Release Date: August 22, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Unsecured collections were 11% above the forecasted curve, indicating strong performance.
- REO sales achieved a 4% margin over book value, showcasing profitable transactions.
- The amended RCF will reduce the cost of funding, improving financial efficiency.
- The company has a solid financial position with low leverage and good liquidity.
- Cash EBITDA was strong at NOK1.3 billion for the quarter, significantly up from last year.
Negative Points
- Total collections are lower compared to last year due to limited new investments in secured NPLs.
- Secured cash collections are down compared to last year, indicating a decline in this segment.
- Higher legal collection costs are anticipated with increased investments, impacting operational expenses.
- The sale of loan receivable assets in Poland will have a smaller negative impact on other revenue in the coming quarters.
- The company has been cautious with investments due to higher interest rates, potentially limiting growth opportunities.
Q & A Highlights
Q: You have a very strong financial position and mentioned targeting higher dividends in 2024 compared to 2023. Is this something you aim to continue into 2025 and 2026?
A: Yes, we aim to increase the nominal amount of dividends over the years to come. We see dividends as a good source of payout to our shareholders.
Q: Can you be more precise on which regions you see the most investment activity and highest profitability?
A: We focus our investments in our unsecured markets, which include more than 10 markets. This allows us to be flexible and competitive. We have seen very favorable returns and expect to be more competitive going forward as interest rates and margins improve.
Q: Can you elaborate on the low investment levels currently and the guidance for significantly higher numbers?
A: We have been disciplined and cautious due to higher interest rates and margins. We expect to drive investments within our target range of NOK2.5 billion to NOK3 billion annually, leveraging improved cost of funding.
Q: After the portfolio sale in Poland, how are you tracking against your targets of reducing the number of active markets? Should we expect similar transactions going forward?
A: We are still contemplating reductions in countries with low activity. We are concentrating our investments in around 12 countries at this point.
Q: Given your strong collection performance, at what point would you consider revising your active forecast and making positive evaluations to book?
A: We consider this every month and quarter. We need to observe clear trends over multiple quarters before making any notable changes.
Q: What is the comfortable leverage ratio given your ambitions for higher investments?
A: We aim to keep a low leverage going forward. Currently, we are at 1.7, which is on the low end. A comfortable level would be between 2 and 2.5 in the short run.
Q: Will the proceeds from the Polish sale be reinvested in the business to increase other income or in portfolios to boost portfolio income?
A: The proceeds will most likely be invested to increase NPL revenue, not other revenue.
Q: Should we expect the margin to expand given the legal costs and running costs trends?
A: This quarter's cash margin was unusually high. We expect it to return to around 70%. Legal collection costs have been high but should come down in the coming periods.
Q: Did I hear correctly that you target NOK2.5 billion to NOK3 billion in investments this year and NOK3 billion annually going forward?
A: Yes, our target is to reach NOK2.5 billion to NOK3 billion this year. If we see more interesting opportunities at the beginning of 2025, we will wait for those. Our clear target is to increase investments in the second half of this year.
Q: How will the termination of the SFA in Q3 contribute to funding for Q3 and Q4 2024?
A: It will not contribute much in the next quarter, but on an annual basis, it should account for around 20% of our NOK200 million target.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
