Q2 2018 Helping people keep their commitments 1 AGENDA 1 - - PowerPoint PPT Presentation

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Q2

2018

Presentation August 2018

Helping people keep their commitments

AGENDA

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Financial update Summary and key take-aways Introduction and key highlights Q2 2018

Hoist Finance plays an important role in the financial ecosystem

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Credit is at the center of a well-functioning economy… …Hoist Finance is the trusted partner to banks and customers that closes the loop when commitments are not fulfilled

Payments Acquisition Hoist Finance Bank Higher rate

• f economic

growth Increased income Increased consump- tion Larger household income Customers/ borrowers Non- performing loans Customers/ borrowers More job

• ppor-

tunities

1 2 3 4 5 6 7 8 9 10 2017 2020E Consumer unsecured Consumer secured SME unsecured SME secured

Three trends currently shaping our industry

4 1 Source Company market study

European NPL deal value1 EUR billion, CAGR growth % Consolidation curve Market share of top 5 players (%)

Maturity Growth Introduction

+11% p.a.

Growing market Consolidation Market maturation

0% 50% 100%

Greece France Belgium Germany Poland Spain UK Germany Spain Europe UK Italy The Netherlands

Our position

Diversified funding base Capital market funding Focus and specialisation Complexity and diversification Regulated Unregulated

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~1,2%

0,0% 2,0% 4,0% 6,0% 8,0% 10,0%

Hoist Finance has the lowest cost of funding among the peer group

Weighted average cost of debt (WACD)

Note: Numbers latest disclosed by the peers. Hoist Finance numbers exclude AT1. Hoist Finance adjusted for IACs Source: Company reports, Bloomberg

Peer 1 Peer 3 Peer 2 Peer 4

3.2x 3.6x 5.2x 4.1x 3.4x

Net debt / LTM adjusted EBITDA

Peer 5 Peer 6 Peer 7 Peer 8

2.0x 4.0x 3.9x 4.0x

Listed peers Privately-owned peers Bubble size represents ERC

24% 84% (51%) (14%) 46%

Net debt / Tangible equity

98% (4%) (31%) 23%

Peer 1 Peer 2 Peer 3 Peer 4 Peer 5 Peer 6 Peer 7 Peer 8 0.0% 1.0% 2.0% 3.0% 4.0% 5.0% 6.0% 7.0% 8.0% 9.0% 10.0% 1.5x 2.0x 2.5x 3.0x 3.5x 4.0x 4.5x 5.0x 5.5x 6.0x WACD Net debt / LTM adjusted EBITDA

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Today our gap in operational efficiency is compensated by low funding costs, giving us a big potential to outperform by improving operations

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Earnings before tax margin (including interest expense)

21% Hoist Finance 2017 Funding cost advantage vs. peers Gap in operational efficiency vs. peers Peer average 22%

Cornerstones of our strategy aiming to increase operational efficiency

Unique funding Market leadership One Hoist Finance Financial Institutions Digital leader

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Knowledge driven

• Clear focus on prioritised markets to leverage

benefits of scale and reduce complexity

• Expansion into new asset classes for profitable

growth

• Effective and efficient operating model
• Banking licence is a competitive advantage

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Strategy – current status of key initiatives

Knowledge driven Unique funding

✓

Focused and at scale in priority markets capturing 80%

• f European transaction volumes

✓

Continue to build out capabilities to price and assess

• pportunities in new asset classes

✓

Expand services to meet the full spectrum of client needs

✓

Specialized leader in FI originated debt

✓

Continue to build out capabilities to price and assess opportunities in new asset classes

✓

Expand deposit offering

✓

Maintain Baa3 rating

✓

Highest level of ethics and regulatory compliance

✓

Simplified operating model with fewer layers and strong functional responsibility

✓

Implementing revised legal structure and converting subsidiaries to branches

✓

Consolidation of Germany and the UK

✓

Process initiated to establish shared services in low cost jurisdiction

✓

First steps to identify savings through procurement

✓

Cloud based diallers in all jurisdictions

✓

Centre of expertise in big data/machine learning

✓

End-to-end service self-service and omni-channel support

✓

Harmonised core collection platform

✓

Improved segmentation, customer “personas” and scorecards Market leadership Financial Institutions Digital leader One Hoist Finance

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✓

Unified data model and standardised KPI’s

✓

Centre of expertise in core collection strategies and campaign management

✓

Standardised best practise systems

✓

Standardised core processes

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Initial review indicates 150 - 200 MSEK or more in cost savings during the next three years taking the C/I-ratio below 70%

Unique funding Market leadership One Hoist Finance Financial Institutions Digital leader

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Knowledge driven

Over the next three years achieve

• Cost savings and cost avoidance of

at least 150 – 200 MSEK

• C/I-ratio below 70%

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Q2 2018 Highlights

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Financial performance

• Total operating income excl. i.a.c +9% YoY
• Profit before tax excl i.a.c. 165 MSEK
• Return on Equity excl. i.a.c 15%
• Collection performance of 103%

Outlook

• Strong transaction market growth
• Stabilised front book returns
• Decisions taken on long and short term initiatives to increase
• perational efficiency

15%

Return on equity excl i.a.c. Q2 2018

Growth

• Portfolio acquisitions +198% YoY
• LTM portfolio growth +37%
• Strong expansion in new asset classes

165

Profit before tax excl i.a.c Q2 2018, MSEK

+198%

Portfolio acquisitions, YoY

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Financial update

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Financial summary

Ratios Q2 2018 Q2 2017 Change pp

Return on Equity, % 12% 10% 2 pp Cost/Income ratio, % 79% 81%

• 2 pp

EBIT-margin, % 30% 35%

• 5 pp
• Net operating income

− Portfolio growth contribution

• Total expenses impacted by 24

MSEK in items affecting comparability

• Strong portfolio acquisition

concentrated to end of the quarter

Volumes, SEKbn Q2 2018 Q4 2017 Change, %

Carrying value on acquired loan portfolios 17,8 15,0 18% ERC (120-month) 25,7 24,0 7%

SEK million Q2 2018 Q2 2017 Change, %

Net interest income 592 559 n/a Net operating income 648 530 22% Total operating expenses 529 442 20% Net operating profit 119 88 35% Profit from participations in joint ventures 22 16 38% Profit before tax 141 104 36%

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76% 71% 81% 70% 83% 74% 79% 75% 71% 72% 70% 75% 74% 75% 50% 60% 70% 80% 90% 100% FY 2016 2017 Q1 2017 Q2 2017 Q3 2017 Q4 2018 Q1 2018 Q2

Operational efficiency

Cost/Income ratio, %

• Increased capabilities in other

asset classes

• Advisory costs
• Cost mitigating efforts in

progress

− Site consolidation − Project portfolio review SEK million Q2 2018 Q2 2017 Change, %

Personnel expenses

• 212
• 171

24% Collection costs

• 167
• 157

6% Administrative expenses

• 135
• 100

35% Depreciation and amortisation

• 15
• 14

7% Total operating expenses

• 529
• 442

20%

C/I-ratio C/I-ratio excl i.a.c.

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Financial summary segments

29% 27% 13% 16% 14% 1% 26% 30% 14% 13% 17% 33% 38% 9% 8% 12%

Acquired loan portfolios, SEKbn Net operating income, SEKm Profit before tax, SEKm

1 2 3

SEK 648m SEK 141m

Country Q2 2018 Q2 2017 Change (%) UK 158 134 18% Italy 176 130 35% Germany 85 91

• 7%

Poland 76 72 6% Other segments 104 84 24% Central functions and eliminations 49 19 158% Total 648 530 22% Country Q2 2018 Q2 2017 Change (%) UK 66 47 40% Italy 76 50 52% Germany 19 32

• 41%

Poland 17 44

• 61%

Other segments 25 1 >100% Central functions and eliminations

• 62
• 70

11% Total 141 104 36%

SEK 17,8bn

Country Q2 2018 Q2 2017 Change (%) UK 5,099 4,056 26% Italy 4,823 3,032 59% Germany 2,269 1,917 18% Poland 2,848 1,519 87% Other segments 2,492 2,313 8% Central functions 232 242

• 4%

Total 17,176 13,079 36%

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Funding and funding costs

Key takeaways

• Established commercial paper

program

• AT1-issue and buy-back
• Deposits in euro, 22 per cent of

total deposits

• Interest expenses/book value

well below 2%

0,0% 0,2% 0,4% 0,6% 0,8% 1,0% 1,2% 1,4% 1,6% 1,8% 2,0% 5 10 15 20 25 Q3-16 Q4-16 Q1-17 Q2-17 Q3 -17 Q4 -17 Q1-18 Q2-18 Deposits Senior unsecured debt Subordinated liabilities Commercial Paper Average cost of funding, %

Funding excluding equity and AT1-capital, SEKbn

1,72% 1,16% 2,3% 2,2% 2,1% 2,2% 1,9% 1,7% 1,5% 1,4%

SEKbn %

Interest expense/ Book value

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Capitalisation, % Capital ratios, % Liquidity reserve

Capital and liquidity ratios

7,9% 11,1% 3,3%

Regulatory capital requirement Margin above capital requirement CET1-ratio

11,7% 13,6% 17,7% 11,1% 14,2% 18,0%

Common Equity Tier 1 capital ratio Tier 1 capital ratio Total capital ratio

31 Dec 2017 30 Jun 2018

CET1-Target

6 800 7 440 31 Dec 2017 30 Jun 2018

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Summary and key take aways

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Summary and key take aways

Strong growth and continued expansion into newer asset classes Further diversification of funding base and strenghtening

• f Tier1 capital

Several initiatives launched to increase operational efficiency

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Carrying value Q2 2018, SEKbn

+37%

Portfolio growth LTM

11,13%

Q2 2018 CET1-ratio

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Appendix

Adjusted EBITDA

Adjusted EBITDA reconciliation

SEK million Q2 2018 Q2 2017 Full year 2017 Net profit for the period 103 77 453 + income taxes 38 27 128 +/- net result from financial transactions 8 48 50 + interest expense 79 85 305

• interest income

(excl. interest from run-off performing portfolio)

• 3

3 14 + portfolio revaluations

• 11

+/- impairment gains and losses

• 49

+ depreciation and amortisation 15 14 56 EBITDA 191 254 995 + amortisation on run-off portfolio 3 11 + amortisation on acquired loan portfolios 553 2,244 + gross cash collections on acquired loan portfolios 1,395

• Interest income on acquired loan portfolios
• 672

Adjusted EBITDA 914 810 3,250

Adjusted EBITDA, excl i.a.c. development

SEK million

878 764 922 829 947

• 100

100 300 500 700 900 1100 1300 1500 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018

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Sweden 84% United States 6% Norway 3% Denmark 2% France 1% Other 4%

The share

Share price development since IPO - March 25, 2015, to June 30, 2018

% Swedbank Robur Funds 9.7 Carve Capital AB 9.7 Zeres Capital 8.6 Handelsbanken Funds 8.5 Didner & Gerge Funds 6.2 Jörgen Olsson private and company 4.1 Danske Invest Funds 3.4 Svenskt Näringsliv 2.8 Holberg 2.7 Carnegie Funds 2.7

Geographical Split

Jun 30, 2018

+12,9% +4,4%

March 25, 2015 2016

HOFI OMXSPI

2017

Largest shareholders (2018-06-30)

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Investor Relations

Most recent stock recommendations Date Institution Recommendation TP 2018-07-30 Nordea Buy SEK 91 2018-07-30 Carnegie Buy SEK 83

4 1 Buy Hold Sell

Analyst coverage Institution Analyst Carnegie Viktor Lindeberg Citi Investment Research Owen Jones Morgan Stanley Anil Sharma Nordea Markets Ermin Keric Pareto Securities Vegard Toverud

Recommendations

• Nordea Small & Mid Cap Seminar,

Stockholm 16 August

• Carnegie Small & Mid Cap Seminar,

Stockholm 5 September

• Jefferies’ 2018 Specialty Finance Summit,

London, 19 September

• NPL meeting, Venice, 28 September

Selected Investor Relations events in 2018

For more information: Web: ir.hoistfinance.com/en Head of Investor Relations: Michel Fischier michel.fischier@hoistfinance.com +46 (0)8 55 51 77 19 @MichelTW1

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This is Hoist Finance

Pan-European debt restructuring partner licensed and supervised by the SFSA Focus on acquisition and management

• f bank-originated

non-performing loans Solid business model with over 20 years experience Scalable business model delivering strong financial returns The Hoist Way

• 1. Contact
• 2. Open Dialogue
• 3. Agreement

Helping people keep their commitments

*Excluding items affecting comparability amounting to 118 MSEK.

SEK million 2017 2016 Change Total revenue 2 811 2 627 +7% EBT* 699 533 +31% Return on Equity*, % 19 17 +2 pp

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Helping people keep their commitments Our mission – Your trust

VISION MISSION VALUES

TRUST– Transparency, Results, Uniqueness, Skills and Teamwork

POSITION

Hoist Finance is a trusted partner to financial institutions

Our Mission – Your Trust