Note 3 – Segment reporting

Segment reporting has been prepared based on the manner in which executive management monitors operations. From 2021, Hoist Finance established a new operating model with three business lines in order to reflect the Company’s business model. Comparative figures for 2020 have been restated to reflect the new business lines. 

» The Unsecured business line is end-to-end responsible for the unsecured NPL business. Unsecured drives the transformation from analogue to digital debt resolution and works with national markets and other business lines to maintain Hoist Finance’s position as the digital leader in our industry. Unsecured also includes the contact centre services provided for unsecured NPLs.

» The Secured business line is end-to-end responsible for the secured NPL business. This includes collections, customer contact centre and collateral management.

» The Performing business line is responsible for all of Hoist Finance’s performing loan portfolios.
The business lines’ income statements follow the statutory account preparation for the Group’s income statement for Total operating income, with the exception of interest expense. Interest expense is included in Net interest income in Total operating income and is allocated to the business lines based on acquired loan portfolio assets in relation to a fixed internal monthly interest rate for each portfolio. The difference between the external interest expense and internal funding cost is reported in Group items.

Total operating expenses also follow the statutory account preparation for the Group’s income statement, but are distributed between direct and indirect expenses. Direct expenses are expenses directly attributable to the business lines, while indirect expenses are expenses from central and support functions that are related to the business lines.
Group items pertains to revenue and expenses for the Group’s corporate financial transactions, expenses for deposits from the public, and other operating expenses.
With respect to the balance sheet, only acquired loan portfolios are monitored. Other assets and liabilities are not monitored on a segment-by-segment basis. 

1) Direct expenses are expenses directly attributable to the Business line. Indirect expenses are expenses related to support functions.
2) See Definitions.

1) Direct expenses are expenses directly attributable to the Business line. Indirect expenses are expenses related to support functions.
2) See Definitions.

Geographical information

Geographical information follows statutory account preparation, with the exception of internal funding. The internal funding cost is included in net interest income and allocated to the segments based on acquired loan portfolio assets in relation to a fixed internal monthly interest rate for each portfolio. The difference between the external financing cost and the internal funding cost is reported in Central Function. This Central Functions item pertains to the net income for intra-group financial transactions. Group costs for central and supporting functions are not allocated to the operating segments but are reported as Central Functions. With respect to the balance sheet, only acquired loan portfolios are monitored. Other assets and liabilities are not monitored on a segment-by-segment basis.

1) In previous years Hoist Finance monitored “Acquired loans”. In addition to loan portfolios, this amount included the value of shares and participations in joint ventures and the value of consumer loans. The latter two items are insignificant and, accordingly, as from 2021 we present “Acquired loan portfolios” as the balance sheet item monitored by chief executive management. Comparative figures have been adjusted. 

1) In previous years Hoist Finance monitored “Acquired loans”. In addition to loan portfolios, this amount included the value of shares and participations in joint ventures and the value of consumer loans. The latter two items are insignificant and, accordingly, as from 2021 we present “Acquired loan portfolios” as the balance sheet item monitored by chief executive management. Comparative figures have been adjusted.