Definitions of Asset Classes
Non-performing loan ("NPL"): A loan that is deemed to cause probable credit losses including individually assessed impaired loans, portfolio assessed loans past due more than 60 days and restructured portfolio assessed loans. Hoist Finance primarily purchases loans that are credit-impaired on initial recognition.
Performing loan: A loan in which payments of interest and principal are less than 90 days due.
Secured loan: A loan in which the borrower pledges some asset as collateral for the loan, which then becomes a secured debt owed to the creditor who gives the loan.
Unsecured loan: A loan that is issued and supported only by the borrower's creditworthiness, rather than by any type of collateral.
Consumer loan: A loan given to a person to finance specific types of expenditures.
SME loan: A business loan extended only to small- or medium-sized enterprises.
Hoist Finance main investments have been and still are within unsecured non-performing loans. However our strategy is focused upon expanding our purchasing capabilities within our existing markets, ensuring we are able to serve as a true restructuring partner to banks and financial institutions, allowing us to grow our book in a sustainable and diversified manner.
Hoist Finance’s core competency has been as an acquirer and servicer of unsecured consumer NPLs and our journey towards developing the capacity to purchase our newer asset classes; SME, Secured and Performing, has been a careful and considered one.
In spite of Covid-19, the year 2020 has seen a continuation of our growth in Secured NPLs asset class, expanding our geographical footprint to Spain and Cyprus, representing 6 per cent of our total acquisitions for the year.
These investments have the additional benefit of being subject to lower risk weights than our consumer unsecured portfolios, providing added mitigation against this regulatory change. Whilst consumer unsecured NPL portfolios will continue to represent our core business, we are now far better placed to pursue our growth strategy.
|Typical Characteristics||Unsecured SME||Secured||Performing*|
|Average portfolio Size (€)||300m - 500m||20m - 70m||20m - 70m|
|Purchase Price by Claim (% of GBV)||1% - 5.5%||30% - 50%||75% - 95%|
|Average Claim Size (€)||10k - 2m||100k - 7m||50k - 200k|
|Average no. of Claims in Portfolio||2k - 5k||200 - 400||500 - 2k|
|Age at Acquisition (years since default / origination)||2 - 8 years||0 - 4 years||7 - 14 years |
|Average Time to Collect||65 - 73 months|
30 - 45 months
|10 - 15 years|