Multitude Q1’25 earnings preview: Anticipating strong profit improvement

Multitude will report its Q1’25 results on Thursday morning, May 22. We expect continued growth and a significant increase in earnings compared to the same period last year, which was shadowed by elevated impairment losses. Business unit-level targets for 2025 are set to be published with the Q1’25 report and will be of particular interest. Naturally, comments regarding the macroeconomic situation will be of interest as well. We expect the company to reiterate its Group-level guidance for this year.

We expect continued growth

We expect Multitude’s Q1 net operating income (NOI) to have grown slightly less than 5% to 58.0 MEUR (Q1’24: 55.5 MEUR). We expect a slight decrease in interest income from the largest business unit, Consumer Banking, driven by a decrease in the NII margin (the loan portfolio continues to grow in our estimates). We expect to see clearly positive and fast growth from the business units in the earlier stages, SME Banking and Wholesale Banking. In addition to growing net interest income, we expect the net operating income to be supported by increased fee income (as seen in Q4’24) and income from associates (the Lea Bank investment is fully visible here). Overall, we expect the demand outlook to have remained at a stable level.

Clear profit improvement from weaker comparison period

We expect Multitude’s Q1 earnings before taxes (EBT) to have grown to 6.4 MEUR, which would represent a significant leap from the weaker comparison period. A major component of the earnings growth we estimate is decreasing impairment losses, which were on a high level in the comparison period. From Q1’24 onwards, the trend in 2024 was positive. During the Q4’24 release, the company also seemed rather optimistic that improvements in credit losses will continue to be a key driver of profit improvements going forward. The cost structure, on the other hand, was rather light in the comparison period and we expect the cost/income ratio to increase slightly in Q1. We expect Consumer Banking to be largely responsible for the Group-level profit. We expect the newest business unit, Wholesale Banking, to be profitable, as seen in previous quarters, although it doesn't affect the Group's numbers much yet. We anticipate the SME Banking unit will remain loss-making.

We expect to hear about business unit-level targets

Multitude expects to reach a net profit level of 23 MEUR in 2025 (2024: 20.2 MEUR). Our current estimate is at 24.9 MEUR. In our estimates, profit growth is driven by growth in net operating income (2025e +8.5%) as well as a decrease in the impairment loss and cost/income ratio. Q1 will again provide a checkpoint for these assumptions.

Considering the longer-term growth outlook of the company, the development of the SME Banking and Wholesale Banking business units is of great interest. The company also said at its Q4’24 release that it will publish business unit-level targets for 2025 with the Q1’25 results, which will certainly be interesting. In the case of SME Banking, the profitability outlook is especially important, as the business unit is still loss-making. Naturally, comments regarding the overall demand outlook and payment behavior in today's turbulent macroeconomic conditions will also be interesting to follow in the report.