Hoist Finance (HOFI) CMD 2024 summary

Strategic direction and business model

• Shifted to a data-driven, low-risk, capital-heavy NPL management model since 2021, focusing on granular, diversified portfolios and avoiding single risk exposures.

• Focused on becoming the leading European asset manager of non-performing unsecured and secured consumer loan portfolios, targeting SEK 36bn in portfolio value by end of 2026, with a banking-regulated NPL asset manager model.

• Emphasizes return on equity (ROE) as the primary performance metric, aligning all management incentives and investment decisions to a 15%+ ROE target.

• Operates as a regulated bank, leveraging stable, low-cost deposit funding (70–75%) and investment-grade market funding to maintain industry-leading funding costs.

• Maintains a diversified portfolio across asset classes and geographies, with 28% secured and 72% unsecured NPLs, and 38% internalized vs. 62% externalized management.

Market outlook and growth plans

• Targeting to double the NPL portfolio from SEK 18 billion in 2021 to SEK 36 billion by 2026, with organic growth across core European markets and no reliance on large one-off deals.

• Sees robust supply in both primary and secondary NPL markets, with EUR 370–400 billion in addressable stock and increasing opportunities as banks offload NPLs due to regulatory pressure.

• Actively expanding in secured NPLs, especially residential real estate and SME-backed portfolios, now representing 28% of the book and half of new investments.

• Diversified geographic presence in 11 markets, with local teams and data-driven underwriting supporting flexible allocation of resources and risk management.

• Expects continued market consolidation and is open to M&A if pricing and risk are attractive, but prioritizes organic, profitable growth.

Financial performance and risk management

• Achieved significant improvement in profitability, with ROE rising from near zero to above 15%, and EPS growth projected at 15%+ per year.

• CET1 ratio target is 2.3-3.3 percentage points above regulatory requirements, with capital generated by portfolio returns matching deployment pace.

• Funding is primarily deposit-based (73%), providing a stable, low-cost, and diversified funding structure across Europe.

• Hoist Finance is the only investment-grade rated issuer in the NPL industry, with the lowest weighted average cost of debt among peers (4.4%).

• Risk management is highly centralized, with ongoing portfolio revaluations, feedback loops, and a focus on early identification of underperforming assets.