Hoist Finance: Paying Less for Money While the Rest of Europe Pays More

A self-described 'nuts and bolts' Q3 still printed a 21.2% ROE and a funding cost cut to 3.21% — the contrarian trade hiding inside a rising-rate tape.

HOFI.ST · Earnings Call · 2026-10-23

A delivery quarter that quietly beat its own new bar

Hoist Finance does not talk like a bank, and this quarter it did not behave like one either. Against a global keyword board dominated by tariff refunds, Fed rate hikes and data-centre physics, Europe's NPL consolidator spent its hour on plumbing: funding cost, NSFR efficiency, direct cost and collection performance. That vocabulary is the tell. This is a balance-sheet machine, not a macro narrator, and in Q3 the machine ran well. Profit before tax of SEK 503m against SEK 349m a year earlier is 44% growth, or 47% once you strip SEK 10m of indirect-cost noise. Net profit rose 35% to SEK 384m and earnings per share to SEK 4.5. Return on equity came in at 21.2% versus 17.6% — above the 20% floor management set at its September Capital Markets Day, which matters more than the headline, because a newly published target is a promise and a first-quarter test of it is news. Harry Vranjes was careful to lower the temperature: “the third quarter has been, let's say, more of a nuts and bolts quarter compared to the blowout we had in Q2 when it comes to the headline numbers” — Harry Vranjes, CEO · 2026-10-23. Fair. Investments were SEK 1.6bn versus SEK 6.1bn in Q2. But the portfolio still reached SEK 40bn, up 27%, on SEK 9.7bn invested year-to-date plus roughly SEK 1bn signed after the quarter. Collections of SEK 3bn were a Q3 record, delivered at 103% of forecast — the same 103% as last year, achieved while onboarding an acquisition.

The one genuine outlier: funding costs falling in a rising-rate world

The most interesting number on the call was not a profit line. It was 3.21%. “We see further improvement of our funding cost to a great 3.21%, driven by similar or slightly lower costs for our deposits and a continuously improved pricing in the bond market” — Magnus Söderlund, CFO · 2026-10-23. Read that against the week's other reporters. Regional banks spent their calls on deposit beta, rising rate environment pressure and floating rate loans repricing. Hoist went the other way. The mechanism is duration. Management has been extending deposit maturities — the average is now about 1.2 years — so a rate rise hits the deposit book with a lag, while the wholesale side and the SEK 27bn liquidity reserve reprice immediately. The reserve earns more; the bonds cost a bit more; the deposit base stays put. Vranjes framed the environment bluntly: “we see a bit of stress in the system with interest rate inflation and sovereign debt fears. In this environment, we are actually strengthening our funding cost” — Harry Vranjes, CEO · 2026-10-23.

If the market is rational and interest rates go up, that should mean that portfolio prices will go down. The funding for the competition has gone up, basically. People should be bidding a little bit lower for new portfolios... We don't fear interest rate changes at Hoist.
Harry Vranjes, CEO · 2026-10-23

That is a real structural argument, not a talking point — and it is testable. If rates rise and Hoist's bid discipline holds, its relative cost of capital improves against levered rivals. If rates rise and portfolio prices do not fall because sellers are patient, the thesis weakens. Watch the accretive returns claim on the next two prints.

Secondary market: an option management keeps pushing into 2027

On portfolio sourcing, the honest answer was that Q3, like Q2, was almost entirely primary market. The interesting part is the forward look. “What we see now is that that activity on the secondary market is picking up again... we expect will materialize during 2027” — Harry Vranjes, CEO · 2026-10-23. Funds and industrials are, in his words, looking over their positions. Note the timing discipline: the secondary market revival is repeatedly dated to 2027, not Q4. That is either prudent or a hedge. It also sits next to rising increased competition in the Nordics, which management answers with breadth: “we are able to deploy capital in 15 different markets in secured, unsecured, in consumer, in SME” — Harry Vranjes, CEO · 2026-10-23. Optionality is the moat; the risk is that 15 markets means 15 places to be selectively aggressive at once.

The loose thread: cost-to-collect

Direct costs rose 39% to SEK 629m from SEK 451m, well above the 24% FX-adjusted book value growth, and the cost-to-collect ratio jumped to 21% from 17.2% in Q2. Management's explanation is coherent — about SEK 90m of Azzurro, of which roughly SEK 35m is front-loaded legal investment and SEK 17m third-party servicing, plus the seasonal Q3 collection trough and the absence of Q2's SEK 180m of interim payments. “This is mainly driven by increased legal expenses” — Magnus Söderlund, CFO · 2026-10-23. Indirect costs, the part management controls cleanly, grew 2% adjusted despite SEK 20m of new Azzurro spend. Total cost-to-income still improved to 63.8% from 66.8%. That is a good quarter dressed as a boring one. But legal investment is a discretionary lever that flatters future collections and penalises today's ratio — investors should expect the ratio to stay elevated while the Azzurro book is worked.

Bottom line

Hoist is a SEK 15.7bn-market-cap specialist whose story this quarter is not growth (investments were light) but the quality of its liabilities: a funding cost at 3.21%, NSFR at 138% against a ~140% target, CET1 at 12.9%, and a Polish zloty deposit platform launching in Q1 2027 to broaden the mix. A company that can cut its cost of money while the continent debates terminal rates has an edge that compounds quietly. The absence of any tariff, AI or Middle East language — themes that dominated this week's global keyword board — is itself the signal: this is an idiosyncratic, bottom-up credit story, and the tape has not been asked to vote on it yet. The thing to watch is not the ROE. It is whether the 2027 secondary-market wave and the falling funding cost both show up on schedule, because the market is currently paying Hoist for the second and only hoping for the first.