bank and we want to go externally, we have a couple of goals or things we want to achieve. We may want to increase the equity capital, reduce the risk level, reduce operational costs, increase the cash flow, fulfill the ESG objectives, which are growing, and regulation for debt collection is more and more regulated, what you can do, what you cannot do. You need data systems. You need people. You need compliance to focus on that. And if this is 3% of your business, it's a hassle. So you're looking for those things when you decide which external party will you partner up with. You can choose a debt collection service company. You can choose a hybrid company. They do both service and they do service and buy loans and become the owner of the loan. So they are a hybrid. There are investment companies and investment funds that have capital that can buy the portfolio from you. They will let a service company service the portfolios. Or you can choose a bank specialized in NPL management. That's kind of the four options you have. We believe, we hope that more and more of the originating banks will select the alternative to the right because that's what we are. We are a bank specialized in NPL management. You can say, "Well, yes, of course, we think like that because we're not objective, right?" What are the arguments for not choosing the first three but choose the fourth box? There are a number of arguments for why an originating bank in Europe should choose a bank managing NPL. There are not many alternatives then. Hoist Finance is the major alternative you can choose in Europe. One is that we're a bank like yourself. We live under the same regulation as you do as a bank. That means by definition and top-notch compliance, risk, security, internal audit, legal, accounting, treasury. That's a good partner for a bank because we are the same. Stable financing or long-term partnership, this is the only thing we do. We cannot do anything else. An investment fund, they can decide to allocate their capital where the return or risk-return profile is most attractive at this point in time. So they can be around or not be around. Depends on what the alternatives are. We cannot do that. We can only deliver what we deliver where nowhere else to go. That means we are a stable long-term NPL partner for the European banks. Sustainability, I think we'll be hearing more about this afternoon. I skip that. Go to dedication. So we're not a debt collection company. We don't sell services at all. That's the box I call hybrid. They do external debt collection for customers and their own loans. We do not do that. We're completely dedicated. Why is that an advantage? Well, it's an advantage because a hybrid is a very complex thing to run because you need to be really good at managing a servicing business, selling services to external clients and delivering that. A big energy company requires you to change your computer system or production system to fit with the mass volumes that Aon or Vattenfall, et cetera, have. It's a hugely complex business. Being an investor at the same time requires completely different managers, completely different skill set. It's complex. Furthermore, if an originating bank chooses a hybrid, they are financed with bonds to 100%. Bonds is often there, but maybe not always. That capital is not for sure at all times. At least the cost for the bonds fluctuates a lot, up and down. Our balance sheet doesn't fluctuate like that. I'll come back to that, which means that this dedication, being a bank servicing NPL, produces a very stable long-term partner for the European banks. Portfolio pricing, we may not be the highest bidder or I guess we lose more than we win. So I guess we are often not the highest bidder at a certain point in time. But over time, we probably are a very attractive alternative, being able to pay good prices to selling originating banks because this dedication leads to operational effectiveness and efficiency. And being a bank, it leads to lower cost of capital than most competitors have in this industry. So therefore, we become a very good partner to the European banks. So that's our value proposition to our society. That's what we basically do. But then the question is, yeah, but so we can do it. But why do we do it? Why is this meaningful? Why is it meaningful to go to work? Why is it meaningful to own the Hoist shares or own the bonds, et cetera? What do we provide? What do we contribute to society with? Well, we think we really contribute. We have a platform, which is the bank. On the bank platform, we have three core processes: investments, loan management, so investment management, loan management, funding. Investment management, that means we contribute to the financial system in Europe. Back to the why do we need that? Why does that create value? It means you can buy your apartment not when you're 50 years old, but actually when maybe you're 29. That means you can start a consulting company because you get the working capital. Otherwise, you could not have started, et cetera, et cetera, et cetera. We contribute to the financial system by being an NPL investor. Loan management is about financial health on the people level. We help people get back on track who have overspent or have been in trouble one way or the other, and we help them to pay off debt, write off debt, and the degrees of freedom we have to structure that is much higher than an originating bank, which can't go to the client and say, "Well, if you can't pay 100%, can you please pay 20%?" That's really hard for an originating bank to do. When we become the owner, we have much more degrees of freedom. That's where the value proposition for society is. That's why we suggest we have a meaningful why. I will not go into further details. Harry is going to do that in a minute. The winning formula, well, with increased risk, you get typically increased return, or at least you should ask for that. We're trying to be an alternative where we have a low risk level but produce a decent return on equity with a low risk level. How can we do that? How can the risk be low? Because we differentiate ourselves compared to the hybrids by seeing us as a balance sheet business. The horse for us is the balance sheet, and the wagon is the P&L. Most of our competitors, at least up until recently, they've been running the other way around so that the P&L is the horse, and then there is a balance sheet as the wagon. It's almost like the balance sheet is a black swan coming in. Oh, there's a balance sheet too because you've been looking at EBITDA, adjusted EBITDA, cash EBITDA, et cetera, and then the balance sheet comes and takes, runs over the horse. We see ourselves as a capital-heavy NPL management institution. The balance sheet is what drives the business and therefore drives the risk. Our balance sheet looks like this. You had the asset side. You had the liability side. If we go through them, start with asset side, we have an NPL portfolio. As I said before, there is zero single risk exposure. When this board joined in February 2022, we had single risk exposures. We had loans in a shopping mall, in nine cinemas, in another country, et cetera, et cetera. We have sold it off. Everything is sold to book value or higher than book value. It's completely cleaned. Zero single risk exposure. Furthermore, we buy from different qualified banks in several countries, so the portfolio is diversified layer by layer by layer. An extremely SEK 27 billion or so portfolio, extremely diversified. The second item we have on our balance sheet is liquidity or next to liquidity. It's the type of papers that the credit risk is basically that the State of Sweden would go bankrupt. It's that type of minimal risk. No goodwill with a regulated bank, not allowed to have goodwill. That needs to be deducted from capital, as you all know. No goodwill, just hard earnings, high earnings density papers on the asset side of the balance sheet, and then if you turn over to the liability side of our liabilities, 70% is savings accounts. Only private persons can save with us, not companies. They cannot save more than what the state guarantee is, incentive guarantee is. So even if they want to, we say no. We have 120,000 customers on the savings side, extremely diversified. Sweden, Poland, Germany, U.K., Austria, et cetera, et cetera, extremely diversified. Currencies that match the asset side, not perfectly, but we are going in that direction, so several countries, many, many small savings accounts, completely diversified. No single risk exposure at all for 70% of the liability side, and then we have bonds, and there we try to diversify that too in terms of time and amounts. So it's not one big bond that comes to an end a certain date, but we spread it out, and the last 18 months, we got really good bond investors, which we are really happy about that want to join and support us. The last tap we did was very small, but still it was eight, not eight investors, so not one, eight investors, really good investors, et cetera, so it's also diversified, so the whole balance sheet then is diversified to a very granular level, and that means a very low, in reality, risk level. I think Christian and Harry and also Fabien will come back to the risks. So I think I'll skip that for now. But as you see to the right, we suggest that most of the risks are really low. We have a cybersecurity risk, I guess, not any specific for Hoist Finance, but society as a whole has a cyber risk. We take that very seriously. We spend a lot of money and effort in doing everything we can to be protected. So far, so good. Nothing has happened. We also bring IT home from being outsourced to India. We could get out of that contract this year, so we did. We're building it up internally. So we've done that. A super grip on IT. And we are in a data war as a business. So of course, super grip on the IT side is important for us. So that was the risk side. And then we have the return side. And then I guess the cost of capital is the key sustainable competitive advantage. And here's the VAC formula. As we all know, this is what part of debt can you have, what part needs to be equity. And then it's the cost of debt and the cost of equity. Since we are a bank with all the regulations that that means, so no goodwill and no this and that, risk scenarios sent to the Swedish FSA, et cetera, et cetera, et cetera, it means our debt to debt plus equity level should be very high compared to most other colleagues in the industry. That hasn't really been so, but rationally, logically, it should be that way. Of course, as we all know, why that is good for the VAC is if this weight is high, it means you multiply that with cost of debt. Cost of debt is always lower than cost of equity. You want to have a high enough gearing level, basically. We should have a leading gearing level in the industry over a longer period of time because we avoid so many of the financial risks that the others do not do. The cost of debt for us is less than half of every competitor we have. High weight times a very low cost of debt means a low total number. A low weight and then a cost of equity is at least same as all the others. It means a WACC that is less than half of what any competitor has. That's how we create return on equity. You can turn this formula around saying we buy for higher and higher IRRs. Then if you sold for cost of equity, it means the cost of equity can grow. When this one grows, this doesn't take so much of that growth. It lands over here in terms of return on equity, where we've gone from basically 0% to +15%, and we're working hard to improve. So in summary, the winning formula is to maintain a structurally low cost of capital and combine that with excellent loan management operations. And that's basically the core of the winning formula. With that, I'll hand over to Harry to take us to a concrete level. Thank you. Yes. Thank you very much. So I will not take us all the way down. I think we're at something at 15,000 by now. But as mentioned, we are a leading European asset manager of unsecured and secured nonperforming consumer loan portfolios, also smaller companies. We want to be the leading asset manager of unsecured and secured portfolios going forward. And now, so now for the next few hours, there will be a break. We are going to take you through sort of the business, the industry, and the market. On the surface, it is a simple business. We buy something for 100 or something that had an original value of 100. We buy for between 10 and 30, depending on if it's an unsecured or a secured claim, if it's newly defaulted, or if it's really old. So these things set the price. And then we simplistically need to collect twice that amount. Now, as in any business, when you start diving into the details, then you see that there are plenty of capabilities you need to have in place, great people, great data, organization, great steering mechanisms. And we'll take you through those one by one. Now, when it comes to the formula, since 2021, we have completely rethought how we do the business at Hoist Finance, which has meant that basically we are treating every single one of these three core pillars different to what most other players do. It's not different or unique for uniqueness sake. It is just this has come out of this very, very serious strategic review. Now, these three pillars, and I will talk a little bit more about them later, are wrapped in a banking-regulated credit market company setup supervised by the Swedish FSA. This gives us restrictions and guidance on the balance sheet, et cetera, as Lars pointed out, and many, many benefits. So operating in this setup is expensive. We need top-notch compliance, top-notch risk, top-notch sustainability, anti-money laundering, internal audit, et cetera. Now, Hoist has been operating in this structure for 30 years. This is in the DNA of everyone at Hoist. We will also be talking a little bit later. Christian will take you through it. We've communicated that we aim to become a specialized debt restructure. This is a status that we see as sort of further recognition of what we do brings value to society. This has been a long process with the European regulators from banking package to banking package. I think they have always seen the value of it. They've just not been able to push it through. Now it's in the third update of the banking package, and we will look at that. We are going to be preparing for that now during the autumn and be able to start on the 1st of January 2025. So if we go through these pillars one by one, investment management, this is, of course, the core of what we do. A question we get is, yeah, but is there going to be a supply out there? We all know that the financial crisis is past now. NPL ratios in the European banks are going down. And at the same time, you guys say you're going to double the portfolio from 2021 levels. Is there going to be supply for that? Yes. We see here that absolutely the NPL ratios from sometimes double-digit levels in banks have gone down to around five. We see an uptick in the last two years. So if we look at this stock here, it's about EUR 370 billion of NPL stock. Now, for us, some of it is shopping malls, half-finished real estate development projects. So what falls within our appetite would be around EUR 250 billion. But those, let's say, I mean, you see from 1,000 to a trillion down to 400, this is what has left the bank's balance sheets. Doesn't mean that this is collected. So this has ended up in various securitization structures around Europe. Like in Italy, they have the famous GACS, state-guaranteed securitization structure. In Greece, we have the HAPS, a similar thing. There are other government players involved in various countries. There are, of course, the investors who at some stage will want to exit that. And there are the industrial players who, many of them at the moment, are reconsidering their strategies, going maybe from hybrid to pure capital light. So the supply will be there, is our assessment. Now then, so how are we going to be able to grow the portfolio? Fabien, our Chief Investment Officer, will take you through that in a couple of minutes. But there is a strong pipeline out there today, and we don't see any signs of that going down in the future. On the contrary, I think we are fewer players at the moment and most likely also long-term who are bidding on this pipeline. Capital and funding. Diversification. 73% at the moment. So roughly between 70% and 75%, we want to be deposit funded. We have an amazing, always there funding source in the HoistSpar accounts. It's not just a funding source. It's also a really, really good consumer offering. We have really well-read consumers who are saving with us in Ireland, U.K., Netherlands, Germany, Sweden, Poland, Austria. And they really do the research, where will I get a good interest level at minimum risk? And then these people have obviously then chosen Hoist. And the rest, as Lars also mentioned, is then market funding. And as you may have seen this morning, we announced that we are investigating the possibility of issuing senior bonds right now. Now, this area, Christian will take you through in absolute detail in, I think, about an hour. But an incredibly important leg of the business and completely different than our peers. Then we come to the loan management leg. And I think this one is absolutely crucial. So we are active in 11 markets. We are looking at others, but typically, these are where we are. This is where we own portfolios, where we have collections ongoing. And when you steer collections, we steer it on return on equity. So every single manager in the company needs to think income, needs to think cost, needs to think capital consumption so that we at all times review our own backbook, basically the portfolio we have. There might be segments that are not living up to our return expectations. Then we need to address them. Either we do it with an operational excellence type of project where we deep dive in and try to change collection strategies and so on. Those typically take a very long time. Or we probe the market. Is there interest in any of our peers or competitors for buying this slice of the book? If the price is right, we will sell. This type of focus on the country units is absolutely key. It cannot be steered by EBITDA or collection performance or metrics like that. They have to have the whole picture. Our units out there, business units out in the markets, they are not collection units. They are delivering the full earnings for this group. And they need to see the whole picture. And they need to take care of the whole picture on their local level every day. That is absolutely key. Obviously, we have an external return on equity target of at least 15%. Every single person in the countries are measured on the ROE as well. So obviously, a little bit of higher level so that it can pay for head office and so on. But it is the same target. Every individual portfolio investment we do is also measured on the return on equity target so that it all is accretive to our external target. So 100% alignment between management and investors. Now, so how do we do this, the collection, and how do we do the loan management? Well, as part of the review in 2022, we split loan management into strategic and operational. Now, strategic loan management, as the name indicates, is a strategic capability. This means that it will always mean this is where we set the collection strategies. This is where we segment the portfolios into various pieces. This is where we follow up on them, where we course correct, where we report upwards into the portfolio management team into a single data lake that we have centrally. The data, the data, the data, and the data points, so that we will always be able to learn, become better and better and better and better for every portfolio we buy. So always in-house, always local. Not a team sitting in London or Stockholm calculating on portfolios all over Europe. It is very specialized. There are differences per country. There are differences per seller. There are differences by asset class per seller, so you need to be close to the seller. You need to build that relationship. Operational loan management, on the other hand, this is where the actual collections happen, so this is where we have conversations with the borrowers. This is where we send the letters. This is where we, if needed, initiate legal action, et cetera, and it is by far the toughest job in the group. About 1,000 of our 1,300 people work in this area, and ethics, empathy, and all our values, core values are part of their everyday life. They really live by the credo, nice and determined, so very, very excellent work being done out there. Now, however, it is resource-intensive. So what we do is that we look at, okay, how many portfolios have we typically won historically in this market? How many portfolios do we expect to win going forward? If we see that the supply is not as regular as needed to have a fixed cost base in a market, we will then adjust and outsource parts of the collections or the full collections where it makes sense. There is no dogma here that outsourced is better than insourced or anything like that. This is a pure business decision on a situation-by-situation basis, and this can fluctuate over time, but this is how we look at it. Every unit, every country individually, and then we follow that up. We're going to have the country managers of our largest countries appear in a panel in about an hour or so. They will be able to answer specific questions about their markets because they are all different and they all have their benefits and their challenges individually. So with that, now to take you down to the real ground level on these various core pillars of our business. Time for Fabien Klecha, our Chief Investment Officer since 12 years, to talk about investment management. I wanted to give you a break from the numbers, show you our team, and with this picture, explain a little bit of our philosophy when it comes to underwriting and investment. As Harry just said, I've been 13 years in Hoist and I've been in various positions. I've been the Country Manager in France. I've been the Country Manager for Italy in interim. I've been originating loans, sourcing loans, loan portfolios across Europe as well. And three years ago, I took over the investment team. The investment team has a particularity. Our investment team has a particularity that, as you can see, it's very diverse. They are very talented people, but you have talented people throughout the industry. The particularity is that they are reporting centrally, but they are sitting locally. Most of our team members, they sit next to the operations. It is a key to our success because if you want to make sure you capture the know-how of our local team into our valuation, that you have a good understanding of the risk, you cannot see that just with data. You need to make sense of data. You need to make sense of the due diligence that we do. You need to connect that with your valuation model. You need to connect that with your SPA and the reps and warranties that come with it. So that's a key part of what we do. So with that, so as you can see on the right-hand side, sorry, the team is spread out across Europe, sitting next to the markets. And that is essential to what we do. We're now, as at the end of Q2, close to EUR 27 billion second book value, coming from EUR 18 billion a few years back. We've grown the book in just three years by almost 50%. And in terms of ERC, what that means, because obviously our old portfolio amortizes, it means that half of the ERC has been acquired since 2022. This year, we have already acquired EUR 4.3 billion. And just to give you an idea of the live deals, and I'm talking about the live deals, meaning that those 43 people that you see here, they are looking at a pipeline of EUR 20 billion as we speak. So, preparing analysis, submitting non-binding offers, binding offers, negotiating SPAs, or waiting for the answer from the seller. This is what we are talking about here. And one thing I think we achieved together as a group, together with the country managers, is to both increase our margin, and I'll come to it afterwards, but at the same time, increasing significantly our performance. So the performance of the vintages acquired since 2022, so since we started this journey essentially toward the SEK 36 billion target, is 116%. And that compares to the 108% that we have for the whole book. So we see it as a combo of more volume, more margin, more performance. And this is, I mean, this strategy that Lars and Harry talked about, we are proving in a way it works in practice and with numbers. Now, throughout this presentation, I tried to explain what we do in the investment function. When in the investment function, we are involved in pretty much all aspects of the life cycle of a portfolio. That is, from the sourcing, we are in contact with all of the major European banks that we tiered, tier one, tier two, tier three, and we are in regular contact with them, obviously. And that's what we call the primary market. So this is what Harry talked about, this NPL stock being EUR 400 billion. And we also are in contact with industry peers and funds. And this is around EUR 600 billion. So this is very significant too. And just to give you a number on that, 25% of the acquisitions we've done this year actually are coming from the secondary market. So us buying from funds or from peers. That's the sourcing part. Then we underwrite portfolios. And here, I think the key thing is that we are data-driven. What does it mean? It means that we never agree to put any unsubstantiated, I will go there, uplift on the curve. We are data-driven. The curve comes from data, full stop. And if we expect a performance increase due to operational aspect, we need to do a mock-up before. We need to do a test before we accept to deploy a significant amount of money into we don't take bets. Let's make it simple. On top of that, we have a very strong governance. I'll come to that after. And that is really helping making sure we get the learning out of our investment. We have a central database, a central data lake that captures all aspects of our underwriting. That is collection performance, operational KPIs, costs, real estate value, and more that allow us to deep dive into the portfolio on a very short notice. So we are in constant collaboration with our finance team, business control, but also the local countries to discuss about our findings and give insights and constantly learn from what we do. We've introduced the concept of feedback loop, meaning that six to nine months after the onboarding of a portfolio, we re-underwrite the portfolio to make sure that we verify the assumptions we have taken are correct and that we learn from our investment on a constant basis. So the CEO, the CFO, myself, the CEO, we're in a committee and we are looking at what we approved six months, nine months before. And that's quite fundamental. Finally, revaluations. Revaluations are independently driven with Christian, our CFO, but we provide analysis, of course, but this is independent from the investment function, and last but not least, portfolio divestment. As it was said, I mean, you've seen we've sold the U.K. a couple of years ago, but we're also selling segments of our portfolio to specialized players. We like to say better owners, people who see more value or for strategic reasons, so this is what we do at Hoist. In terms of our strategy, we focus on banking claims. This is what we buy. We buy banking claims. We don't buy telcos. We don't buy utilities. This is not our core business. 99% of what we have is banking claims, so what is it in practice? It's consumer loans, whether it's unsecured or secured. Secured are typically mortgages, so backed with real estate collaterals and SMEs. SMEs can be unsecured or secured, but most of the time, or every time, sorry, they are granular. Our largest single exposure at Hoist is 0.08% of our book value. Our top 100 exposures are 1.96% of our book. This gives you an idea of the granularity of our book, so we have pretty predictable performance as a consequence of that. We are dedicated to a number of markets. Those markets are listed here. You know them: Italy, Germany, U.K., Poland, Greece, Sweden, Spain, France, Netherlands, Belgium. Why is that? Well, those markets, they make the majority of the NPL stock anyways. They have a strong legal system that we can rely on, and we have a strong competitive position in those countries, so that is what we buy. Now, on top of that, we are very proactive in the management of our portfolios. So we are constantly centrally monitoring the portfolios, monitoring the performance metrics. We are benchmarking our portfolios. And we don't just look at the numbers. We also monitor the SPA reps and warranties to make sure that what has been sold to us and what is wrapped in the SPA is actually the reality. And if not, we get indemnification. And that is a large part of making sound investments because if you buy a portfolio and you have the wrong value of claims or if you have claims which are supposed to be titled, who are not titled, or you're supposed to have a collateral and you don't have a collateral, then you end up in trouble. And finally, just to get into a little bit more details on what we do on proactive sourcing, yes, well, we problem-solve for banks. Problem-solve for banks. I mean, as was said, we have the same regulation. We've been through the same issues. We know about the regulation as well as them. The only little difference is that 100% of our book is NPLs. So we know how to structure efficiently the consolidation of those NPLs while either retaining exposure to it or completely removed from balance sheets. Second point, important co-investment. As a lot of players in the industry are moving from a balance sheet business to an asset-light business, there is opportunity for us to co-invest. And there's opportunity for us to co-invest while retaining our cost base low and while making them happy because we give them volume of servicing. And this is exactly what we do. And this is actually an important point in our growth this year and for the coming years as well. And finally, secondary market opportunities could be industry peers, could be funds. We work a lot with funds. As you know, funds, they have five, six years time horizons. At some point, they sell. We buy. So that is on our strategy. Our book, so back in 2018, we expanded into secured assets. Now it represents 28% of our book, but it represents half of our investment this year. So it's mainly residential real estate-backed portfolios, whether it's mortgages or SME, it's real estate-backed. Residential real estate-backed. And we see the SME segment actually as being core to our growth because we see the level of NPLs for this particular asset class going up significantly. In terms of book value per market, you see there's no predominating market. We are super well diversified. And actually, this makes our book very resilient to operational risk, market risk. It is really comfortable to be able to deploy money where it best suits us. Because the team you've seen a couple of slides before, they are not dedicated to one single market. They cover typically two or three markets each, so we can allocate resources on the markets that need the most resources at a certain point in time, and the last point, it was discussed with Harry, is the portion of what we managed operationally, internally or externally, well, this portion has increased significantly, went from six to 38% the last few years, and this gives a very big operating leverage. What does it mean? It means that we don't need to build a fixed cost base. We don't need to feed the machine, as some people say in the industry. So even if we are in a context where the book value decreases, we can still deliver the ROE to our investors. And this is the idea behind it. There's a lot of spare capacity in the industry. Let's use it. Let's work with our peers. Let's partner with our peers rather than compete with everyone. Here, I'm going to get a little bit more details. It's just for people who know a little bit less about our industry. So typically, we source a lot of portfolios. And out of those portfolios, there are some that are fitting our strategy, some who are not fitting our strategy. Typically, if someone comes with a portfolio of single names with lines at 100 million exposure, we don't like strategy filter. We rule it out. We focus on the granular banking portfolios. We start an initial analysis, just portfolio description, just to understand what we're talking about. We start the pricing. We submit the non-binding bid. The seller tells us, "You're within what our expectations or not." If so, we go to the investment committee. We submit a binding offer. We start the SPA negotiation based on the due diligence finding, based on the approval from the investment committee. That's particularly important. Finally, we sign and close. In terms of governance, I think a key aspect is the collaboration between the country management teams and the investment team. We jointly underwrite the portfolio. Our team is taking charge of the modeling of the due diligence strategy. The local team, the operational team, and the management team is taking charge of the due diligence work, the cost aspect, and feeding in their know-how into the valuation. That is selecting the comparable data we're going to use, so there's a discussion, a healthy discussion. When we agree, we go to the committee. This committee, investment committee, is chaired by myself, but actually, there's Harry, our CFO, Christian, our CFO, Misha, our CO, are present, and the country manager has a vote too for the deal, so it's not that we can invest in the country without the approval of the country manager, and then we go up to board investment committee and full board, depending on the size of the transactions, and there's been some complaints this year that we had a little bit too many board investment committees, just because we had a lot of large transactions to look at. In terms of monitoring, we have monitoring within the team, so I talked about the IC feedback loop, but we also have independent quality review. That means that there's a peer in the team that underwrites separately to challenge and gives his own opinion about the transaction. And we track the performance of the portfolio depending on who has underwritten the portfolio. And on top of that, we have the revaluation committee that is independent. We have the risk function that participates to the investment committees and gives a review as well. And then, of course, internal audit, external audit contributing. So at Hoist, now talking about how we look at the returns on our portfolio. Well, we are, in a way, like any investor looking at the net money multiple. That is the net cash divided by the price, the weighted average life, which is when the maturity of the cash flows or the IR, which is an indication of the time value of money. But the most important KPI to us is really the return on equity. The return on equity captures the leverage level, captures the cost of debt, captures the time value of money, captures everything, and is completely aligned with our group target anyways. So going down to earth now, looking at an illustrative, I insist, investment case. So here, it's a mortgage NPL book in a country. So typically, we look at IR, we look at net money multiple, we look at return on equity. Okay? And this is our base case here. So what do we do? We stress our assumptions. So for example, we are buying this mortgage book, so it's residential real estate. What if real estate price goes down 20%? Well, then our returns become 10.7 IR and 45% return on equity with a 1.45 money multiple. What if the assets are more illiquid than we thought, or if we have trouble selling or reprocessing? And on average, the while goes from 40-52 months. Well, this is what happens to our IR and ROC. So this is two examples of sensitivities we do. But in reality, we also take into consideration other aspects. The concentration of ERC, so part of our expectation within the portfolio, the asset liquidity. We typically have a scoring to assign liquidity measures for the type of assets. Obviously, our due diligence finding. They are fed into the model, but they also are fed into the sale purchase agreement contract and our experience with this asset class. We have a central data-driven approach. So what does it mean? We have a data lake. All the data we have in the country, we have centrally. We have access to them in an efficient and cost-effective way. We have databases structured in different ways, but essentially, we have access to all types of data: collection data, operational data, costs, pricing assumptions. How we segmented the portfolio at pricing is also stored so that we can challenge our pricing methodology that's particularly used in the IC feedback loop, collateral as well. I mean, if there's a fire in a region, we know which region. We know how we are impacted or flood or things like that. We have also a centralized automated reporting. That gives us the ability to manage very large datasets very efficiently. We use, for example, tools like Alteryx. This is what we use for pricing. We don't use Excel. It's a combination of an ETL and an analytics model that allows us to have an audit trail on our evaluation and to make millions of sensitivities in a very easy way, in a very efficient way. Now, going to what happened the past, let's say, three years. Well, we increased the book since 2022, 50%, 64%, if you look backwards towards the COVID time. But at the same time, we increased our margin. That is our IR that we are not disclosing here, but just putting as an index by 55% on average. So you look at a company that is growing 50% in a couple of years and is also growing its margin by 50% and is also increasing its performance significantly. So that's the short version of that. Now, in terms of the market outlook, getting a little bit into more details here, but I'm trying to make it easy to understand. We are, on average, investing 0.5% of the stock on a yearly basis. So there is abundant investable market for us. Two-thirds of the NPL stock is our addressable market plus the secondary market. So in total, we have the 400 billion. We have the stock of stage two loans, which are not NPL yet, but part of it will be. That is piling up to 1.9 trillion now, and then we have 600 billion on the secondary market as well. So there's abundant offer of NPLs in the market that we can take advantage of. And that is in a context where the rates went up, where our funding stays stable, and where the secondary market is a key focus of the regulator. Christian will come to it, but with a special status for people like us, so. So, in a summary, we have capacity to source transactions. We have capacity to underwrite and data to underwrite. We have a clear regulatory status. We have a strong track record. We are well capitalized. So, we are in a good place to be a leading player in the industry for the coming years, I believe. So, that was the asset side of things. If you remember the balance sheet that Lars showed. And now we're going to go with Christian on the liability side of things. Thank you, Fabien. Hi everyone. Good to see so many people here in the room and then also online, so my name is Christian Wallentin. I'm the CFO and the Deputy CEO of Hoist. I've been here for now exactly three years, give or take or add another month. My background is in financial services broadly, so I've been knocking now on 25 years in financial services. Wide range of, well, the red thread in my roles is value creation and creating really better companies, so that's what I've been doing in various roles, investment banking, private equity, and then in leadership positions in the banking industry, and now at Hoist, I'm heading clearly the finance function and in charge of the health of the balance sheet, also working a lot on the strategic initiatives, rejuvenation, and sales of larger assets like the U.K. market. I will focus here in the capital funding on three key messages. Basically, we have a sustainable, low-cost, and diversified funding, so we built that over a long period of time. We've been a bank for a very long time, so I'll go through that in some detail, and it's based on the stable and sticky deposit base. And secondly, our deposit model is complemented by the investment-grade market funding platform, so diversified in both the funding and then also accessing larger transactions if needed, and all of that leads to that we have an industry-leading funding cost, which helps us a lot to help the banks, so this is the overall view of the deposit platforms or the funding platform. So we have 73% deposits, we're ranging more or less 70%-75% over time, so we want to keep that at a high level because it's very cost-efficient. It's also always on. If we need to add funding, it's very much an online thing. We can go, we can adjust rates, and we get more or less funding as required. Then we built this platform across Europe. We have attractive sourcing opportunities, and we offer attractive savings offering. The more lumpy side of the funding is clearly the market funding. If we grow very quickly, we want to access the funding. We want to maintain our investment grade. We think it's very important to have that flexibility. I'll go through that a little bit more in detail on these pages here. The funding platform. We've been expanding. We built a well-diversified competitive funding with a stable, sticky deposit as a base. We believe this is a low-risk model. We have it always on. It's highly fit for purpose in our industry, I believe, and also the aims that we have as a firm. With that, I mean that given the lower funding advantage or lower funding cost, we can price attractively for the banks as well. We do help them to get on the margin slightly better prices given that we have such a competitive funding. The core is the 75% funding or so, and then the investment grade. Across Europe, we offer attractive savings offering to our clients. It's now in seven markets across Europe. We believe that it's very low risk for these clients. We're a Swedish bank, so the risk that we're on the Swedish deposit guarantee scheme, so the risk is underlying the Swedish state, so AAA rating. So it's very much a, if we offer a sufficiently attractive price, then people will sign up for this. We have been expanding this and diversifying this over the last few years. We used to be, we come from a situation where we started in Sweden a long time ago, and now we're across seven markets. So last year, we added Poland, Netherlands, Ireland, and Austria in total seven markets. We have also grown the savings clients from 80,000 to 120,000. That reflects both the growth of the balance sheet and also the diversification in markets. This is all enabled by us being a credit market institution, so regulated by the Swedish FSA. The important thing about the deposit side of the business is that it's highly granular, coming back to what Lars was discussing. So this is highly diversified, and therefore we believe very low risk. It doesn't move very quickly. We can build up gradually. We can take it down gradually. We see that when we have priced this, we always, we tend to, or we always only offer up to the savings, the deposit guarantee scheme level, so EUR 100,000. You can see on the, if you do the math here, so SEK 22.3 billion over 120,000 customers, it's a little bit less than 200,000, so 185 or so, and then less than EUR 20,000 on average per client. It's very, very, very diversified, which we like. Then clearly across markets as well. The funding is available in real time, which is a really important thing. When it's like that and pricing drives volumes, we have continuous access. It's also important to say that a large part of this is term, so it cannot leave us overnight. So when we had a turbulence in the US a year ago or so when Credit Suisse failed, then we didn't see any impact on our deposit funding. So this is a really stable thing. Last but not least, deposits are priced highly attractive. So it's materially lower than the capital markets funding. We have an average rate of 3.33 basis points or percentage. And given that we have seven markets as well, we can optimize pricing in these markets. So we have a few, we have four markets in Europe, for example. So if we want to build deposits overnight, then we don't need to reprice the full stock. So we can use different markets for different purposes. And therefore, it's very easy to guide the price that we're paying and then keep the prices attractive for ourselves as we can while still offering attractive savings offering to our clients. So in summary, we believe that we have developed a really low-cost, diversified funding platform with a deposit base. And then it's complemented by an investment grade, being an investment grade issuer in the industry. And we're alone in this. So we're the only one being investment grade currently. And we have a B3 positive outlook. And this is on the Moody's banking framework. So it's a very, the risk level is compared with stable banks. And that's what we look at ourselves as. That's what we are at core because that's how we're organized and are regulated. So we have a positive ratings outlook, and we hope and believe that will materialize. We have looked, when you look at Moody's criteria for potential upgrade, we believe that we tick all of those boxes. We will see when Moody's come back on this, but we do believe and hope that they will support our belief in that as well. This is peer pricing in the industry. We have the deposit base as a platform, and then we complement it with the market funding. You can see us being the slightly pink ball here. We have these four on this page. We have another euro issuance, but it's very close to maturity, so we haven't included it here. You have the pricing and then the maturity on the right-hand side. You see that we're in the bottom left corner, which is where you want to be. It's very cheap market funding as well compared with peers. And I think this is building on the overall attractiveness of our funding package. So over the last few years, we've been building a SEC presence, as many in the room know who invested in our bonds. We believe that that's a diversification to the European EMTN program that we have. And we want to build a curve to being able to manage the NFSR and the more technical sides of the balance sheet in a good way as well. So now we're building a granular curve, which is more across the, and we've also seen a really tightening spreads since we've issued these bonds. So the journey that we've been on to improve the company has really been reflected in the pricing of our bonds as well. And we have seen a really strong demand in these bonds. As Harry mentioned, we were out in the market starting today and investigating if we can raise more funds. So we're setting up meetings with credit investors over the next few days. And in this page also, I can mention that we have excluded a few peers that are a little bit outside the chart because it's not reflecting the true business risk of the industry, the funding risk. So overall, this is a page where we have all our funding in here. It also includes the additional tier one instrument that we issued. So it's more the capital side to make it a full comparative basis. And for our peers, it includes all the both traded and non-traded debt. There's a few minor assumptions around cost for rolling RCFs, but they're very minor. So this is broadly the picture that we are seeing in the industry. We can see that our funding cost is almost half of the industry. The average is 78% higher than the industry, than our cost of funding. We do have a leading funding cost in the industry to support the investing and purchase of NPL portfolios. Next section, I want to speak a little bit about the risk that Lars was touching on before, slightly more in detail. We do believe that we have a low and stable risk profile. Alex, I'll talk you through slightly more detail than what Lars did. I'll give you an overview of what the full picture of the risks are, and then I'll dig into two aspects which I think are not always well understood of our risk, and then how we manage that risk as well, so how we manage the portfolio. I'll start with the overview here. The credit risk is clearly the most pronounced risk in our book. This is what we do. This is where our main business risk is. This is the key what Fabien does in everyday working. We actively invest into diversified assets, and that's the active part of this. We are very much building it into everyday life, how we manage this risk. We're not only managing the risk we get on, we are very actively picking the type of risk that we want. I think it's very clear from both the asset selection that we do and Lars's introduction and Harry's in there as well. It's all data-driven and statistical. We absolutely don't want to make any big assumptions or big bets, as Fabien was calling it. We have then this central check on all of it. I'll come back to the credit risk slightly. The credit risk in the liquidity portfolio. We have a liquidity portfolio on the asset side. It's very much managed as a bank liquidity portfolio. It's high, high credit-rated papers in this. That's it. This is how it will continue when we become an SDR as well. We don't want any business risk in this. It's very liquid, it's very low risk. That's exactly how we want it. Operational risks. In terms of operational risk, we believe that we have a low operational risk overall. We are working very actively with putting the right structure, the right organization, putting the right people in there. It's part of our everyday DNA. We are never happy with how it was yesterday. We always want to improve, and that is driving these operational risks, and on top of it, we are a highly regulated institution. So we have the highest regulatory standards in our society, so banking regulation, which means three lines of defense. It means all sorts of operational risk controls, risk assessments. You need to have ready-made plans on the shelf if something happens, so it's very, very diligent and very detailed. We have crisis management frameworks, etc., etc., etc. It takes a lot of work, and it's a lot of toll on the organization, but it is paying off in the sense that we believe that we have a low operational risk, and then clearly, there's risk that you cannot fully control. Lars was mentioning cyber, internal, external fraud as well, so ill-intended people can always come around, criminals, either internal or external. That is slightly out of our control. We try to really minimize it. We train people. We try to recruit the best people we find. We have internalized our IT structure. We have a dedicated cybersecurity team as part of the IT in-house. We believe that we are very well prepared and also have the right systems. We're cloud-based. We have all the top-notch standards that you can think about. Market risks. We're bank-regulated. This is about FX. We're an international firm. We have a pan-European presence. We're investing in 11 markets. We have presence in 13. These investments out of Sweden, we report in SEK, that carries FX risk. We manage it both by naturally hedging it. We have deposits locally in the same currency as the assets, so the natural hedge, so the economic hedge. And then we also can use the liquidity portfolio to steer the exposure to certain FX if we would like to, and that we do actively as well. And then the remaining part, which is unhedged, is we take care of that with derivatives, basically. So FX derivatives to cover that risk. So we believe that we have a very well-functioning FX situation. And then the interest rate risk is the other part of this. So this is the mismatch between the longer asset side and the shorter liability side. So if you have a shorter liability side, at one point, you need to refinance the same assets with new financing. We do it gradually. We do it very on an ongoing basis. We manage it very actively, both by making sure that we try to match the length of the funding to the degree it's economically feasible. And then we clearly hedge also the interest rate risk. It's called interest rate risk in the banking book. So that's a hedging that we have in place as well. The liquidity risk, that's in the liquidity, just meeting your payments, that sort of kind of risk. We have a really big liquidity portfolio, so it's not really an issue. We can sell the papers that we have very easily, so it's highly liquid. So it's a very low risk for us. And now, given the SDR, which I will come back to after the panel of Q&A with the country managers, that liquidity portfolio will grow. So that risk is becoming even less or more remote. So regulatory and statutory risk. I think the most important thing, and I'll come back to this in the SDR section. I think the most important thing is that we believe that we are absolutely aligned with the regulator's intent, what they want to do with the banking sector, what they want to do with the consumers. And we play a very natural role in that system. So that is now reflected in regulation, and we go into some detail later on. And that is an incredibly strong starting point for any company, any person, etc., that you're aligned with intent. So we do believe that this is. I put low to medium, but I do think it's more bordering to the low, if you would ask me. And we also have an SDR status coming up that we're aiming for the 1st of January 2025, which gives us this stability of that role. It's level one regulated, meaning that it's detailed in legal text. It's not a directive, so it's detailed legal text, and this banking package is meant to be in place until well into the 2030s, so it's a very stable regulatory status that we're now heading into, and that said, regulatory risk, we are a pan-European company, so it's a very complex organization because it's international, so we have structural risks. We have a lot of different subsidiaries, etc., so we manage that very, very carefully, and we believe that we have that risk well managed as well. This is often a misconception that I've met, and I think my colleagues can probably say the same, because what we invest into are NPLs, and NPLs are not the same across. So the risk profile completely changes as you go through a process where you sell an NPL to an investor like ourselves. So in this, we wanted to show, so this is the gross book value of the originating bank, the value of the original claim that we buy. And we buy it at around 90% discount. So SEK 49 billion is this and SEK 581 billion. So this is from the inception of Hoist. So just to give you a long-term trend. So overall, all the portfolios that we bought since late 1990s, that's the amount of gross book value, and that's the book value that we bought. And we have clearly worked through and collected a lot of them. So that's not the current book value for us. So this is a massive discount. And what happens is that someone becomes, for some troublesome reason, divorce, lose their job, etc., they get into debt trouble and cannot pay. Lars was dealing with all of that process. Then they decide they want to sell. The credit risk, as it's called, has at that point materialized. And then we price the true risk based on the investment process that Fabien laid out. So we look at all the cash flows that we believe statistically will be paid from this sort of bank. And that's the price we are paying. And in that process, 49 is the same here. You get a massive debt borrow relief. So we offer a debt restructuring process to society in which we are much, much more flexible. We are much more designed to be specialized in that process to help the consumers. In that process, on average, we take down the repayments with almost, let's say, 16%-17% they pay of the 100, and that is not well known, and clearly, that risk and that risk is completely different, so that's why we call it de-risking NPL by pricing the true risk profile of an NPL, and this process leads to this side here. This is also from inception, so this is the initial curves that we set in accumulation, the pink ones, and at the time of investment, that's the cash forecast we set, and on average, across these years, we have collected 108% of that, so it's very, very stable, very predictable, and the risk, de-risking of NPLs is often misunderstood. People see it also in regulation. It was also more geared towards this than this risk. It's a world of difference because the credit risk is gone basically when we have bought the NPL. Then the next one page is how we actually manage the book. Because if we screw up managing the book, we will get into trouble as well. So a large majority of all the portfolios that we buy, you can see it on the previous page, we are delivering what we thought we would deliver. So 100% of that initial curve. And then we have an objective with the book to deliver a stable and predictive collection performance so we can absorb unforeseen shocks, so we can make some mistakes in investing. And this is what we've been building the last few years in the book. This chart here shows the overperforming books in relation to the underperforming books. So it doesn't focus on the large majority, which is just where we thought it would be. So this is based on a flagging system that we have in the centralized governance and follow-up framework. This flags these portfolios on a real-time basis. We look at them in a monthly evaluation committee. If it's large enough, then it goes to the board. If it's slightly smaller, then we deal with it internally in management. And this outlier focus gives us a really strong overview of the health of the book, we call it. So if we have a health book, which often say in the quarterly results, that means that the number of overperforming portfolios are higher than the number of underperforming portfolios. And you can see that the number has been growing steadily. And portfolios come in and out of these tables, right? As we work, we are more or less the same on underperforming, but the overperforming are growing. And that points to a really healthy book. And then the question is, okay, what does that entail in terms of numbers? A healthy book will, by definition, mathematically give positive collection performance, so above what you actually thought it would be. In our numbers, that means 106-107 this year of what we actually had in the current management forecast. And this we want to maintain for the reason that that's on top of this page. And we're really prudent how we manage this book. So everything that is here, we try to deal with as soon as possible. So everything that is difficult, we want to deal with as soon as possible. We know that pays off because you really build the performance for tomorrow. It's easier to deal with issues today than it is tomorrow. These revaluations that come with positive evaluation, we are very careful to do. These we must do because of both what we want to do, but we also have an external auditor that is checking this. And this is their also largest risk. And the positive revaluations, we manage in a slightly different way, in a much more conservative way. So as you know, it's 15-year curves that we invest into. So if you see a portfolio overperforming the first three years, for example, you could take the assumption that you build this into the future curve. So overperformance for 15 years. And then it's a pretty big revaluation, positive revaluation. We don't do that. We want to do this gradually, very carefully. So we look at the performance and then we say, okay, over the next two years, maybe that's the positive revaluation we will take on this because we are very sure that this will happen. We're absolutely sure this will happen. And why do we know that? It's a very simple reason. In this business, past performance is a very strong indicator of future performance, actually particularly here. So that's why we deal with the issues early on. So it's a very strong correlation here. I think it's 70% or so, slightly less here, but still very strong. So if something has been performing really well, it is very certain or not, it's very likely that this will continue. However, we try to only do the positive revaluations slightly and gradually when we're certain. And why we do this is to want to have a stable and predictable collection performance and also be able to have this positive small contribution from our positive book, not only from the normal cash flows, but also from taking some benefit from the health of the book as well as we go forward. Fabien was touching on feedback loops. So this is integral to this framework as well because we are constantly learning. It's a really strong culture of learning in the firm. And we do that on the operational side. We do it in the investment side. So the loan management side feeds the investment side with data. And that's an ongoing loop. And then we follow up. How did the investment go? We adjust. And then it all goes into the revaluation of curves. So we revisit these curves very gradually. So we do believe that we have a very high level of insight into the performance of all our portfolios, and the investment team has done a fantastic job the last few years to centralize all the data which Fabien was speaking about, so three, four years ago, we didn't have that view. We had a local revaluation of the country managers. They did this themselves, and then the oversight from central, so the checks and controls, so to speak, was not sufficiently strong, and we did it once a year. Now we do it on an ongoing basis, so we are all over this risk, which is a really comforting thing because we don't want to end up in a situation where something unexpected happens. We want it to be really, really predictable, and clearly, the result is the collection performance we are seeing now. So we see really positive and healthy collection performance on an ongoing basis. The last two years, we've been having a collection performance of 105%-107% or so. I think that was it on the risk side. I think we have a break now, right? I think we're a little bit ahead of time. So we'll break for 15 minutes. I'm speaking because Harry doesn't have a mic. So the web hears this as well. And we will revert that, shall we say, at 3:00 P.M.? Yes, that's good. Yeah, very good. Well, thanks so much for listening so far. And we'll be back at 3:00 P.M. Excellent. So welcome back to this second session of Hoist Capital Markets Update. And next, we'll have a Q&A with the country heads at Hoist. Harry, give all of you an introduction. Now I'll get the opportunity to drill down a little bit deeper on your different markets. Let's start with you, Andrea. You're the country head of Italy. That's Hoist's largest market. There's been quite a lot of debate and discussion about, you know, Italy, the credit risk, and the market overall. I mean, with all of your experience from the market, what can you tell us about how it's evolved over the last few years? Yes, it's my pleasure. Good afternoon, everybody. It is a fast-changing market, Italy, likewise most of other markets. The major change, the motor of the changes, is basically the fact that from a very substantial peak of NPLs stocked in the banks and a very high generation of new flows of NPLs, which we have seen in the last years, the peak being more or less in 2015 in Italy, the market has reduced importantly, and so it is interesting because in the last two years, we have seen more or less the bottom of the stock in the banks and NPLs in the banks and the bottom of a new generation of NPLs, and we still managed to grow our book in Italy, taking the opportunities of some structural strengths that we have built over the time in our Italian platform, following a little bit the philosophy, the mindset, and the strategy that the group has in general. First of all, of course, we shifted from the primary market to the secondary market because, of course, the stock has been exited from the banks, but it's not been collected yet, it's somewhere else, and so we did important deals, constant flows of new deals on the secondary markets, which has helped us to keep the pace of growth that we wanted to have, then we benefited, of course, from the fact that some two very large competitors have somehow expired, and the first one has been the GAICs, which has been this instrument, public guarantee deals that have helped the banks to the leverage that somehow amounted to EUR 120 billion of value of the stock, and which, of course, was not an addressable market for us. It expired in 2023, and we see the effect of that. The second powerful competitor that has somehow stopped has been AMCO, publicly owned bad bank that has bought more or less EUR 40 billion of NPLs, and that has finally changed their strategy and stopped purchasing. We benefited from that. We also, more in general, benefited from the fact that the market has become much more granular, so lower, the same, more or less the same amount of deals, but with much lower volumes, which is very good for an investor, sophisticated, industrially prepared to underwrite constantly new portfolios. You have somehow heard the presentation of the investment team, which is centralized, powerful, very well organized. We, in a market like Italy, where we now have a lot of deals, but those smaller amounts, you need to be very efficient to properly underwrite and do due diligence, smaller portfolios, still in a sophisticated way. Not everybody can do that. We are in a position to do that, and so we are in a position to compete also in this market of lower volumes, which is not that obvious and requires to have a certain capacity, and finally, sophistication, I mean, of course, Italy has been and still somehow is the largest European market of NPLs, so everybody has been there. Everybody's still there. It's a very competitive market, which is good because it has somehow trained ourselves to be extremely efficient in a number of selected asset classes, and now that the market has proven to have lower volumes, of course, the competition is very strong, and this requires specialization, and we, hopefully, are extremely focused in a number of selected asset classes. We want to be there, and we are efficient in those asset classes. So in this particular moment, we prove to be profitable in the investment we do, and we are capable to grow. We are at the bottom, and the Italian economy has not changed in its structure. So this bottom cannot but go to the historical average, which is more or less with volumes which are doubled than what we have seen in the last two, three years. And so we expect that the increase of volumes will help us to further grow, but we still have had the possibility, even in these years, to provide a growth and an increase in our profitability, which somehow satisfies ourselves and the targets that we had. Excellent. And maybe just a short follow-up on that, actually. So, I mean, in Italy, some of the largest banks have quite close partners, like you have Intesa, you have UniCredit, which has some devalued background, etc. Has Hoist, to an extent, your pipeline? Not really. Not really, because these long-term agreements that banks have undertaken with specific services are more on the management of the loans. In parallel to that, the banks have continued to sell, to dispose of the assets, and even accelerated somehow the disposal of the assets, having a specialized servicer helping them to build, to improve the dataset. They have found it easier to go on the market and sell the assets. And we somehow benefited from this more professional approach that has helped banks together with their servicer to manage the assets. So I think it has been a positive impact, all in all. Excellent. Thank you. Then I think we can move on to Enok, actually. Hi. The Head of Growth Markets. Yes. I am the Head of Sweden, Belgium, Netherlands, UK, and hopefully other markets coming. Yes. But the growth journey, if you're Head of Growth Markets. Yeah, I think the key point is really this, what was mentioned before about the return on equity being really key in all these things. I mean, we have shifted focus since rejuvenation towards return on equity, and I think that is really the key. And also tying into what Fabien said before about the huge network among other banks, and I mean, they like doing business with us because we're also a bank, then we see a lot of transactions coming in. And given that we also have a very sort of short time to market and going into new markets, when we see something we like from the network or the partners we work with, also servicers, and they come with something, if we like it, it's quite easy for us to just extend and leverage that relationship into going into new markets. But I don't think it is that important which market it is. I mean, for sure, it will be adjacent, but the trigger will be that it will only be when the price is right and we feel that we can make competitive and good enough returns on it. And I mean, historically, Hoist Finance is headquartered in Sweden, but you haven't really been buying portfolios in Sweden until quite recently. What made you take the step in, and how do you see the competitive outlook here in the Swedish market? I think Sweden has been a stable market, almost a little bit boring, right, so you have these hybrids who have been dominating the market, and now, as they're moving into a more capital-light strategy, many of them, suddenly, I think the market structure is changing, so that instead of having these hybrids dominating, you get more clear roles, so you have investors, such as ourselves, you have servicers, and you have sellers, and I think for us, that is really a good thing because we have many, many years of expertise. We understand the asset quality really, really well, so when we are competing against investors who are maybe based in London or in other places, I think that we really have a strong edge to compete, basically. Excellent. And then I think let's move over to you, Miguel. So you joined Hoist in 2019, right? Yep, correct. And in Spain, you've been growing your secured book quite a lot. So maybe you can spend some time on that. And how do you expect that to continue? Do you expect to continue growing the secured book? So as you say, that's a pretty recent development of the group. We entered the market some three or four years ago, not more than that, with major moves even more recently. So it's extremely recent. We've had really encouraging results yet to date. And we believe we are still developing the platform, improving the hand we have, the grasp we have on the processes and the performance. So we, of course, expect to keep improving and become better and become more competitive in the acquisitions that we consider. We, of course, expect also to consider new opportunities for growth and develop that business further. I mean, generally, there's been several players in the industry that struggled in Spain historically, right? What can you tell us about the market? How has that dynamic changed over the last few years? What makes you hopeful about it going forward? The struggling has been more evident in the unsecured space, I would say. The industry has changed. The overall volume is big and stable, and we don't expect it to shrink anyhow. The number of issuers has actually been reduced through mergers of banks that have been really frequent. In the buying side, there has been also some capacity reduction through mergers, but much less so. The reduction of capacity has happened more in the secured servicers who have struggled because of the real estate bubble burst several years ago. Those servicers were created with massive capacity, and once the burst was sort of digested, that capacity was excessive, and they are restructuring gradually, so the unsecured players are the ones who suffered, and also the secured servicers, so for us, it's sort of a thing that benefits us. The trend, the market, the interest rates, of course, favor us, as we explained in the beginning of the day, and Andrea told us a bit about how AMCO has reduced their purchasing in Italy. How has that development been with Sareb in Spain? Sareb is a company we don't really do much business with, precisely because what we explained about the single names. Sareb is a lot about real estate developer loans defaulted. So there is a lot of very high tickets. There is a lot of real estate developments midway. So it's something we don't really go after. Excellent. Let's head over to Mr. in the back there with Makram. I mean, you joined Hoist quite a while ago, right? Yeah, exactly. And in 2012. I think France has been one of those markets that whenever we speak to any company industrial player in Europe on the NPL sector, France has always been, you know, this is the El Dorado where everyone thinks that they'll have all the growth. But we haven't really seen so much disposals from the banks. Could you tell us a bit about what's been holding back so far? Thank you, Ermin. Good afternoon, everyone. I would just start with setting a little bit the stage here by giving you three figures. The first one is that 32% of Europe's NPL stocks sit with French banks. This is to be compared with 2019, where this figure was 21%, meaning that other countries have really worked on decreasing the NPL level, whereas France, we can see that nothing really happened, and as a matter of fact, that takes me to the second figure I want to talk about, is the fact that inflow, the annual inflow that we see is about EUR 3-3.5 billion. This is the figure from 2023, whereas the outflow is, on average, we've seen EUR 2-2.5 billion being sold. Basically, you have around EUR 1 billion piling up on the stock every year. However, 2024 is expected to be a record year in terms of sales, as we expected to close with about EUR 4 billion of NPL being sold. So we can see a little bit of change there. The second point is why do banks behave like that in France. Historically, banks have preferred internalizing the management of their NPL for different reasons. I'll start with the first one being the fact that they always wanted to have control on the customer relationship with the hope to get him back. The second one being that they never were a little bit troubled with their NPL ratio. The NPL ratio in French banks was at about 1.5%-2% maximum. Now we are at about 1.5%. We even have some banks that never sold on the French market. They are still today. They have never sold any NPL, one of them being a big bank, Crédit Mutuel. But that leaves big doors open. So the potential is there. The last point is to finish on a good note is basically that we see that they are facing strong pressure from two elements. The first one being regulation. The regulator is shifting from looking at the NPL ratio in the balance sheet to looking at the stock of NPL and is asking banks to really focus on dealing with the stock they have. So we have the backstop regulation that came in that basically is really putting pressure. The second element is really important as well is the profitability. French banks are suffering from a very high cost to collect, sorry, cost income ratio. The second element is the ROE. When you compare French banks' average ROE, that's a little bit below 8%. When you compare it to average European other banks, it's about 11%. There's a significant lag. If they want to be competitive, they need to actively manage that. Yes, at the moment, there's a massive stock, but we have high hopes that they get in this, the French banks get in this active management and selling those stocks they are sitting on. Excellent. Hoist has been in France since 2001, I believe. Do you think that you're well positioned to benefit from that volume or what makes you believe that you are? Exactly. I mean, we are present since 2001. We've acquired our first portfolio and have been active on the market since then, really working on becoming a trusted partner to this seller. And today, we are working to be capable of addressing this market by first being positioned on all asset classes. As long as the portfolio is granular, we are a partner. Second, we have a strong data set that we've acquired over time. We have good expertise. And we are competitive, including thanks to our funding. So yes, we are a serious buyer in the market, and we plan on being the leader on that market. And last but not least, we have developed also a mixed servicing approach between internal and external capacity to eventually be capable of taking volumes. Great. Thank you, Makram. So we can move over to you, Mihails. So you're the COO of Hoist Finance. And one topic I thought we could discuss was during the year, you've done some IT insourcing. I think you went from like 100 external resources to about 50 internal instead. Could you tell us a bit about what made you take this decision? Thank you, Ermin. Good afternoon, everyone. There are actually a number of reasons why we decided to go this way. First, there was a reason, there was a strong business case actually to do that. Second is that our business model requires agility from IT specifically, so IT follows the business, and we believe that having IT insourced produces that agility for us, which we found difficult to achieve with the outsource model, and the third, last but not least, is that IT, cybersecurity, data, those are the strategic disciplines for us. Those are enablers. To extract more value or maximize the value that you can extract from technology, one way of doing that is to keep technology and these teams closer to the business, sharing the same objectives and same values as the rest of the organization. Those are the key reasons why we actually decided to do the insourcing of IT. Understood. You touched upon it a little bit here that IT is quite a strategic asset. I mean, we heard Fabien before talk about how much you're using data for pricing and everything, so machine learning. Can you tell us a bit more about how you're using machine learning, AI, etc.? Buzzwords, obviously, but super interesting how you can leverage it. I think AI is, we cannot deny it. It's actually entering our day-to-day life, not only personal, but also professional life. At Hoist, it's a different scale of utilization of those technologies. On a smaller scale, we enabled Copilot for all employees who are willing to use it to simplify their daily professional life. On the larger scale, when we acquire portfolios, as an example, we acquire lots of documentation related to the loans with different historical interactions, what happened with the loan, how the originator interacted with the loan holder, etc. And for that, we actually deploy AI models to extract this historical information, but also to improve the data quality and enhance the data set that we are then loading into our collection systems. When it comes to the data, that's our core asset, as I mentioned before. And to support this core asset and to keep it in a good shape, we are finalizing now our transition of our data platform, a central data platform from the old technology into the cloud to support different functions, including investments, including loan management, etc. And that sort of builds a future-proof platform for Hoist, which would enable us to go further. When it comes to AI in terms of communication with the customers or debt holders, here we are dealing with people who are in a distressed situation. And I think AI is not yet there to be able to support people in those situations. And those solutions typically require human-to-human interaction with tailor-made solutions. But the technology platform that we have laid out so far is positioning us very well to absorb those new AI solutions when they will come to the market. Very exciting. Last, but definitely not least, let's head over to you, Sarah. So you're the country manager of Greece. Yes. And I believe you entered the Greek market in 2018 with Hoist. Indeed. And it's a little bit different country compared to the rest for Hoist because that's always been an outsourced market basically for you. Could you tell us a bit more about how that works and how you work with strategic loan management in Greece? So it's a quite dynamic model. It relies on data steering and local market expertise, aiming to maximize efficiency and synergies with the outsourcing partner. Curiosity and continuously challenging our partners in both their performance, but also their ways of working, processes, is driving continuous performance improvement. And I mean, what are the keys to be able to be successful with an outsource model here? Starting from having a clear process on how we select the partners with whom we work and how we constantly review them. Then it's transparency, clear roles and responsibilities between the parties, and a set of common goals with the ones we work. Lastly, as already mentioned, is steering through data-driven decision-making and strong local market expertise, and then maybe lastly, just on the supply of volumes in Greece. I think after GFC, Greece was a very hot market. I think we read a little bit less about it nowadays. What can you tell us about the situation there? Greece is currently shifting to the secondary market. The primary stock has been sold. We are now on the last round of the HAPS scheme, which is a government guarantee scheme, and we expect the market to pick up more on the secondary part in the coming years. Excellent. Thank you very much. I think we'll actually invite Christian up to the stage to start the next session. Thank you all. Thank you. Very good. SDR, specialized debt restructure. This is a recent development in the banking world. It's been one of my key focuses over the last few years to engage with regulators. It's a really interesting process. I was quite unaccustomed to speak with the European regulators, the Swedish FSA. I have been in touch with in my previous jobs quite a lot. I can become quite nerdy around this and talk for hours, but that's not the intent here. I'll try to give you an overview of our interpretation of both the legal text, what it means for us, and also the meetings that we've had with the European Banking Authority, the Commission, the Parliament, and clearly the Swedish FSA in this process since we understood that this is coming. So this section is designed to give you the regulatory context behind this development. It's also to explain the backstop rules. It's not that evident to many people. It's a complex banking lingo that we would like to try to simplify. And then also outline the current impact and what it means for us, this regulation at this point. The SDR criteria, there's a number of criteria that needs to be met to qualify. And then that impact, what does these criteria have on what kind of impact does it have on us? I'll put it together, try to put it together in a summary in the end. Regulatory context. I think following the banking crisis, a new area of regulatory development was introduced. The two key regulatory objectives in my mind would be financial stability and also protecting the taxpayers and the depositors from unhealthy or banking failures. What they did was to raise capital levels. Regulation around capital. They made sure that the liquidity was there. LCR is the regulatory measure. A lot of short-term capital to meet short-term outflows from depositors, stability of long-term funding, and then also transparency in reporting. These four are the cornerstones in the banking regulation. Also in this crisis in 2008, 2009, there was a large buildup of NPLs, which continued then later in what was then called the PIGS crisis. That then amounted to the peak in 2015 that Andrea was referring to before. As part of this buildup, there was a number of legacies in the banking sector, so zombie banks that didn't deal with the NPLs as forcefully as the regulators wanted it to. That means from a societal point of view that the banks were unable to finance our societies in up and down terms because they were so focused on dealing with a bad balance sheet. There was a growing need to deal with all of these NPL problems. The European regulators started an action plan to deal with this issue. They were clearly, as anyone I would think, starting from the top. What are the key priorities? Healthy banking sector. That's what the regulation started with in what came about in 2019. So, forward-looking credit losses, IFRS 9, prudential backstop, which will I come back and explain, creating NPL markets that were more deep and liquid, the prudential backstop. And the most important thing for us in this was creating liquid NPL markets and forcing the banks to sell. That's really positive for us, which supports our investment business. And then the challenge that we had to deal with was the prudential backstop, clearly. The principle behind the prudential backstop is that the longer exposure has been non-performing, the lower likelihood that you will get back a high amount. So that's the whole principle why they've done it like this. I come back to what it means in practical terms. In short term, the backstop is very easy. So it's a set timetable when you have to put aside capital to cover your losses, basically. Just as a reference, the backstop is applicable for all claims issued after April 2019. Everything before then is not hit by this, and it's also clearly just applicable to banks or bank-regulated entities. I think it's important to say that we fully support this. This is completely in line with our objective, what we try to do as a firm, and basically, it ties very well to our purposes: support the healthy banking sector and then help the consumers back to the financial system. The next step for the regulators was to create a better-functioning NPL market, so high liquidity, the right market participants, and during COVID, I don't know if you followed the industry that closely, so you knew that the regulators issued another action plan, and that was in trying to see the implications of COVID. They were very worried that there would be a massive buildup of NPLs, so as part of that report, they wanted to establish a new segment of the NPL market. They were calling it removing impediments for bank restructurers, and this is what then led eventually to the SDR, and I think in our interpretation, the specialized debt restructurers are seen as stable and very productive participants in the NPL markets, so it's adding to the buy-side with attractively financed companies that can help the banks, so offering them everything else equal, higher pricing for the NPL portfolios, and then a stability to that industry as well, to that market better, so it's improving market functionality and then increasing the competitiveness of this market, and if you go to the next page, we will see how the prudential backstop works. We've touched on how an NPL works, what drives the level of money that you can expect to get back. It's basically the type of claim and the age of the claim. So secured, it's very likely that you will get more back because it's a guarantee or a house behind it normally. So we invest in resi mortgages. And then if it's unsecured, it's less. And then with age, it's less probability that you will get a higher amount back. And this is exactly what this does. So unsecured, if you haven't dealt with an unsecured claim that you've been facing as a bank as an NPL, then after four years, you need to write it off completely. You have no choice. It's a regulatory standard. It's a set schedule. They force the banks to do this. And it's designed to encourage selling it to a specialist like Hoist Finance. Same thing for secured. However, that's more complex. It takes much more longer time because you have a security behind it. And it's also a slightly more complex regulation in that one. But for us, that has very limited impact for us, if any, at this point. So this is in a nutshell what the prudential backstop is: a set time for the banks to write off their NPL claims. So they need to provide or write down these NPLs over this period. And this page is designed to show two things. One, how the required minimum loss coverage works. So that's what you need to set aside in this prudential backstop. And also to give a view and the impact of how much this impacts Hoist today. So when we buy, this is the current Q2 book. So it's not the same numbers as before because the previous number in a similar chart was since inception of Hoist. This is the current book. So currently, we have more or less SEK 400 billion on our balance sheet in original claims, gross book value. This is not the book value. This is the book value that you recognize if you've seen the last quarterly report, so SEK 27 billion. That means that, again, around 90% purchase price discount on what they issued, credit risk materialized, completely different asset. And then when you look at the required minimum loss coverage, you need to deal with two things. So if it's a sold NPL, you can use this as your write-down or loss coverage, so to speak. So this discount can provide for that. It's allowed to do that, which is very logical, right? So because the risk is gone. So this is part of the minimum loss coverage. And then also what we haven't, all of this is not backstop clearly impacted claims. So part of this is backstop, and that's provided for in the discount when we buy things. And then as older and older our books become, and as older the portfolios after 2019, then more of the book, more of the portfolios that we see in Europe will be backstop impacted. Because now it's 2024, so it's gone five years since these claims started to be issued in April 2019. So the cycle is that issued, then becoming an impaired credit, becoming an NPL, and that's where the clock starts for this four years for unsecured. And then that clearly impacts. So if we would not become an SDR and we would just buy NPLs, they would in five years most likely all be under the prudential backstop regime. And then this would be equally sized as this in the end, right? So because it just builds up. However, until this date, we have very limited impact of the backstop. And that's the key reason why we haven't rolled out earlier solutions for the backstop. So we have other solutions than becoming an SDR. So a few years ago, we've issued a securitization, which is a significant risk transfer. We will continue to do that, but more as a strategic product. You can do co-investments to deal with the prudential backstop. However, if you look at all the solutions that are available to us, then the SDR solution is absolutely the most attractive. So both on RE level, and so the returns are higher if we apply this status. The size, we don't need to share the investment with the external investor. So we will be larger, and we will get all of the returns. So in every level, return, absolute size, the capital we will throw up because of that is better in an SDR world for Hoist Finance. And then just to state the obvious, the SDR is one thing, basically. It's an exemption to the prudential backstop. So that's very simply what it is. And you need to meet a number of criteria, which is on this page. These are supposed to be ticks. It's in the presentation. It's a green tick. So meaning that we have these six criteria. And first one, main activity being NPL acquisition and management. So the banking-regulated entity needs to be focused on this. So the regulators do not want larger banks to be able to circumvent the prudential backstop because then they can structurally get around it, push it into a daughter company or whatever it may be. They were very clear that this is something that is not something they are pursuing. So it needs to be really focused on being a bank debt SDR. And then for the same reason, they put a 15% cap on owned originated loans. So these specialized banks are not supposed to lend money to the public or to companies to any larger extent. So when we become an SDR, we can, of the total assets, have 15% of own lending to private persons to refinance NPLs or to co-investment partners. We can finance those to a certain degree, but it's limited to 15%. And then 5% purchase of NPLs qualifies for forbearance measures of the purchased NPLs. So the forbearance measure is simply put a change of the key terms of the contract. So if somebody comes into a difficulty in a debt situation, if you change the interest rate levels, if you extend the maturity, if you write it off, you change any material things in that contract with the bank, then it's under forbearance. And this clearly is, we tick this as well. I mean, this is our core thing that we do. We talk with our consumers. We try to make it work for them. The key is clearly the ability to pay back. If that's on average around slightly less than 20%, then basically the large majority of our claims is this. So we tick that one as well. Total assets, they don't want too many large, so they don't want too large SDRs. They don't want to build in the risk of an SDR becoming so large as it's a risk to the system. This is EUR 20 billion. We're not there yet. Ideally, we will get there at some point, but it's not over the next few years. Currently, we have a book of the total assets around SEK 30 billion or so, roughly. We're quite far from that in SEK. And then the ongoing NSFR, so net stable funding ratio, this is the long-term stable funding. This is what the banking sector put in, or the regulators put in place to ensure that the long-term funding is in place for the banks. This is normally 100%. They hiked this to 130%. This is something that will impact us. I'll come back to that on the next page. Sight deposit should be less than 5% of total liabilities. In our case, we don't have any sight deposits, so that's not a consideration for us. We have savings accounts and savings offerings. This is more into transaction accounts connected with debit cards, that sort of thing. That would be the typical sight deposit. What does this mean that we need to? The only thing that we need to develop now is an NSFR of 130%. We said this in the Q2 report that after the board decided that we would aim to meet all of the criteria, including this, we would start to increase liquidity to meet this. This was the Q2 actuals. We had an NSFR of 121%. This was its last 12 months leading up to Q2. It was 115%, so it was slightly higher than normal. If you would look at having a slight buffer to the 130%, so let's say 135%. This is illustrative. Just to put that in context, we're going through always a yearly ICLAP process, so internal assessment, how much liquidity and capital, the risks around those, and that then guides our risk appetite, the limits, etc. We still haven't done that work with the board. We'll do that over the next month and a half to see the internal limits, how much risk appetite do we want or not to the 130% limit. We used illustrative here, 135%. Then it's expansion with the same size of this is supposed to be as a typo. This is the same NPL portfolio. Then the total assets would grow 16%. The liquidity portfolio would go from SEK 11 billion to SEK 15 billion. This clearly comes with some cost. The funding plan to fulfill this is now during the second half of this year. As I mentioned, we're in the market starting now and taking mandate for a senior unsecured bond or two bonds. The way we see it is that we will have give or take 80% deposits that will fulfill this new criteria for us and then 20% market funding. That will, as I mentioned, of all the alternatives long term, this is by far the most attractive. If you would take a non-backstop world and compare it, then this would add more or less SEK 65 million per year and then SEK 20 million in 2024. That's a very small part of our overall funding cost. It is a really efficient way to deal with this and becoming an SDR. The increased liquidity buffer will draw some capital. It's very limited because it's very high quality paper. As I mentioned before in the liquidity portfolio risk, we will maintain high quality, highly liquid, so sovereign bonds, municipals, that sort of papers in this portfolio. Just to repeat what I said in the Q2 report as well. So what we've said about RE and the full year outlook that we're given on that include this cost of SDR. So we've always said that starting the year with that we plan and expect to hit our RE target for the year. And that remains the case. And it's always been including this cost because we've had it on our radar. So summarizing, this status, regulatory status is in level one text. So it's regulatory in there. So it's not a directive which needs to be implemented into local law. It's across European law. It's there to design and stimulate the NPL markets overall. The regulators want to make sure that we have a really liquid and deep NPL markets. It's an exemption from the prudential backstop, as I mentioned. For us, if you look at the more conceptual level, it enables us to focus on what we do best, meaning helping the banks and then in the longer term, helping the consumers going back to the financial system. We don't have any distractions once we become an SDR. We can focus clearly on that. That gives us a simplified business model, having securitizations, more complex structures that draws resources. It costs us. We need to share profits with an external investor. If you have an external investor, they want to be part of the decision-making in one way or the other, either by frameworks or by having a say on each investment, which is very complex. It lengthens the processes, etc., etc., so we have a much simpler business in an SDR world, and we're also fully independent, and we've said this now since Q2 that we plan to qualify as an SDR by the 1st of January 2025, and we're in good progress to meet the 130 NSFR requirement, which is the final outstanding requirement that we need to fulfill, so I think just to summarize, I think we see this as a real recognition of the model of specialized debt restructurers such as Hoist Finance from the regulators' point of view. So the way we interpret them is that they see the real value of these players being part of the NPL markets. It's the same high regulatory framework. They want to keep that. So all the consumers stay within a banking-regulated framework. They really like that. They also like the fact that it's cheaper funding. So it can provide a competitive pricing to the banks. They don't need to, everything else being equal, write off as much on these NPL portfolios. So in summary, once we become an SDR, we will not be hit by the prudential backstop, and we will have a much more simple and full independence to focus on our core purpose, which is a really, really productive place to be. Excellent. Thank you very much, Christian. Yeah, we seem to be continuing to be ahead of time. Now it's half an hour. So we did push a lot on don't run over time. This has clearly worked. I think we have about 10% or maybe 12% overperformance on time management at the moment. So hopefully you will have had the chance to listen in now on what we do, what our philosophy is, what our strategy is, business models. We've tried to take you into the nitty-gritty of the WALs and the net money multiple and the IRRs and the ROI and so on. But in the end, of course, it will come down to measuring the financials. But before we go there, we want to become the leading. We are a leading asset manager of NPL portfolios today. We aim to become the leading in Europe. And so as we've called people, invited people to this session, etc., one of the comments has been, "We've missed the race." We are at the beginning of the journey still. And it has been a journey. If we look at where Hoist was a couple of years ago, 2021, I guess it was loss-making. So then this program, change program started, the one we've called a rejuvenation program in two phases. One 2021 to 2023, basically fix the machine, get the collection performance up either by improving it through operational excellence or outsourcing to somebody who potentially does it better for specific segments, etc. Really, really granular, go through the full portfolio segment by segment, understand where we are good, where we are less good, what we can do about it, initiate action plans, etc. Now, during this time, we also sold the UK business in 2022, which gave us a lot of capital. Now, moving then into the next phase, which we are in now, is the profitable growth, and back then, we set the target to double the book from where we were then, which was SEK 18 billion, so we set the target of SEK 36 billion, but this is, of course, not some sort of an end state target. This is a first stage target that we want to reach, and we want to reach it profitably. This is not a volume game where we just want to bring in volumes of NPLs just to have a large book. We need to do it profitably. I hope that what you have seen here now, how we work with the investments, how we follow up on the investments, how we work with the funding, our treasury team, everyone, every day around the group, we can see that profitability, of course, has gone up significantly. An enormous job done there. On a capital markets day, sometimes you change financial targets. There will be no such excitement here today. We have our financial targets. We keep them. Profitability and return. We want a return on equity exceeding 15%. This is because we believe this is the minimum return for investing in the asset classes that we are in. In terms of the capital structure, we said we want to be well capitalized. We need to be steady above the regulatory limits, so 2.3-3.3 percentage points above regulatory limits. In terms of growth, deliver an EPS, earnings per share growth of 15% per year, and then comes the one I need to read very, very explicitly, the dividend policy, so over time, over the long term, we want to be a company that divvies out money to shareholders. When that happens and to which amount is something that the board will decide at the end of each year, and it will be communicated in the Q4 report. How are we then doing? Well, I see we got the ticks, no question marks. That's good. That's very good, so on the return on equity, 15%. I think 2022, we had a 17% ROE, but if you look at where it was coming from, 4% ROE came from this organic business, from the underlying business, and 13% came with one-off items as selling the U.K. at a premium. Fantastic deal, fantastic work, but not something we can do every year. Last year, we've seen, we didn't reach 17. We had much less one-off activities. We sold part of our book in France, the unsecured part, but the organic business improved. Now, looking at where we are today, yes, we still sold a segment in Italy. We sold a segment in Germany. We keep doing these things wherever it is profitable. What we see now is that the returns are now coming from the real underlying business, and this is something we expect to continue. On the capitalization, it looks fairly steady. We're investing seven, eight, nine billion per year, and our CET1 ratio is very much very steady. It's basically because the portfolios with the returns, with the new investment strategy, with the returns that we get from the portfolios, they generate capital roughly at the speed at the moment at which we can deploy it. This can vary between quarters and quarters. If we have a really successful investment quarter or sourcing quarter, then that will fluctuate. But in general, they throw off a lot of capital, these portfolios. Looking then at the EPS, well, 15% growth. It should be very clear here that this 8.8 is not any guidance from the Hoist team here. This is projection-based, and it's the average of the research we have on the share right now, so analyst recommendations or analyst research. But looking at where we are half year here, so 5.3 SEK per share, which should we reach the analyst projections would correspond then to a 57% CAGR. What was set in this strategic review, the way we are working with it is reflecting also in the financial numbers. The dividend policy, I should say, remains unchanged. We are even more ahead of time. Summary. First of all, thank you all very, very much for coming here. We will still have Q&A, and there, that's what we've done. We've saved more time for all questions you could have. This was fully intentional. Now, like we said, the 36 billion target, etc., on book is not an end goal. We are at the beginning of our journey. Why do we believe we can win or we will win in this industry? We have the lowest funding cost. You've heard it a couple of times today in the industry. We know how to manage it. If interest rates go down, our funding cost will go down immediately on the deposits. If interest rates go up, we will still have the lowest funding cost. We have a very healthy balance sheet. It is simple. It is healthy. SEK 27 billion portfolio, SEK 11 billion liquidity buffer on the asset side. On the liability side, SEK 23 billion of deposits, SEK 9 billion market funding, SEK 6 billion equity. Clean. Very few intangibles and things like that because we would have to hold capital against it. So we are also incentivized not to have those kinds of things. Data. Now, everyone will say that they have data, but you need to have well-managed data. We have a significant data pool from all the right markets, all the big markets in Europe that stretches back 25 years. We are putting that now into the cloud, which basically will be in computing power, will be virtually unlimited. I guess you have to pay for the processing power. And the crunching tools, etc., that we have is a real strength. Certainly, when we compare to other peers who might have similar funding advantages we have, very few of them have this. Strong team. I hope you've now met most of them today. I hope we've been able to convince you that these are the people that are going to take over the industry or that are going to become leaders in this industry. And the steering of how this business, that we steer on return on equity, income, cost, capital consumption, you need to track all three regardless where you are in the organization. That we believe is a winning formula there. And then we had a very clear regulatory status, or we have one already today. With the SDR, we think it's going to be cemented further. We will become sort of we will get the recognition that what we do is absolutely important for the financial banking, for the European banking system and the financial system overall. So this is us. Now, thank you very, very much for listening and for those of you who are on the web as well. Now it's actually time, half an hour early, for Q&A. And I would ask Christian to come up on stage as well. Perfect. Do we have a Q&A? So actually, if you have any questions here in the room, just raise your hand and we'll give the word. And then if you're listening in on the webcast and you want to ask any questions, just send them through. They'll pop up here on the tablet. So I'll take liberty to start, of course, given that I'm up here and I already have the word. So I mean, the financial targets, it sounds like it's quite a clear message that the ROE is the most important one and EPS growth, book growth is all secondary. Is that the way we should see it? Well, I think you should see it as ROE is our leading target internally, which is 100% aligned with the outside world and the investors. And the book growth and the other targets actually also contribute to the ROE. They're not sort of exclusive. Just to give a slight perspective as well to add on to what Harry just said. I think starting with the ROE was really logical because we want to have, as Harry alluded to this. We want to have a really strong business that we scale. So clearly fixing the ROE was a first priority. And then we want to keep this well-functioning machine and grow it. So yes, priority number one was to fix it. And then clearly now we are growing and I think we're proving that we're on track with the page that Fabien and Lars, or Harry was showing as well. Excellent then. And another of the financial targets is the capitalization, right? And now we even have the board in the room because otherwise you will just say that it's a board question. For how long will you be overcapitalized or what are you saving the capital for? First priority is always going to be profitable growth. So as long as we see portfolios that we believe will generate higher returns for the shareholders, that's what we will deploy the money for. The other items you can ask the board at the AGM because this is not that type of session. I think just to add to that as well, I think, as I hope Fabien was showing, we believe it is a really, really strong investment market. So we are investing at really attractive returns. And you saw it there with the IRR that's up, I don't know if it was 60% the last two or three years. So it's really healthy returns we're investing in it. So it's a market where some demand has come out and supply is steadily growing or is already there. So we believe that we're putting the money to work in a really productive way. Is there any way to give an indication for when you think you're within that target range? I referred back to Harry's answer. I will refer back to my previous answer. It will be communicated in due course. Sure. Let's see. Robert? Yeah. In terms of attracting higher ops, several of your peers have had some issues with accessing funding. When they do access, it's been quite expensive in recent years, months. Rates are coming down and one is also going to happen. What's the outlook sort of on investing that you mentioned? Yeah, if you can just repeat the question so everyone on the webcast can hear it as well. Okay. The question was whether, well, as rates are coming down, how will that affect our competitiveness? Basically, our competitors should then get lower rates. Yeah. I think, yes, new issuances as they come down will become cheaper. On the other hand, the average funding cost, right? So most of the people who are bond financed, they have issued in 2018, 2018, 2019, 2020, 2021, etc., at significantly lower levels. So as each one of those matures and gets replaced with new funding from today, we don't really see that that's going to benefit, right? The average funding cost in a situation like that. So we believe that we will continue to have an advantage for quite some time. I think as the rates go down, we will see it almost immediately on a big share of the deposit side, right? So I think we will also benefit significantly from that. And you could see, I mean, if we look backwards, which is easier to relate to, two years ago, we were basically at the same comparative status. So we were, give or take, half of the rest of the industry's funding cost. And then rates came up and there were some issues around balance sheets in the sector clearly. And as people are working through this phase, they are bringing in partners to use their sourcing networks. So capitalites, meaning you need to source the capital elsewhere. We see that financial investors are coming in. They are traditionally much more financially disciplined. So we believe that even in a rate environment which is going down, so built on the dynamic that Harry was saying that you need to replace the old cheap funding, and it's not easy to beat that by a margin. On the contrary, it's probably around the same or higher, even in a declining interest rate market. And then on top of more financial discipline when people price because there were more disciplined investors, financial investors. So I think we have good hope that when we look in the crystal ball, that prices will remain really attractive for the foreseeable future. And we will continue to have a really strong competitive advantage because of our model and funding. [crosstalk] I can just complement that. Thank you. Yeah. If you look at long time series, you see that the interest rate on savings accounts is always lower than the bond rates in all environments. So it's always going to be a delta. And then you can say, yeah, but the others, can't they become a bank too? Yeah, they could. But not if you're a hybrid and you have a big service business. You can't. So in a high interest rate environment, our relative advantage is higher than in a low interest rate environment. However, when the rate goes up, as Christian said, it kicks in immediately for us because the savings accounts have short duration. So we are hurt faster than our competitors, which have longer bonds. So even if the rate now starts to go down, the average interest rate, as the guys say, will increase for a while. But then, of course, in the very long term, it will go down for them as well. However, there is always going to be a big gap between savings interest rates and bond interest rates. Excellent. And we have another question here. Karl, please. Yeah, we can repeat the question. Thinking on your financial targets, your EPS targets grow 50% plus, I guess. You grow your book faster. Then you're buying back shares, which maybe will be canceled. In your sort of operating leverage in your P&L, shouldn't your EPS be, let's say, 20% plus? [audio distortion] Yes. Just to repeat the question first. So this was a question from the audience around recording financial targets, in particular the EPS growth 15% plus. Given that the book is growing faster and we have been repurchasing shares, and on top of it, the operating leverage that will then increase or increasingly support when we grow the book, then shouldn't we have a higher target on EPS growth? And I think we are coming from a position in 2020 and 2021 where we lost money. The first step was this to restore things and make sure that we are meeting the current target. If things change, which they are changing quite a lot, then the board needs to take a view with, okay, do we see the market? Do we see share repurchased? How do we think about dividends? It's a package, I would say, that we will need to come back to decide. There is operating leverage in the P&L, yes? Yes. It's huge operating leverage in the P&L. The external financial goals we have, there is no goal to grow the book. It's an ambition, like Harry said, to go from 18 to 36 because we think it's really meaningful and possible to do as a step. That's not one of the external goals. I agree with you. If we should have a growth goal on the book, the earnings per share target got to be higher. So when we grow from 18 to 36, the income and the direct cost will grow. The indirect costs will be flattish. So that is a huge operating leverage in reality. So yeah. I think do we have a question on the left? Rickard, did you have a question? Thank you. Regarding your rating, which you do not have a formal target on, but you have earlier at least communicated the importance of being investment grade rated. Does this change anything with your SDR license? I could guess that an even higher rating might support the funding cost and hence also make it less costly to have the extra liquidity. You have no mic. We'll give this one to Christian. So we have a positive outlook today. So we are invested in grade rating. So we will maintain this investment grade rating and we have a positive outlook. And as I mentioned, we have ticked the boxes, we believe, for a potential upgrade. So this is the base case. And then becoming an SDR, we believe that the regulation is making us even more stable given the NSFR of 130%, which drives a larger liquidity portfolio. So we will basically be running the NPL business and then we will have a large liquidity portfolio to manage in a conservative fashion. So I think from our point of view, it's a less risky balance sheet, clearly. And that's the purpose from the regulators. And then if that translates into a rating upgrade or not, and then that needs to be a discussion with Moody's and we don't know exactly how they view it currently. I would also say that if we will get a rating upgrade, that will support our continued growth through this doubling the book as well. Because in Europe, we have both SEC and Euro bonds issued currently, so we want to be diversified. In a growth scenario, it's not unlikely that we would also go to Euro markets in the future. In that case, with an upgrade, we have a higher or a larger pool of investors potentially looking at our issuance. I think it comes together and SDR supports our credit story in a very productive way. Welcome back to the room in just a minute. Questions from the webcast as well. One is, what is your stance towards consolidation in the industry? Several of your peers are trading around half book value. That's the stance. The stance on consolidation because several peers are trading at half of book value. I think we believe there will be consolidation in the industry. We are, of course, interested in being part of that where we see a good case. It's simple as that, but is that an attractive venue for you given that you already see a quite good supply of buying directly? Is it just an unnecessary risk to do M&A? No, I think with an M&A, you get completely different risks on top of sort of, let's say, the portfolio risk, so in any such situation, we would look at it just like we look at a portfolio investment, and the price would have to be right, which might not make us the most attractive M&A partner to many of the players. Then another question is, if you could maybe describe a bit more on the dataset on historical cash flows from an NPL portfolio you receive when you're submitting an offer in an auction, as opposed to just kind of what datasets you get in an underwriting process from a seller? Sure. I mean, the answer is it depends, but typically we try to get as much as we can. So everything from the GBV, so the amount of the debt, whether it's title and non-title, whether there's a collateral, a description of the collateral when there is one, the time since the first unpaid, the date of default, we have the history of collections as well, the type of products, and I can go on and on for half an hour, but it's typically very large datasets that we have to handle. It's typically thousand and hundreds of thousands of lines sometimes that we analyze all at once. And maybe just staying on that question, actually, there's been proposals and there's been this template that sellers are supposed to fill in. Is that good or bad for Hoist? Does that take away anything of your time? No, it's very good. We comply ourselves with those templates because, I mean, we mentioned we are divesting and we are a bank, so we have the same regulation. So typically, when we sell a portfolio ourselves, we comply with this template. When it comes to the banks, I have to say it's a little bit slow to get there, but they're getting there more and more. So we see more and more banks adhering to the template provided by the EBA. Excellent. Then, I think we had some more questions here if we take a look at maybe. [audio distortion]. Thank you. Question to Christian and Harry. You showed there the overcollection that has improved in particular over the last two years. And you also mentioned that you have an ambition to maintain it at current levels. What type of sort of visibility do you have for the coming quarters or years in that sense? And also, what are the main factors that impact this? I think that's part of the revaluation process, etc., that Christian was talking about. Yeah, no, I think if you do, when we do our statistical analysis of our portfolios and how that translates into key drivers, the absolutely strongest correlation we have is to the health of the book. So if we manage the book in a prudent way, which we are absolutely doing, which I hope was clear before, that is the clearest guidance to future performance. In that case, we can take closure of legal systems, for example, without getting into major issues like happened during COVID. We can deal with ups and downs in the economic cycle without issues. And to be frank, I mean, when we do our regulatory process around capital assessment, liquidity assessment, the correlation between, for example, economic growth, unemployment, etc., in an economy is not a significant driver of our own performance. So it comes back to the health of the book. So as long as we are prudent and have a conservative view, which we intend to continue with because we think it's really value-creating to be a stable, predictable company, then we have a good hope that this type of collection performance will continue. We had another question here. Isak. Thank you. So I was wondering what you would do in another pricing war in this environment, as you're saying you're in a comfortable spot, but I was wondering what would happen if competitors were starting to put pressure on pricing in your investments. Would you scale down, or would you start eating from your own book, or would you try to find other geographies, etc.? Thank you. I think, first of all, if the industry would choose to go back to where it was before, it would not be good for anyone. But let's say that happens. Then we, with our operational structure, would be able to. We will not be forced to feed the machine. So this is the expression basically where you have a large, large cost base and you need to buy, and maybe you then make less economically sound decisions. So we would not. We would keep our discipline and we would adapt the cost base for that. And also, I think to add to that, I think Andrea's perspective on the Italian market is a really strong one. It's been a low-volume environment, highly competitive. And given we have been so focused on improving our business and operations, I mean, everything across the group, then we've been really successful in that sort of environment as well. And then on top of it, as Harry said, we are diversified, so we can invest much less in one market while investing more in another where we see a better support for pricing, etc., returns. I suppose on that topic, a follow-up. Having more outsourced collections, you're able to tackle those fluctuations more than if you have a big collection unit yourselves. I think currently you're at about 40% outsourced. Where do you see that in five years? Is that something you want to increase the proportion of even more? We don't have a target for outsourced collections. Where we have a steady flow of portfolios coming, we'd love to keep an internal unit where we see that if the supply would disappear, etc., then we would make a new, well, we would make a new decision at that point based on how we would project the future from that point. So we don't have any, like I said before, there's no dogma around this topic. This is a business decision on a case-by-case basis. Okay. We have one more question down in the room. Far away mic. Thank you. A question on banking regulations. So sort of you might say ask the regulator, but I'll try asking you. The NSFR threshold of 130%. So what's the reasoning behind that? I understand all the other criteria, but that one, if you could give some color on that in your words. I think the conceptual answer is very easy. The regulators want stability, so they don't want to build any risk into the system. And then that said, if you go into the technicalities of it, then it's slightly more. We don't see the internal consistency in this. I think the way we look at ourselves, the NSFR ratio, now it becomes quite technical, but the NSFR ratio is depending on different required stable funding factors. And for an NPL, it's 100%. That means that for every euro of NPL, you need to have a euro of stable funding. So it is 100%. And that is disregarding this chart that I showed before, if it's a de-risked or not de-risked NPL. So we don't think that the liquidity regulation is fully internally consistent with the, because it's called an NPL, it's 100% disregarding. And if you then add on 30% on an FSR percentage points, then you make that even larger, that incongruence. So I think, I mean, I think it's a conceptual objective that they put into the criteria more than a technically fully thought-through criteria possibly. And staying on the SDR, we have a question from the webcast here as well. So could you expand on why you said the debt purchasers with servicing operations can't become an SDR? Servicing. If you're a debt purchaser and you have a servicing operation, why can't you be an SDR? I think the starting point to even consider to become an SDR is that you need to be bank regulated. Otherwise, you are exempted from nothing, basically. So if you're not a bank regulated, you don't need to be exempted from the prudential backstop because it's not applicable to you. So, however, if you're a servicer that deals with a lot of other people's NPL debts and you invest and you're a bank, I actually don't know of anyone currently that does that. But it's, well, if you take the current servicers, that's a very fragmented industry structure. Barriers to entry are low. That's why you have many players and that's why the servicing industry, debt collection industry in Europe today is characterized by overcapacity. However, there are forces driving towards a consolidation. Regulation, information, technology, etc., drives towards scale advantages and growth. So if you want to future-proof your service business, you likely want to take part of the consolidation, become larger, there will be fewer players that are larger. It will very likely be a consolidation. If you're a bank, you cannot participate in that consolidation because debt collection services businesses, that's P&L businesses. If you're going to acquire another service business, it's likely that that service business you want to acquire has a very small balance sheet, but it has some kind of earnings generating capacity. You're going to pay goodwill. But if you're a bank, you cannot take on goodwill because that has to be written off completely. It's very unlikely that service companies will continue to do servicing and at the same time become a bank. That kind of doesn't go together. It's more likely, I would suggest, that what we will see now going forward is more of you will see players that will actually become service-heavy capital light, participate in the consolidation, small balance sheet, acquiring machines, a lot of information technology, writing scripts smarter and smarter, etc. That's one strategy way to go. The other one is capital-heavy, which is our strategy. And there it's more the investment funds that we compete. They are also capital-heavy. They could become a bank theoretically. It's just that if you think about it, the investment funds, where does the money come from? It comes from pension funds to investment funds. And then they're supposed to generate a spectacular return, right? So they ask these days for 20% return on equity. Then they can have a gearing or maybe 60% and cost of debt of around now 9%-10%. So 60% times 9%-10%, and then for the remaining weight, 20% cost of equity. That's a very high total cost of capital. But yes, they could turn that around and become a bank. But that's a very long term. And also, if you have other activities in your investment fund, you may not want to be an SDR for all of that business activity since you need to hold an enormous amount of liquidity where you're not going to get the return. So does that go together with the whole business model of the investment funds as we see them today? I'm not sure of that either. So by and large, the answer is likely that the service businesses, they will remain and become even more of a service business, and they will not become a bank and not become an SDR. Should also say that SDR is great for us, but we take on an enormous cost to run a bank. It would take someone that is not a credit market institution to build up the capability that, for example, Hoist has. That's a multi-year, highly costly journey to make until you have reached. So, for example, if you have SEK 5 billion- SEK 10 billion in a month, which smaller investment organizations can have, that's not enough to become an SDR. You need scale. So yeah, that's a few thoughts on that theme. Excellent. Perfect. And then maybe on the regulatory horizon, we've seen quite a few regulations that are looking to improve kind of customer protection. It's been everything from the Consumer Credit Directive. We've seen some introductions of statute barred debt in some countries. How do you see that impacting your collectibility on portfolios? Is that any risk? I think we are supportive of that regulation. I think everything that has come into the NPL Directive is something that we, as a credit market company or a banking-regulated entity, have lived with for a long time. And statute barred, etc., is not part of our investment strategy anyway. So I think we are fully supportive of that regulation. And we believe, if anything, that it's, I mean, the more of that we see, that it's an advantage for us, comparative advantage for us. Do we have more questions in the room? No, it doesn't seem like it. So maybe just if we could talk a little bit about the outlook for new NPL formation. You talked a little bit about stage two loans. Generally, is it possible to quantify how much new NPL formation you have every year in the banking system? Well, I think we see we have a slide on that, actually. It's probably one of the first slides. But no, we see now that the NPL ratios are going up. To put a specific number on it, right, is very difficult. But we see basically growing now by 5% from the levels we are at today. So just that would be then 400 billion times, that would be 8 billion, right? No, no, that would be 20 billion. Exactly right. So 20 billion per year is what we see forming now. Now, is this trend over? This looks a little bit steep, right? But is this trend over now? Difficult to say. What we can see is that many of the banks completely, in certain markets, we should say, completely froze new lending. And of course, then you only have the stock to deal with. That new lending has started again, which is most likely why we are seeing the uptick also on the NPL. So your best guess, if we would just extrapolate this one, five years, is the stock smaller, bigger, the same? Certainly the generation, I would assume, would grow in line with new credit being issued, basically. With regards just to new investments, could you talk a little bit about where in Europe you see the best opportunities currently? Which geographies are the most active and most attractive returns? Not sure we want to talk about that, but we have six country managers here raising their hands. No, I think what we see is an increasingly attractive market in principle in every country. Everything has its cycles. There's become a very interesting situation in the Nordics, a little bit like Enok was talking about before, that from being dominated by a few players who are now shifting strategies, there is a lot of dynamic there, and then let's see what materializes, but that's certainly an interesting area. And we have the French situation where there is, right, where we see that things are coming out to market now out of this large French stock. And we are, of course, very happy to participate in those processes. But we also saw with Miguel in Spain, the secured NPLs, so the mortgage NPLs, etc., keep coming out with an increasing regularity at the moment. And all the signs that we can see on the real estate market, etc., and so on are positive. So that's an attractive area for us, right? And I could go on and on country by country here, but it's widespread, right? But it's not the same recipe everywhere. In Spain, it might be Resi mortgages. In the Nordics, maybe it's unsecured, etc. And that's sort of the real importance with this strategic filter that Fabien showed in this funnel, right? That there we need to make the right calls, right, based on the massive pile of portfolios that come in before the strategic filter, right? So if we see that something is changing, right, that asset classes are growing in certain markets, etc., then we will take a look at it. Maybe a question on this chart, actually. So going from 27 up to 36, do you expect that that will be with your bread and butter just investments that you do every quarter, or is that going to take a couple of really large investments as well? I think on average, our investments have gone bigger. So I think we used to have an average investment of about EUR 11-12 million. Now it's EUR 20-22 million, right? So we are buying larger portfolios on average, and we are buying them in more places. I think this first stage goal of 36, which is not an external financial goal, is achievable with organic activity. We are not planning in any large one-offs in that. Perfect. Did we have a question? Yeah? Yes, a bit long question. Thank you. A bit long question on the growth prospects in the secondary market. How do you expect that to develop from here? There's a lot of things happening both among your competitors, but also in the funds, the investment funds. Do you expect the growth from the secondary market to accelerate from this point, be flat or decelerate? What do you see? It's difficult to say. There's been a lot of movement already in the secondary market. And as I mean, we have certainly taken part of that. Well, this year, we've bought quite a lot from the secondary market and also last year. I think that sort of links to the consolidation, right? As players start shifting strategies, maybe collaborating with investment funds or capital-light collaborating with capital-heavy, etc., or if two capital-heavies want to or hybrids want to merge, which I think will be difficult. But there are so many different strategies that is being worked on out in the secondary market that it's difficult to say what's going to happen on the peer side. But with the dynamic of the big AMCO, for instance, in Italy that Andrea was talking about, so this is a government organization that has bought enormous amounts of NPLs over the years. Now, when they stop buying, it will have to be divested at some stage, right? You can service for a while, but in the end, it's going to be divested. Similar with the GACS and the HAPS, etc., right? Where we see it's already ongoing, right? They're selling pieces of the portfolio in those securitization vehicles. So we think the level there is absolutely sufficient for Hoist at the moment. Whether it will accelerate or not is difficult to say. But it's a lot of NPLs that need to find a home in the next few years. And I think you talked about during the presentation that about 50% of your ERC has been invested from 2022 and onwards. Is that a risk, or how long time does it have to pass from acquiring a portfolio until you can be quite certain about how it's going to perform? Fabien or Christian? A s I said, after six, nine months, we have a pretty good view about how a portfolio is performing. And I think Christian mentioned that the early overperformance is the best indicator of future overperformance. The same goes for underperformance. It's a statistical business. You see how much you convert. You see how many files you convert into salary seizures or amicable agreement or if you can repossess the collaterals quite quickly. So I'd say six to nine months after you onboard a portfolio, you typically have a very good view about how you will perform long term. Then thinking about your collections generally, what can you do from here to further improve collections? Did you expect to see kind of collection performance to improve further apart from just the market? I think probably we should give this question to one of the country managers. But I think right now we have hundreds of initiatives still ongoing. We had a program earlier in Germany. We sold a little piece of the book, etc., right? A segment that we identified that there are other specialists out in the market that are much better at handling that than us and therefore see higher value. I think those kind of things, I mean, we're still in the middle of that program, and we're constantly looking market by market, right? Because it is a competitive business. We need to be really, really strong in operations, and with the data that we're building up and with the teams we are building up, we are becoming much stronger at the strategical loan management part where we will be able to observe why this is not performing as that one, etc., although it's the same asset class, etc., right, so those kind of initiatives are continuously ongoing and they will not stop. And I think just to add to that, I mean, a cultural perspective. I think both this management team and the organization overall is very curious. So they want to improve. And that's clearly an ongoing drive that is very, very strong with the individuals that we hire and that this is also very much encouraged. So I certainly think, I mean, we cannot pinpoint everything, but people continue to improve in all areas, I would say. So if we're thinking about your cost base, you usually talk about it kind of direct cost, indirect cost. I saw you had some on it in the appendix. How should we expect those to scale going forward in, say, percentage of the book value or something like that? I think large picture, right? It is like Lars basically said, right? The income will grow with the growth of the book. The direct costs will grow with the growth of the book. I don't think we have them on this presentation, actually. We do. We do. I've been looking already. Yeah, yeah. Well, big picture, right? So then the income and the direct costs will basically grow with the growth of the book, whereas the indirect cost, which is a significant cost, will be flatter growth, right? And I think that's what we can expect going forward. Yes, absolutely. The big trend is there. And the indirect cost, it is a central, very scalable cost base. So that's around a billion. And we have invested in really strategic capabilities in that. So we have insourced IT. We've strengthened the investment team significantly, more people, more skilled people, etc. And then on the direct cost, we have, like Miguel was alluding to, but what Miguel has been leading in Spain, we have built new businesses. So while we have the direct cost growing with the book, we have invested a lot into the direct cost as well. So that will also gain scale. So we hope we're working very hard to get scalability in that direct cost as well, clearly. But there's been a lot of investment in that side as well to build the new businesses, entering new markets, etc., etc. Would you say those investments have been kind of exceptional, or is that kind of running basis? You'll always have those kind of initiatives running? I think if we look at the direct cost, right, that contains sort of action costs as well, right? So it's people, it's legal costs, etc., and so on. There, I think there we have increased the share of legal cost, right? We have increased the share of debts that go to the legal route, which of course means that we have spent a lot of money on the legal side at the moment, and as we grow that, obviously collections will come later, but as we grow that, you could consider that sort of one-off, but eventually that will stabilize in a ratio, right? But at the moment, we have sort of, if you do a year-by-year comparison, it looks like we're increasing that a lot, but it is basically on the back book, right? I think just to add on that, the strategic journey we've been on the last few years has entailed a lot of changes, so building new businesses and changing businesses, etc. So while we will always continue to do that, there's been a lot in the past that we have done. So the pace of change has been incredibly high the last few years. So that pace will now turn more into growing the book than to change the underlying processes and operating model. I mean, we've set that. We have a model that is yielding the returns we want. Now we want to scale it. So it's less of change of the structure, more growing the existing one. Do we have any final questions in the room? No. Then I'll end with one of my own. So we've heard about the financial targets, how you're kind of steering the company. Could you talk a little bit about how you're incentivizing everyone, kind of what targets are the critical ones for your LTIP, for your incentive programs for the country managers and top management? Yes, we can talk a little bit about that. It is simple. It's return on equity is the bonus base for everybody in here and below. We are a bank, so we live by that regulation. We need to have a share of the incentive programs based on non-financial KPIs. We do that. That's 20% of the incentive programs. On top of that, we have issued, or we have the board has launched this share investment program, which has gone to all P&L owners in the company, and which is there to align interest between management and shareholders to an even greater extent than before. And these are the programs we have on that level. Very clear. That's all questions I have. So I don't know if you have any final remarks, but thank you for me. No, well, just a huge thank you for the interest you have shown in Hoist Finance this afternoon. Really great questions. I hope we've been able to explain how we as a company work. If there are any unclarities or if there is anything else you would want to know about Hoist Finance, don't hesitate to contact us. And with that, thank you all very, very much. Thank you.