Source: Inderes

Multitude's Q2 earnings clearly exceeded our expectations. This was driven partly by higher-than-expected earn-outs from last year's divestments, which is not a recurring operating item. However, despite the earn-outs, the operative development was also better than expected due to lower-than-expected impairment losses. The company reiterated its 2026 guidance of 30 MEUR net profit. The guidance remains tilted towards H2, but Q2 eased our largest worries about the guidance. The valuation of the Sortter deal was also disclosed, and we view it to be very attractive for the Company.

Topline slightly above expectations

Multitude's Q2 total net operating income (NOI) came in at 56.6 MEUR (Q2'25: 55 MEUR), which exceeded our estimate of 54 MEUR slightly. Our estimates for the different business units and net fee income came in as expected, and the beat was primarily driven by larger-than-expected other income (2.5 MEUR), which we believe relates to earn-outs of last year's divestments. As anticipated, Consumer Banking's net interest income still experienced headwinds (-20%) from the Micro Loan divestments and Swedish interest rate caps, although the quarter-on-quarter development stabilized as expected. This softness was largely offset by growth in Wholesale Banking, where the expanding loan portfolio supports strong net interest income growth (102%). SME Banking's net interest income grew moderately (2%). Additionally, net fee and commission income grew at an impressive 279% rate to 7.0 MEUR. This was in line with our expectation, as fee income was supported by consolidation of Sortter. The trend in fee income has also been very good organically.

Profit was clearly above expectations

The Group's earnings before taxes (EBT) in Q2 stood at 10.0 MEUR (Q2'25: 8.0 MEUR), which exceeded our 7.7 MEUR estimate with a large margin. We note the beat was driven partly by larger-than-expected other income, which directly supports earnings, and we don't view it as a recurring operating item. However, the profit exceeded our expectations even disregarding the other income item. The operative beat came from clearly lower-than-expected impairment losses (16.9 MEUR), reflecting the company's ongoing strategic shift towards lower-risk customers. Operating expenses were 29.7 MEUR, which were slightly above our expectation. We believe the profit was also supported by the consolidation of Sortter, even though it affected the numbers by slightly more than a month. When it comes to the business units, we found the performance of Consumer Banking (EBT: 9.8 MEUR vs. Q2'25: 8.7 MEUR, boosted also by consolidation of Sortter) and Wholesale Banking (EBT: 1.8 MEUR vs. Q2'25: 0.1 MEUR) to be very strong, but SME Banking continued its rather weak performance (EBT: -1.8 MEUR vs. Q2'25: -0.9 MEUR). The interest on perpetual bonds and the tax rate were pretty much in line with our expectations. Ultimately, EPS landed at 0.32 EUR (Q2'25: 0.28 EUR), clearly beating our 0.22 EUR estimate.

2026 guidance requires a strong second half

Multitude reiterated its guidance, which expects a net profit of 30 MEUR for 2026. After H1, Multitude has accumulated a net profit of 13.1 MEUR. Thus, the guidance relies heavily on a strong second half. However, the strong Q2 eased our biggest worries about the guidance, as it looked very difficult after Q1 (net profit of 4.4 MEUR). H2 is supported by the full consolidation of Sortter and anticipated earn-outs from the 2025 divestments. We note that the exact timing of the earn-outs causes uncertainty to our estimates. Nevertheless, reaching the guidance will still require a solid H2 operationally.

Multitude also disclosed the valuation of the Sortter deal. Multitude bought the remaining 80% of Sortter with a cash consideration of 7.0 MEUR. We view this valuation as very attractive given Sortter's track record in growth and earnings (2025 net profit 1.6 MEUR). Thus, we view the acquisition as positive and likely to be value-creating.