This article first appeared on GuruFocus .
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Net Profit:PLN555 million for the first six months of 2026, flat versus the prior year period.
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Cash EBITDA:Grew 8% year-over-year.
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Recoveries:Increased 5% year-over-year.
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Assets:Grew 12% year-over-year.
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Indebtedness:Leverage ratio of 2.6x, consistent with the prior year.
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Return on Equity:19%.
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Investments:Secured PLN864 million in new investments during the first half of 2026; full-year target of PLN2.5 billion maintained.
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Financial Costs:Decreased, aided by a PLN53 million gain from hedging instruments.
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Revenue Impact:Negatively affected by the depreciation of the Romanian lei, costing roughly PLN59 million.
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Lending Business EBITDA:PLN27 million.
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Release Date: August 27, 2026
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
Positive Points
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Solid net profit of PLN555 million for H1 2026, with cash EBITDA growing 8% and recoveries up 5%.
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Assets grew 12%, indicating potential for future revenue growth from the expanded portfolio.
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Healthy indebtedness level of 2.6x, providing capacity for additional leverage if needed.
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Significant improvement in Spanish business recoveries and profitability in Q2, with plans to increase portfolio purchases.
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Strong cash flow generation with nearly PLN4 billion in cash EBITDA, and all markets were profitable.
Negative Points
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Net profit was flat year-over-year, missing expectations due to lower-than-planned recoveries.
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Depreciation of the Romanian lei negatively impacted revenue by approximately PLN59 million.
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Investment deployment of PLN864 million was below expectations, with market competition in Poland and Romania posing downside risk to the PLN2.5 billion target.
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Legal process results in France remain weak, with operational presence not expected until next year.
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Romanian lending business is expected to be loss-making this year due to startup and marketing costs.
Q & A Highlights
Q: Can you help us understand if you are able to continue with near 20% IRRs for your first half 2026 debt purchases? A: Michal Zasepa (CFO): I would expect the IRR for the full 2026 to be at a similar level to 2025, maybe somewhat lower, but not significantly. I expect the number to still be in the 20-something range, perhaps closer to 20% than 21%, depending on how we invest for the full year.
Q: Please explain why recoveries are growing slower versus the carrying value of the portfolio, which is growing double. A: Michal Zasepa (CFO): This is because we are buying assets with recovery curves assumed at 20 years and a cash flow break-even of about six years. Recoveries are relatively spread flat for a long period. The growth of assets is quicker than the growth of recoveries in the first years after acquisition. This is driven by competition paying high prices for fresh banking portfolios (30-40% of nominal), but we can still make a 20% IRR and 2.3 times money over a long period.
Q: Where is the difference between the reported EBITDA and cash EBITDA coming from? A: Michal Zasepa (CFO): This is a difference specific to the industry. Accounting EBITDA is not a good measure for operating cash flow because it only incorporates interest revenue, not recoveries. By subtracting revenue from recoveries, we get cash EBITDA, which is a better representation of operating cash flow. Revenue is the difference between recoveries and the purchase price. For example, if we buy a portfolio for 100 and collect 220, revenue is 120, but recoveries are 220; the difference of 100 is the purchase price.
Q: What is the outlook for the second half of 2026, and why did the first half results not show growth? A: Michal Zasepa (CFO): The first half net profit was PLN555 million, flat versus last year, but we expect growth in the second half. The results were impacted by the depreciation of the Romanian currency (costing roughly PLN59 million) and slightly lower-than-planned recoveries. However, the recovery plan was healthy at above 5% of the active forecast, so there is no need to worry about negative revaluation. We sustain our investment guideline of PLN2.5 billion for the year.
Q: Can you provide an update on the Spanish business and its profitability? A: Michal Zasepa (CFO): We have seen a significant improvement in recoveries and profitability in the Spanish business in Q2. The legal process and how we manage it are much better today than in January 2026. We are ready to come back to buying more portfolios in the second half of the year. There is still potential for further improvement, especially on NPL trusts, though the timing is uncertain.
Q: What is the competitive environment like in Poland and Romania, and how is Kruk responding? A: Michal Zasepa (CFO): The market remains competitive, especially in Poland and Romania, with high prices for banking portfolios (34% in Poland, 46% in Romania). We did not compromise on returns and gave up some portfolios, resulting in a lower market share in Poland. However, we can afford to press the gas pedal in less competitive markets like Italy (55% market share) and press the brake in more competitive ones, optimizing capital deployment.
Q: What is the status of the transformational projects, including the IT system replacement and the reorganization into an alternative investment fund? A: Michal Zasepa (CFO): The IT system replacement is advanced as planned, with an important milestone achieved in July when the minimum viable product (MVP) for the new system in Poland was released. The reorganization into an alternative investment fund is on plan, targeted for sometime in 2027, possibly the second half of the year.
Q: How is the lending business performing, and what are the expectations for Romania? A: Michal Zasepa (CFO): The lending business performed relatively well with PLN27 million of EBITDA. We have three lines: Novum Finance in Poland, a startup in Romania, and one in Romania that took over lending assets. The Romanian business will likely be loss-making this year due to startup and marketing costs, but we hope it will be profitable in two years, copying good practices from Poland.
Q: What is the outlook for the French market and the legal process there? A: Michal Zasepa (CFO): In France, after very good performance on the amicable part, we continue to see relatively weak results on the legal process. This is not significant for overall results but is a lesson for the future. We will be able to use much of that knowledge only when we start to build our operational presence in France, which likely will not happen this year but hopefully next year.
Q: What is the company's financial position and dividend policy? A: Michal Zasepa (CFO): The business is well-capitalized with indebtedness contained at 2.6x, a healthy level with potential to increase if needed. The net result and dividend payout of about PLN20 per share meant a 19% return on equity. The business is well-funded with good access to debt, and the dividend policy is in place.
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
