Source: Inderes

Multitude's topline developed in line with our forecasts, but profit fell short of our expectations due to a higher-than-anticipated cost structure. The guidance (30 MEUR net profit) was reiterated, but given the softer-than-expected Q1, we see the safety margin for the guidance as low. However, we believe it is worth noting that the majority acquisition of Sortter will help reaching the guidance. You can follow the company's webcast here.

Expected topline development

Multitude’s total net operating income (NOI) for Q1 came in at 51.2 MEUR, which topped our estimate (49.4 MEUR) slightly. Thus, the NOI declined 8% year-on-year. Share of results from associates (1.1 MEUR) was still included in the net operating income, but taking this into account, the topline developed in line with our estimates. Overall, the performance of the segments was in line with our expectations. The net interest income of Consumer Banking declined sharply due to divestment of Micro Loan businesses and interest rate caps. SME Banking saw modest growth, while Wholesale Banking grew the fastest thanks to its expanding loan portfolio and a slight increase in fee income. Overall, net fee income grew to 4.7 (Q1'25: 1.9 MEUR), but missed our estimate slightly.

Cost structure was clearly higher than we expected

The Group’s earnings before taxes (EBT) in Q1 were 5.1 MEUR (Q1'25: 8.3 MEUR), missing our 5.9 MEUR estimate. We expected that Q1 would be a softer quarter, but the performance was clearly weaker than we expected and the decline from the comparison period was significant. This weaker-than-expected performance was driven by cost development as operating expenses increased to 28.2 MEUR (Q1'25: 25.4 MEUR), which was clearly above our expectation. The cost inflation was broad across personnel, administration and sales & marketing expenses. Impairment losses were 18.0 MEUR, which was below our estimate of 20.2 MEUR.

In terms of business unit performance, the EBT came down in Consumer Banking and SME Banking, but grew in Wholesale Banking. In our view, SME Banking's performance (EBT -1.7 MEUR) was a clear disappointment, and the unit has a lot of work to do to reach the targeted profitability this year.

Guidance needs some dramatic improvements in the coming quarters

The company reiterated its guidance for 2026, which expects the net profit to reach 30 MEUR. After a softer Q1 (net profit of 4.4 MEUR), the performance needs to improve drastically in the coming quarters. We had already anticipated that the guidance was H2-loaded but the deficit is larger than expected. We believe the majority acquisition of Sortter will help reaching the guidance. We also see it possible that the company will still receive some earn-outs from the Micro Loan divestments, similar to 2025. Anyway, we don't consider the safety margin for the guidance to be large, and we expect to hear more about the earnings drivers for this year in the webcast.