Year-end report 2016
October – December 2016
- Gross cash collections on acquired loan portfolios increased 7 per cent to SEK 1,105m (1,032).
- Total revenue increased 8 per cent to SEK 672m (621).
- Reported EBIT was SEK 242m (211) and the EBIT margin was 36 per cent (34).
- Profit before tax totalled SEK 155m (132).
- Portfolio acquisitions totalled SEK 1,568m (1,451).
- Basic earnings per share were SEK 1.41 (1.32). Diluted earnings per share were SEK 1.38 SEK (1.29).
Figures in parentheses refer to Q4 2015.
31 December 2016
- Carrying value on acquired loan portfolios totalled SEK 12,658m (11,279).
- Gross 120-month ERC (Estimated Remaining Collections) totalled SEK 21,375m (19,367).
- Total capital ratio improved to 16.76 per cent (15.21).
- CET1 capital ratio was 12.46 per cent (12.32).
- Proposed dividend per share of SEK 1.30 (0.75).
Figures in parentheses refer to 31 December 2015.
Events during the quarter
- Hoist Finance issued EUR 30m of Additional Tier 1 capital to further optimise its capital structure.
- Launch of the HoistSpar app, making it easier and more convenient for customers to monitor their savings.
- Larger forward flow agreements entered. The agreements cover a range of predetermined volumes in 2017.
Statement by the CEO
Strong fourth quarter marking the end of a successful year
We have now closed 2016 and Hoist Finance can look back on another successful and profitable year, during which we have continued to strive towards our vision – a leading debt restructuring partner to international banks and financial institutions.
During the year we continued to operate in line with our strategy, gradually strengthening our market presence. Several key milestones on our growth journey were achieved during the year, amongst others our entry into the Spanish market, our strategic partnership with the Bank of Greece, and the establishment of our EMTN programme to diversify and broaden our funding base.
Operating profit (EBIT) increased 39 per cent and profit before tax increased 87 per cent compared to full year 2015.
Major portfolio acquisitions and strong earnings during Q4
The fourth quarter showed strong development. Year-on-year, operating profit (EBIT) increased 14 per cent and profit before tax increased 18 per cent. Portfolio acquisitions totalled SEK 1,568 million during Q4, seasonally the strongest quarter for investments. We acquired portfolios for a total value of SEK 3,329 million during the year, in line with investments made during the three preceding years. We continue to consistently invest in accordance with our profitability requirements, with acquisitions at long-term sustainable levels in terms of both profitability and risk. This also enables the generation of stable, predictable and profitable growth for our shareholders going forward.
Strengthened positions on a regional level
In Region West Europe, an increased focus on the integration of the 2015 Compello acquisition produced results. The region’s EBIT, EBIT margin and return on book improved steadily during the year. The establishment of operations in Spain during the second quarter is already starting to have a positive impact on earnings.
Region Mid ended the year with major portfolio acquisitions, which included a strengthening of our position in small- and medium-sized enterprise (SME) loans through the acquisition of an SME portfolio from Banco Popolare in Italy. A portfolio was also acquired in Italy from one of Europe’s largest consumer banks, the third transaction in which the seller chose Hoist Finance as partner. These acquisitions strengthen our position and broaden our expertise and capacity beyond the consumer segment.
In Region Central East, focus during the year was on optimising operations. Several improvement initiatives have resulted in a maintained operating margin as compared with the same period last year, despite lower acquisition activity. A service contract was also terminated during the autumn, with resources reallocated to our core business.
Outlook for 2017
Looking to next year, we see a continuation of favourable market conditions. Growth is driven by the movement of several markets towards greater market maturity, with NPL sales becoming an increasingly integrated part of the financial ecosystem.
Continued regulatory pressure and profitability problems for banks are also strong drivers for market growth. By selling NPLs, banks can lower their costs, clear their balance sheets and, not least, focus on their core business.
Our partners are to an increasing extent looking for well-known, highly respected purchasers who meet all regulatory requirements and who have a documentd track record of treating customers fairly and respectfully. With our status as a regulated financial institution, our high ethical standards for customer relations, our strong financial position and our geographic presence, we are well positioned for future growth opportunities.
We will continue our efforts to strengthen our position as a leading partner to international banks and financial institutions in Europe. This includes actively evaluating opportunities to enter new geographic markets and, in a disciplined way, continuing to increase our presence in other asset classes such as secured loans and SME loans.
In late 2016 a forward flow agreement was signed for portfolio acquisitions in 2017 valued at SEK 800 million. Along with the strong start to 2017 and the healthy market growth we see ahead of us, this reinforces our ambition to reach our targets.
Hoist Finance AB (publ)
Hoist Finance AB (publ) (the “Company” or the “Parent”) is the parent company of the Hoist Finance group of companies (“Hoist Finance”). The Company’s wholly owned subsidiary, Hoist Kredit AB (publ) (“Hoist Kredit”) is a regulated credit market company. Hence, Hoist Finance produces financial statements in accordance with the Swedish Annual Accounts Act for Credit Institutions and Securities Companies. In order to assess the operational performance of the debt purchasing and collection operations and to facilitate comparison with our competitors, Hoist Finance supplements its statutory financial statements with an operating income statement. The operating income statement is prepared based on the accounting and valuation principles used in the statutory financial statements, with no amendments or adjustments thereto.
The information in this interim report is such that Hoist Finance is obligated to publish under the EU Market Abuse Regulation and the Swedish Securities Market Act. This information was submitted for publication on 9 February 2017 at 8:00 AM CET.