Multitude will report its Q1 results on the morning of May 21. We anticipate a decline in both topline and profitability from a strong comparison period, driven by the divestment of Micro Loan business entities and interest rate caps in Sweden. We expect the company to reiterate its 30 MEUR net profit guidance for the year, and our focus will be on the underlying drivers supporting the expected profit growth later in the year, as we expect Q1 to be the weakest quarter of the year.

Topline expected to decline due to divestments and interest rate caps

We expect Multitude's Q1 total net operating income to decline by 11.6% to 49.4 MEUR (Q1'25: 55.9 MEUR). It is important to note that the company is changing its reporting as Income from Associates (mainly Lea Bank) will no longer be included in net operating income (adjusted growth around -9%). In our estimates, the decline is primarily caused by lower net interest income in the largest business unit, Consumer Banking, due to the divestment of Micro Loan businesses last year and the impact of interest rate caps in Sweden. In terms of net interest income, we expect SME Banking to show stable development and Wholesale Banking to show strong growth.

Overall, we expect net interest income to decline (-17%), but this will be partly offset by growth in fee and commission income, which is a strategic focus area for the company. The fee income is driven by the partner business in Consumer Banking and the Payment Solutions business in Wholesale Banking.

Earnings burdened by topline drop

We expect Q1 earnings before taxes (EBT) to decline to 5.9 MEUR (Q1'25: 8.3 MEUR), largely mirroring the topline decline. We estimate impairment losses to have slightly decreased, reflecting the company's ongoing strategic shift towards lower-risk customers (divestment of the Micro Loan business). We expect operating expenses to decrease slightly as the company focuses on cost discipline and efficiency gains. We estimate Q1 EPS to decline to 0.18 EUR (Q1'25: 0.26 EUR). Earnings are supported by growth in Income from Associates, driven by Multitude's increased stake in Lea Bank (29.7% stake) and Lea Bank's solid earnings growth in Q1. Sortter (19.97% stake) has also grown rapidly and turned clearly profitable in 2025, and we believe this minority stake will start contributing slightly to Income from Associates.

Focus on the path towards the 2026 profit guidance

Multitude's guidance for 2026 expects a net profit of 30 MEUR. Our full-year estimates are in line with this target. We don't consider the safety margin for the guidance to be large, and we will be focusing on the outlook of the earnings drivers for this year. Given the expected slower start for the year, reaching the guidance requires a clear profit improvement in the coming quarters. The H2-loaded development is supported by fading headwinds from the 2025 divestments. We also expect the company to receive earn-outs from these divestments, similar to 2025, which would support this year's earnings. However, visibility regarding the size and timing of these earn-outs remains limited. Overall, profit generation is shifting this year; while net interest income is under pressure, this is balanced by fee income growth, an increased contribution from associates, and potential earn-outs. In terms of business units, the smaller segments, SME Banking and Wholesale Banking, should increase their contribution to earnings as Consumer Banking is facing headwinds.