Multitude AG (0R4W) Earnings Call Transcript & Summary

Good morning, and welcome to Multitude's 2024 Preliminary Results Earnings Call. I'm Lasse Mäkelä, Chief Strategy and IR Officer of Multitude Group, and I will be your host during this call. Today, we will hear a presentation regarding our year 2024 results by our Founder, Jorma Jokela; CEO, Antti Kumpulainen; and CFO, Bernd Egger. Afterwards, there will be a questions-and-answer session. [Operator Instructions] I would now like to hand over to our Founder, Jorma Jokela. Go ahead, Jorma.

Good. Thanks, Lasse, and hello, everyone. So my name is Jorma Jokela, Founder of Multitude. And today is the last time I will walk you through Multitude earning call and preliminary results for the full year 2024 as Mr. Antti Kumpulainen took over the Group CEO role at the beginning of the year. And he is joining with me today, along with our CFO, Mr. Bernd Egger. But let's jump to next slide. So what an amazing year again. 2024 was the fourth year on the row that we hit our guidance. And today, we want to share with you some additional key takeaways there. The first one, we achieved a strong 14.4% growth revenue. Second, we delivered an impressive net profit growth over 23%. And the third one, we confirm our net profit guidance of EUR 23 million for 2025 and EUR 30 million for 2026. Lastly, the Multitude Board has proposed the highest dividend in our history, EUR 0.44 per share. This includes EUR 0.24 per share as a base dividend, which corresponding to our previous year payout ratio of net profit, and a onetime extraordinary dividend of EUR 0.20. This is a thanks to our shareholders' support over the past year and rewarding our strong start this year. If you look at the overall, this brings the payout ratio nearly 50%, which is in line with the midterm targets we shared during our Capital Markets Day in 2023. And the future, we want to be a responsibility and aim is to maintain payout ratio within 25% between 50% range. But before we dive in the last year performance, I would like to briefly remind everyone who we are, where we come from and where we are headed. We have an impressive 20-years track record, a profitable global fintech company focused on serving customers often overlooked by traditional banks, deliver outstanding and fully digitalized customer experience. We were founded in Finland and Scandinavian. Our registered seat is in Switzerland. We operate with a full EU-wide banking license and are listed on the Frankfurt Stock Exchange in the Prime Standard. At the Multitude, our inspiration comes from our vision to change the world to build the most valuable financial platform and give amazing experience for customers who are often overlooked by other banks. We want to democratize financial service through the digitalization, making them fast, easy and green. Our fintech growth platform is built around the idea that the Multitude serve as the core platform, hosting all our scalable components. Currently, we have 3 business units on the platform: Ferratum, specializing in digital consumer banking; CapitalBox, focusing on digital SME banking; and the wholesale banking customers under the Multitude Bank brand. On the Multitude platform, our focus is on the twofold: enhancing scalability and constantly seeking new opportunities, like we do in last year with the Lea Bank investment. We are a unique FinTech company, guided by ESG principles, contributing to growth and profit since day 1. We are confident in our business model, which has consistently enabled us to meet our profit target year after year, along with the commitment to high dividend payout ratio. And finally, we are excited to share our dream of building a company valued at EUR 1 billion by end of 2028. Okay, but let's dive into how Multitude performance in -- of 2024. It was again an outstanding year with a strong revenue growth of over 14.4%, impressive EBIT growth of more than 48%. All told, we faced higher credit loss beginning of the year, but those have normalized during the second half of the year in both consumer and SME business, thanks to our skilled teams, fast action and robust business model. Each of our 3 business units is a different stage in life cycle, and all are delivering revenue growth. Our investment in Lea Bank shares last year was important for us as we see this investment from 2 perspectives. First, from a pure investment standpoint of view, Lea Bank is a well-managed listed company with fully automated and digital customer approach, strong profitability and cost/income ratio. Second, we see the many attractive opportunities for partnership just as a payment platform, cross-selling the products and boosting profitability through the shared activities on the both side. The current market environment is also very, very favorable to us. Credit demand and payment behavior remains strong. New customer segments are entering the market, and our total addressable market continues to expand as the traditional banks struggle to service their customers. Last year, we also completed 2 share buyback program and successfully finalized the relocation of our registered seat from Finland to Switzerland. But perhaps the mostly important personal change for me was the decision to step down from the CEO role after 20 years. In the future, my focus will shift increase the shareholder value through the strategy project, partnership and acquisition. And of course, I will continue my role as a Board Member of the Multitude AG and Multitude Bank p.l.c. Our new group CEO, Mr. Antti Kumpulainen, will present later today his insight from his first 100 days together with his plan for the future enhanced profitability and efficient. Good. Looking ahead, we have a clear focus. First, we are committed to profitable growth through 3 main drivers. Second, we are focused in enhancing scalability by investing in risk management and AI. Third, we confirm our net profit guidance. We will publish our business unit financial target with the Q1 2025 result on the 22nd of May. So today, we will focus celebrating the amazing results from the last year. Good, but let's take a closer look at Ferratum business, revenue growth by 7.3% year-over-year and EBIT by an extraordinary 45.1%. Last year, we focused for the 4 key areas: improving credit risk, integrating SweepBank mobile app for the customers in Finland and Latvia, optimizing our digital marketing, and building up for partnership sales network. All these 4 initiatives have been highly successful, and I am so proud of our team performance. Credit loss have improved significant, which Bernd will present it later. The SweepBank integration is completed, and we will continue to scale it. Our digital marketing efforts have doubled our ROAS, return on advertising spending, which is outstanding result, and we successfully launched our first partnership case in Poland at the end of the year. Looking ahead, we plan to scale the Sweep mobile bank app to Ferratum customers in other countries. We will continue driving profitable growth through organic expansion, partnership and acquisition, while enhancing scalability through automatization, data, AI and risk management, which Antti will talk about later on as well. With a total addressable market of EUR 24.9 billion and our current share around 2.3%, there is lots of growth potential ahead. Good, but let's dive in to CapitalBox. Last year, we focused on accelerating growth, resulting in amazing 41.9% revenue increase. EBIT was minus EUR 1.8 million due to higher credit loss reservation, mainly from strong portfolio growth and higher credit loss at the beginning of the year. Last year, our original target for CapitalBox EBIT was EUR 10 million for the full year, but we saw lots of growth opportunities during the year, and it was our choice to invest in growth over short-term profitability. Our team made excellent improvement to collection and underwriting, which led to strong reduced credit loss by Q3 and Q4. We expanded sales channels, improved customer retention, boosted digital marketing and scaled our secured lending portfolio. In early 2024, we completed the acquisition of Omniveta, a digital factoring company based in Denmark, where we leverage our AI and data expertise to enhance customer experience and efficient. Looking ahead, we will focus on driving growth through organic sales, partnership and acquisition. We will also enhance profitability through automatization, data, AI and risk management. We see the big opportunity in digitalizing SME banking with a target market of EUR 14.8 billion, and we currently hold just a 1% share of that. Good, but let's look at our newest business unit, Wholesale Banking. The first full year has been incredibly strong, exceeding our expectation with revenue growth of 167% year-over-year, generating an extraordinary EUR 7 million in EBIT during the year when our original EBIT target was EUR 6 million. Our business unit CEO, Mr. Alain Nydegger, joined in the Q2 in the last year and has been expanding our specialized team and strengthening our process and policies throughout the year. We have a focus on building a high-quality customer pipeline for our secured debt and payment solution product through targeted marketing across the Europe. We have also improved our operational and risk management process, blending in AI and data insight. Last year, we successfully onboard 2 customers onto our payment platform and more than doubled net ARR from EUR 62 million to EUR 132 million in secured debt clients. Both products now have a strong pipeline of new customers. Looking ahead, the wholesale Banking team is focused on accelerating customer intake. Good. As a part of our ESG program, we have set a goal for each area to achieve by 2025. Last year, we have worked hard to strengthen our ESG effort and made a great progress. When we look at our emission, it's important to understand that they are mainly driven by financed emissions. Emissions have not increased as much as our lending portfolio has grown, showing the ESG quality of our lending portfolio has improved. About the social part, we made a lot of improvement last year, and we are well on plan to achieve our 2025 targets. Lastly, regarding the governance part of ESG, we enhanced internal methodology and procedures for the Double Materiality Assessment and piloted ESG risk assessment of supplier and corporate clients. Good. So this is my last slide, but maybe most important for myself. As I founded Multitude about 20 years ago with a few colleagues and until end of last year, I have had the honor of leading the company as CEO. In the early days, I focused had been in our products, improving the customer experience and automating our process. I also spent a lot of time working closely with our team, discussing how we going to grow and innovate. And this hands-on approach has allowed me to share my experience across the organization, helping colleague overcoming challenge and bringing the new ideas forward, something I truly enjoyed. Over the years, Multitude has grown significantly. We have expanded our country network, our team and our product offering, growing from a small start-up to a listed company with over 700 people, serving customers in multiple countries across 3 customer segments. But this growth has also added complexity to our management and governance and taking more and more of my time. Because of those demands, I have had less time over the past years to focus what I'm most passionate about. In November 2023, we launched a bold new strategy with a dream to reach over EUR 1 billion market valuation by end of 2028. We have outlined the 3 driver of this: organic growth, partnership and acquisition, which will need more and more focus as well, especially on the later 2 as they are relatively new areas for us. After careful thoughts, I decided to step down as CEO by end of last year to focus the full-time new role beginning of January this year, Founder and strategy project. And in this role, I will drive those strategy initiative, mentor our top talent, building partnership and lead acquisition. I would also continue the Board of Multitude AG and Multitude Bank p.l.c. My successor, Mr. Antti Kumpulainen, CEO of the Multitude Bank, has also taken on the role of Group CEO. We have worked closely for many years, and I'm confident in the smooth transition as we share the same values and vision. I will naturally remain available for the investors and stakeholders as needed, but investor relationship responsibility are transferred to Antti and Bernd. And I think saying that one, Antti, maybe you could take over here.

Thank you, Jorma, and welcome also on my behalf. Like said, as I approach my first 100 days as CEO of Multitude, I wanted to share a brief update with you. While I have been part of Multitude for over 9 years, stepping into this new role has brought an even more inspiring perspective than I expected. Looking at our company from a bit different angle and meeting even more our people in the organization truly has given me more thoughts on what we need to focus on more. I have also had the opportunity to meet with our investors and listened to their views and questions about the future of Multitude. The message from the different stakeholders and what I also agree with is that we need to clarify and simplify our structures, product offering and way of working. This work has now been started, but the results will clearly be visible step by step. Actions, they have been started already. A key part of my first focus has been on improving the effectiveness of the organization. We have streamlined our structure by removing layers of management and reducing the size of the leadership team. This is already enabling us to make faster, more agile decisions. We have great in-house knowledge in data, analytics and AI, and I want to invest significantly more to AI, which is one of my personal key focus and passion areas going forward. Our first tangible results under this new leadership phase will be visible when we publish our Q1 2025 results in about 6 weeks' time. But now let's go back to year 2024, and I will pass on to our CFO, Bernd Egger, for the financials.

Great. Thanks, Jorma. Many thanks, Antti. A lot has been told already. Nevertheless, I would like to focus on a number of key messages that I consider very relevant and also would like to do a deep dive on some of the key drivers behind that in a numerical sense. Message number one, and this is in this environment, from my perspective, extremely important, financial performance in the full year '24 was characterized by strong growth dynamics throughout the year with an excellent performance in Q4, especially. Message number two, and we will do a deep dive on credit risk, as Jorma has pointed out, we have taken a lot of actions to improve credit risk performance, and we've seen very strong results. I've given you a detailed update on where we stand in the course of the 9-months presentation, and I will extend this view to give you the full year perspective. Message number three, the scalability of the organization, it is improving, at the same time, we invest in future growth. And these 2 factors are determining our cost development, and we are exactly on the right path in our perception, at least. Let's go into the details of the financial performance and take a look at the P&L., and let's start with interest income, which reflects a significantly accelerated business dynamic also compared to last year. 12-month interest income, EUR 261 million, plus EUR 30 million compared to last year. So this is a top line growth of 13.3%. And I'm super happy actually that we are not only dependent upon interest income, but have started generating meaningful fee income in the amount of EUR 2.6 million, and that gets us to a plus of EUR 14.4 million and a revenue increase of EUR 33.2 million compared to last year. By the way, this fee income is driven mainly by payment industry and partnership business. So it's fully in line with the strategy that we are pursuing. The composition of the revenue growth is -- and this is also something I like a lot because we have not one driver in the end, all of the 3 business units are contributing to growth. Consumer Banking, plus 7.3%; SME, plus 42%; and Wholesale Banking, plus 165% in terms of revenue. Now let us talk about, and this was also a focus area in the last presentation, 9-month call, about interest expense and net interest income. Naturally, in this environment, interest expenses increased quite significantly compared to '23. So we are now at a level of EUR 40.9 million for '24, which is actually slightly below what we had budgeted. This compares to EUR 22.2 million in '23. And I guess it goes without saying, but nonetheless, the key drivers are, on the one hand side, higher reference rate, that is something that we obviously have in common with everybody else, whether we like it or not; secondly, expiring of relatively cost-efficient term deposits, likely we see a decrease already, so this is going to support our performance going forward on a net profit perspective; thirdly, a significantly higher business volume, so around about EUR 125 million above the '23 level, which obviously also drives finance expenses; and as also pointed out in the 9-months call, EUR 3 million one-off related to replacement of bond, which gives us a super comfortable position when it comes to our repayment structure and our funding structure in general. That altogether gets us to net interest income of EUR 220.2 million compared to EUR 208.2 million, an increased by EUR 12 million during '24 or in, relative terms, a 6% increase. And after foreign exchange results and hedging costs, both being a little bit less than EUR 1 million below last year's level and also below our budgeted level, and after other income and pro rata profit share from investment here to those who have listened what Jorma has presented already, we have a profit share of Lea Bank for the period after 9th of October when we started acquiring shares of Lea Bank is reflected here in the P&L. And that all gets us to net operating income of EUR 219 million, an increase by EUR 15 million or 7.3% for '24 compared to '23. So much on growth. Let us move to my second key message. As you know, after Q1 '24, we were not 100%, also 90% satisfied with credit loss performance. So this became a top priority for the full year 2024. And apparently, these efforts have paid off very significantly. So credit risk performance has improved very significantly during the year. In absolute terms, credit loss impairments are on the level of EUR 96.4 million, EUR 8 million above '23 level, but a degressive development and most importantly is the trend, but I will do a deep dive on credit risk impairment at the end of my presentation on financial performance. Cost management, again, 2 main statements I would like to make. I've just mentioned this balance, the ambition to remain balanced between growth dynamics and developing and maintaining a scalable organization. This is one of the focus areas for Antti. And I can confirm that a lot of energy and effort is going into this direction already, and this will certainly pay off going forward. In numerical terms, we see an increase of EUR 3.5 million in personnel expenses, mainly driven by investment in growth. CapitalBox, for instance, we have taken over the team from Omniveta when we've done the acquisition in Q1 '24. Wholesale Banking, key driver here is the ambition to build up the resources that we need to really scale this business and transform that into a multi -- well, a 3-digit million type of business, generating profits. And as pointed out already, we will see that in more detail. This business is profitable already. So we look at these hirings in the end as an investment in future growth and profitability. Similar picture when it comes to operational expenses, general and admin expenses, EUR 3.6 million above last year's level, an increase of 11.5%, a reduced growth rate, by the way, compared to the first 9 months. So we see the efficiency gains already. Key drivers here are a number of strategic projects, growth-driven M&A analysis, partnership models, but naturally also costs that we had to incur as a part of the relocation process as, for instance, the interim audit that we, whether we like it or not, had to perform midyear. So I think we are very well audited over the last 1.5 years. Depreciation expenses, a reduction by EUR 2.5 million, and that is essentially offsetting the increase in general and admin expenses very nicely. So from a big picture, the OpEx situation is as follows: we have seen, as everybody else, considerable cost pressure from inflation as well as costs related to future growth, strategic projects, and the objective was and will be to balance those 2 ideally within a substantial efficiency gain also going forward. Now let us take a look at the -- how these factors translate into profitability, and I'm still on the P&L. I would speed up a bit. EBIT up to a very strong EUR 67.6 million. This is by far all-time high result. This is more than EUR 20 million above the historical all-time high. And I think it's really something that I would like to highlight once again, we've achieved our capital market guidance for the fourth year in a row from EUR 20 million EBIT to EUR 30 million to EUR 45 million to EUR 67.5 million. Back then, I think not everybody thought this would be doable, but the teams have achieved that, and I think that's really great. Profit before tax, EUR 23.2 million, plus EUR 4.2 million, which is equivalent to also double-digit 22.3% increase. Tax expense, EUR 3 million; effective tax rate, 13%. So this is pretty much in line with what you have seen in 9-month level. And finally, net profit, very strong with EUR 20.2 million, significantly above the '23 level, plus almost EUR 4 million or 23% and also above expectation if you take a look at the analyst expectations, as published over the last year or 2. So in a nutshell, we think that this was a very, very strong year, driven by growth, by the aggressive cost development and remarkable improvements in credit loss performance. At this stage, I would now like to do a short deep dive into credit losses and move on to the next slide, which is in line with the presentation I've given during the 9-month call, but it's really important that people understand, investors have the opportunity to understand what the drivers are, how credit losses develop mid and long term. Credit losses Q1 were at EUR 28.3 million in '24, above target, a significant reduction over the years -- over the quarters, sorry. You see already in Q2, down to a little bit less than EUR 24 million, a reduction by EUR 4.5 million. The trend continues down to EUR 21.5 million in Q3 and similar level on Q4. So on average, minus 20% quarter 2 to quarter 4 compared to Q1. So really, really impressive performance. How did we get there? In Consumer Banking, focus was on integration of new data sources, refined underwriting models, operational improvements in the area of payment processes as well as collection performance. Similar picture in SME, the key drivers for this even more remarkable credit loss reduction, the proportion of secured business is going up. So this helps on the path of derisking the whole organization together with the increase in the Wholesale Banking. So this is 1% in line with the strategy that we presented, as Jorma pointed out, in November '23. We have been under-weighting industries that were more affected by current economic environment. This has paid off. Collection processes improved significantly and a constant effort to refine scoring models, and all those factors had a very positive impact on profitability in reduced credit losses in '24. So overall, very positive development with significant positive impact on net growth. After this credit risk deep dive, I would like to move on with a little bit more boring stuff, maybe balance sheet data. But before I do that, I would like to [ acknowledge ] on the call to thank Clemens Krause, the Group Chief Risk Officer, for several years of great cooperation and collaboration. It was really great. Many thanks, Clemens. And the journey will continue with Adam Jezierski covering credit risk management. Balance sheet. On the asset side, there are basically 3 topics that I would like to highlight. One is we have deployed cash to support the growth of the business. And still, we have cash resources to support our very ambitious growth plans for 2025. Segment number two, quite significant increase in loan portfolio to EUR 650 million and relatively speaking, more remarkable, the increase to more than EUR 110 million debt investment. This is the quite significant or very significant growth dynamic that we have in the Wholesale Banking business. And segment number three, for the first time, investments in associates increased significantly from EUR 1 million to EUR 9.2 million. This reflects in this, at year-end, 9.9% held in Lea Bank. Meanwhile, we have increased the stake quite significantly. So much on the assets. Let me continue with equity and liabilities. I can limit myself to simple statements here, deposit base around EUR 800 million. We will talk about funding very briefly. This is the main source of funding for us for obvious reasons. Scalability and cost efficiency are the most relevant ones. Debt security, we have replaced a bond expiring in '25, relatively early, and have now a bond expiring in '28 instead with around about 50% increased volume. And finally, equity, we are approaching EUR 200 million, currently at EUR 193 million, currently means, in this context, obviously, end of year, EUR 193.7 million, including the perpetual bond that we issued a couple of years ago. And then, in general, my favorite slide, segment performance on the next slide, for a number of reasons. Reason number one, I pointed this out already, I like the fact that all of them are significant growth engines in our business. Secondly, the fact that in terms of profitability, we are on the right path, driven by or supported by the credit loss performance that I've highlighted already. In Ferratum, we see extremely strong profitability, profit before tax, EUR 22.9 million to EUR 32.9 million. So an increase by EUR 10 million within 1 year on the profit before tax, high scalability, supply high efforts on credit loss development, a combination of that in connection with top line development really gives us an excellent profitability metrics. CapitalBox, as pointed out already, what we like a lot is the top line development, 42% revenue dynamic, driving up revenues by EUR 10 million to EUR 33.6 million. By the way, this is also an all-time high. Credit losses, a little bit the pain point beginning of the year, I elaborated in quite some detail already, significantly improved. Just to give you another metric, credit losses of interest income beginning of the year, Q1, 51%, dropped to around about 30%, so 20 percentage points improvement during the year. So really, really very significant. And to the EBIT target that Jorma has elaborated on, I would like to highlight H2, we are back to positive EBIT and also from a net profit perspective, we are approaching breakeven. And that is despite the fact that we've invested quite a lot, which in turn explains the increase in cost, personnel expenses up EUR 2.2 million and general admin CapitalBox up EUR 3 million. These are investments in this growth. I don't want to repeat the Omniveta acquisition topic. So this is where we are, not exactly there yet where we want to be, but the trend is absolutely giving us comfort in -- yes, with regard to dynamics, but also profitability. And finally, let me conclude the review of the business units. With Wholesale Banking, revenue, as pointed out, up to EUR 13.5 million from a starting level of EUR 5.1 million, growth factor 2.6. So this is all -- also if you compare that with other fintech providers with early-stage businesses, growth factor 2.6 in 1 year is top performance. Credit loss, a couple of hundred, EUR 700,000 to be precise. It's a collateralized business, a lot of cash assets that cover us against expected credit losses. And this, of course, supports the profitability of the business, quality of our portfolio is on track. And that despite the fact, as pointed out, we've invested a lot, built up a significant team, taking all that into consideration the businesses. EBIT positive at EUR 7 million and also breakeven already on profit before tax. Next slide, finally, you're familiar with that, just 1 or 2 sentences on the asset quality. This is the reflection of what I've tried to explain when it comes to credit losses, significant downward trend, downward trend means improving asset quality. So we see on this slide credit loss impairments in comparison to the portfolio size, a very significant increase long term, but also quite a significant increase, improvement during the year 2024. Slide -- the next slide, cash development, super safe, really in connection with the funding side. Maybe in the essence of -- interest of time, I move on to funding right away. We have the target funding structure currently in place. We are focusing on deposit funding, EUR 800 million with some activities in the capital markets. We have placed the senior bond instrument successfully in summer. We have, by the way, also placed successfully a Tier 2 instrument on the level of the bank in '25. So that means no debt capital market instrument falls due within the next 3.5 years. In '26, we have to step up the event in the perpetual bonds, but I think we're in an excellent position to work on potential replacement at some point in the second half of this year. So with that, I would like to hand over to Antti and Jorma. Jorma, many thanks for 5.5 years of doing earnings calls together. It was a pleasure.

Super. Okay. Yes, really big thanks for Bernd in that one. And I think it has been quite amazing 20 years. And I think I want to repeat exactly the same what Bernd mentioned as well. So I think it's a big thanks for the point on Mr. Clemens Krause as well. We have worked together the long time, many years together. He have once already the step in our CFO role out in the -- it was 2021, am I right? It's when Bernd...

I'm afraid it was in 2019.

Oh, 2019, sorry. Yes, years are going so quickly. So I think it's -- and Clemens helped us with the risk after that one, then he focused at the Group Board and then we had some challenge and he come back, and he had really helped us the many years there and doing with his team, amazing performance there. And he will be continuing as a bank Board member and supporting our growth and value creation on that way as well. So really big thanks for Clemens, and big thanks for the many improvement from the last year, especially the risk part is going to his and his team on the table there. Of course, it was a team effort for the all different part as well. Good. And of course, good luck with my new colleague in the successor, Antti Kumpulainen. I think it's -- that will be the interesting journey, and it will be very interesting to see how we're working together and how we -- how these first 3 months now have showed lots of already good things that we are share the thoughts and that we are like supporting each other. So I think I am so happy that one. And like I mentioned earlier, I think it's -- this transit is going very smoothly. I'm 100% sure. But before we start to take a Q&A, we are now the shift -- there's only one microphone here. So we are sitting in the same room here, all 3 of us. And I want to repeat our key takeaways for you. It's because I think it's -- I think the whole 20 years has been a quite amazing journey, but I think it was -- somehow it was an amazing milestone on the 2024 because it was the fourth year on the row with those -- our long-term investors, you remember how 3 -- 4 years back, we give the guidance on the 4 year. We said that we will deliver the 50% EBIT growth year after year, and we delivered that one. And I think that is something what I'm so proud in our team that we all commitment to doing that one. Of course, now we shifted the guidance on the net profit at the beginning of this year. And this year, guidance is EUR 23 million net profit; and next year, EUR 30 million net profit. Last year, the growth, 14.4%. Same time, we delivered amazing 50% EBIT growth, and the net profit growing over 23% on the last year. I think that's amazing. I personally believe that ending this journey now in this 4 years guidance journey, it's a really, really great opportunity to reward for all shareholders, stakeholders and the partners. And this all-time track record, the highest dividend payout in the history, EUR 0.44 per share, it's really, really nice there. What we want to repeat that we're splitting in 2 different ways how we look in that one. One is that the base dividend part is EUR 0.24, and this onetime extraordinary dividend part is EUR 0.20. What is totally driving around the 50% payout ratio, what we see is like a midterm target, what we already talked about in Capital Markets Day in 2023. And on the future, we want to, of course, behavior as a responsible way and looking always on how the previous year went and how we see the future on the year -- the coming year as well. And as we've said on the payout ratio between the 25% and 50% range. So we don't want to promise that the next year is staying in that level. It's important to understand it's a 2 different way or 2 different side how we look in this on the last year. But that are the 4, 5 key takeaway, what we really want to leave all of you in this morning, and we are ready to take Q&A part.

Okay. Thank you, all speakers. So now it's time for the Q&A. [Operator Instructions]

Good. Let's go forward. So I think I see there -- now there is some technical issue. I don't see the hand...

We have here the chat box, we have a first question. So maybe we can start shooting that one. It's -- and so we have a question from [ Stefan Hirsauter ]. And the first is, congratulations to the great Q4 results. Really big thanks, and I think the thanks for the behalf of the whole team. And the first question is, the financial result was with minus EUR 13.4 million, very high. When do you expect the decline in the interest to influence the interest expenses in P&L positively?

Yes. I hope you can hear me well. Maybe, Stefan, if you agree, I will combine this question with the other 2 that you raised. If I may read them aloud, second one, what is the plan with the IFRS equity bond for the future? There will be a jump in interest rates next July '26. Is there a plan to repay the amounts at interest rates -- as interest rates are then very high? And then also a funding-related question, question number three, was wondering about the very high interest rate on the '25 bonds, why interest rates are so high? So now on funding in general and the financial results, actually, we see already -- first one on the decline, we see a gradual step-by-step decline already. It's also reflected in the weighted average cost of debt funding in the presentation where we show the quarterly development. There are 2 factors driving down gradually our expectation, it's not a promise, but an expectation to see a gradual decrease. That is, on the one side, the lower interest rate levels on new term deposits. This was the main pain point over the last 1.5 years that we had to pay 4%, 4.5% on new term deposits. That has changed. Meanwhile, we are paying between 250 to 300 on new term deposits up to 3 years. So that has improved significantly, but there is a time lag as those term deposits that we have taken in last year, obviously on the books for a while, but gradually, we expect average deposit cost to go down. Naturally, new instruments are going the other direction and have an increasing effect on interest levels, but expectation midterm is to go down. And as pointed out, you see it already. So now currently in Q4, weighted average cost of debt funding is already below Q3 and below Q2 level. On the IFRS equity bond, it's an equity bond, hence, I cannot make a promise to replace it at some point because it's the very nature of an equity instrument. But economically, the step-up, as you rightfully pointed out, 450 basis points in July '26 would make it economically advisable to replace the instrument, and this is the direction in which we're thinking. So not a promise, but an indication that the intention goes in this direction. Otherwise, I agree, interest rates would be a little bit on the higher end. Finally, question number three, the 2025 bond, high interest rates, there are 2 factors. One is the bank, and this was a Tier 2 instrument issued on the level of the bank. The ambition here is to build up a track record for the bank. It's a financial institution that has not issued capital instruments to the public in the past [indiscernible] instrument of EUR 3 million. But in the end, it is not enacted on the capital markets yet. We are doing this for the first time. And naturally, the first transaction has a tendency to be a little bit more expensive than the others. The second factor, whether we like it or not, whether it's fair or not, but also the fact that the bank is located in Malta doesn't help for some investors. But we have been very successful in attracting new investors. We look at the European landscape from a little bit of a higher picture and that is the successful placement of this instrument. And going forward, we would expect that future transactions once we have been active on the market will be closed at lower interest rate levels.

Good. Thanks, Bernd. And I understand we have the next question from the audio. Am I right?

Yes. So we have Marius Fuhrberg from Warburg. Please, Marius.

I hope you can hear me.

Yes, we can.

Perfect. So my first question would be with regards to the recent downward trend in the general economy. Do you already experience a deterioration of customer quality? And how does this translate into your loss assumptions for your business going forward? Do you already incorporate a higher probability of default or higher risk costs for the new business? And the second question with regards to the SME banking, which turned profitable in EBIT, if I recall correctly, in Q4, but still slightly negative on EBT level. Should we expect this trend to continue so that SME banking should contribute positively to EBIT in 2025 and maybe even turn profitable on the EBT level in the course of the year?

So thanks, Marius. Sorry, we make alignment here is the answer in the -- so maybe I can start with the CapitalBox part and then Bernd can answer about the general economical impact and how we have a preparation that one. I mean, CapitalBox, we founded this in 2015. So we have a 10-year history there. We have investment lots for the scale in that one. We have investment lots of the -- during the last year in the accelerated growth there. And we decide to put the profitability part on the side and focus the growth and product expansion because we just see that it's in the long term, it make a lot of business sense. So we did not want to work in as optimizing the quarter result or quarter profitability or short-term profitability there because we know that opportunity is very, very attractive on the behind there. I will personally not look too much on the quarter profitability there and make like lots of like a long-term conclusion based in the quarter result there because like we all know, the volatility is on the place there as well. In generally, I think as the payment behavior have improved, they have improved. We have increased the top line, significant there. And about the more detailed guidance about the business unit profitability, we have agreed that in the 22nd of May, when we publish the Q1 result, I mean not me anymore, it's, I mean, Bernd and Antti will do that one. It's -- and I promised a bit the background there. So -- but then we will promise the guidance more the target on the financial performance as well on the CapitalBox part there. But we are very positive on the CapitalBox as a future. Of course, we understand that current economical environment as well, there is an impact on the SME sector as well. However, we see that it's a partial on the polarization question as well that you have some industries, what are the higher impact; and some industry, what is not so much impact. And this is the part of our team and risk management, how we serving between the different industries and different product there as well. So -- but in general, we are positive and we like the CapitalBox, the growth and we have to make a choice to focus the growth. So that's the reason why we don't want to give any guidance today about the profitability part there. Good. Bernd, do you want to do the other one?

Yes. Economic trend was the question and whether the not so supportive economic circumstances have an impact on probability of default and risk cost. Yes, I think there are 2 aspects I would like to raise. One is if we look at the last couple of years, we have seen a very significant number of negatively disruptive events. And this is, by the way, the reason why we put this development trend, quality of assets in long-term perspective, from 2019 to 2025. We had COVID, we have had the inflation, we had a war and political instability. Now we have increased economic uncertainty, recession in several European markets and see the credit loss performance has improved significantly during this year. There are 2 lessons. One, I think we need to constantly make sure that we gradually improve the quality of underwriting performance. There's a lot of new data sources, new models in the background that are not seen on the surface, but that in the end dictates the quality of our credit loss -- the assets and credit losses long term. So I cannot give a promise, but I think it is quite impressive that, again, SME, for instance, starting from EUR 4 million credit losses on a quarterly level in Q1 to EUR 2.7 million, now EUR 2.8 million in Q4, minus 30% in 1 year. That's not a promise for the future, but I think this didn't just happen. It is reflective of really great work and performance. So from that perspective, I'm at least positive when it comes to future expectation on the credit loss performance despite the 1%, right, despite the very challenging market circumstances.

Good. Thanks, Bernd. So Marius, I hope we answered your question. And...

Yes. Thanks very much, and all the best for you, Jorma, as we will not hear each other so often, I think.

I am around. I am around. Thanks, Marius. Good. Lasse, did we have any other audio question?

No, I think the rest are on the Q&A box. If you -- I think the next one seems -- actually, now we just had one hand from [ Frank Lehmann ]. Frank, please.

Congratulations to a very, very successful and delivering on the targets here. My main question is, and we spoke about it in Stockholm also, is on the balance of the portfolio of businesses. The Wholesale Banking business seems to be the one where you might see more growth opportunities maybe than in what you do in the Ferratum business. Is that right? And what's going to be the balance long term between those 2 divisions? Of course, there's a third division, but let's just focus on those 2. That will be my question here.

Okay. Frank, let me hand over the microphone over to Antti.

We talked a bit about this in Stockholm, like you said. So yes, we do see a significant growth potential in the Wholesale Banking unit. Of course, the reason that why is it growing faster [indiscernible] is that we are now comparing 1.5 years with 20 years. So we do see growth potential also in Consumer Banking and SME Banking, in all business units. But obviously, from a relative perspective, Wholesale Banking is the one growing the fastest. What is the future composition of the balance sheet? This is also a question we spoke about a bit. We don't know yet. And obviously, we don't want to give any guidance on how the business unit balances will be in the future. But what is sure is that Wholesale Banking is, at the moment, the fastest-growing unit and will have a significant impact in the future as well. But what is the exact composition? We can't say.

All right. Last question or last comment, I just want to say goodbye to Jorma. I hope we meet again. And you will be around, I hear. And congratulations to the building of 20 years of Multitude. It must have been quite a voyage. And you leave something behind in good hands, it feels. And so best of luck. And again, congratulations. Stay involved and, yes, give guidance to the team.

Thanks, Frank. Thanks. A really big thanks. I appreciate that one. It's -- I still stay around. I don't disappear anywhere. And I have to say that if you ask my wife's opinion, she told that I have been more busy last 3 months than I was in the end of the year. So I mean we have been quite a lot of those strategic projects ongoing here. And hope we can talk about those later on this year as well. But I am very, very happy with Antti and our cooperation and, of course, this operational direction. I think Multitude go in the right direction now. I'm very happy with that one. And thanks for your words, very kind words.

Good. I think the next ones are in the Q&A box. It would make sense if you...

So we will continue from there. So Harald Hof, let's jump to your questions. So congratulation of the good numbers. Thanks for your asking. I've got the 3 topics from my side. How much were the one-off expenses for the move to Switzerland? Are further costs to be expected in 2025? The second question, a bit more information of the Lea Bank and the plans. What are the next steps? How can you grow together? Could you be more -- could you buy more shares? And then the third one, will there be more share buyback programs? Maybe, Bernd, do you want to start with the registered seat, the relocation costs?

Yes. Yes, absolutely. It has been quite a journey. And naturally, this came with a cost of around about -- if we include the audit costs midyear, then we're talking about closer to EUR 2 million last year than EUR 1 million. Still, there is some costs involved in 2025 because we are very actively communicating with regulators. There's a little bit of fine-tuning here and there. So there will be cost also in '25, but they will be most likely considerably below the level that we had in '24.

Yes. And then maybe I can answer about the Lea Bank part as that was one of my first project here as well. It's a -- so like we have communicated in day 1, it's -- we are very excited for the Lea Bank. We have following the development in the few years. So it's not something we just weekly in the end of the last year, ending in that investment decision. We like how laser sharp they focus their own customer segment, like a prime consumer lending and pure digital, the customer segment. We see the lots of cooperation. We have talked about very open in that as well the day 1. And we see the cooperation opportunities, example, the utilize our payment platform. We see the opportunity doing the cross-selling as we operate in the different customer segments there. So we can do the lots of cross-selling there as well, and utilizing our like distribution platform for data product and they can utilize in the data distribution platform and our product. So this type of cooperation, we see very, very interesting as well. There is additional like shared resource type of the things or maybe not the resource, maybe it's more like activities where some topics you have more like power to -- and doing the better instructions when you can share the cost there and everybody benefits there. And those are the activity what we have a look in there as well. About the Lea Bank shares, I mean it's -- we have increased our stake there. So around 24% is our stake today. We see this is still the attractive investment case. And like I mentioned in 2 different ways, one is the pure investment case, but in the strategy point of view as well. So we see this very, very attractive. It's -- and we are very happy how well the management have been doing the relocation to Sweden and start to reset the offering there. So we are very, very happy with that one. Good. Will there be more share buybacks? Bernd, have we public anything? We said we have another public 2 programs, and we are still ending in the second one, but we have not public any third program there so far. So I mean it's -- yes, that's maybe only what we can comment in this point in that topic. Good. Bernd, do you want to say something more?

No. One way or the other, I think a dividend proposal makes a lot of sense from our perspective, and not much more to add.

Yes, exactly. Exactly. And then there is a next question comes from Roni Peuranheimo. There is a few questions. What type of the trend shall we expect going forward in terms of credit loss? Is it significant drive for the profit improvement going forward? That's the question number one. Should the high dividend be viewed as a signal regarding your growth ambition? How does the high dividend go hand-in-hand with the new rather expensive new Tier 2 funding? What are the biggest risk factor you see regarding your outlook? Maybe I can take the first, the dividends part, and then maybe -- yes, and then the funding part is -- Bernd, if you can start. So dividend part, I don't know what you really mean in the view on the scene regarding growth ambition. I think it's -- our growth ambition is staying the same. So we have -- we don't see the Multitude on the position that, that growth will be slowed down. That's not the case. We see that the dividends part, we have a history that all our here, excluding the 2 years in our 20-years history, we have paid the dividends. And the first year was 2020 when we did not want to pay the dividends because the COVID was start. So we said that we want to frozen the dividends and to be sure that what happened in the life. Then the following year, it was the same situation. And then we went back to pay the dividends. The dividend ratio was been somewhere in the -- of course, it depends on the year, but between the 15%, 20% up to 25%. Why we want to look in as an extra dividend part here was 2 different things. The first one, we want to reward our shareholders as this [ anticipation ] and the investment what they have done there. And that was the first thinking process. And the second one that we see the current year in 2025, the very, very, very interesting and attractive year. So we have very positive view on this year. So -- and that's the 2 main drivers why we want to pay the additional dividends on -- or the proposal for the AGM to pay the additional dividends from the last year profit there. So that is our view on the -- but there is no any other operational part there. And how it's going to hand by hand with Tier 2 bonds, I don't know, Bernd, do you want to comment that one? It's -- I mean I personally feel it's going very well hand by hand, but do you want to comment that one?

Yes, absolutely. I mean on the dividend, not much to add to what Jorma has pointed out. And again, I have to say, I think it's a super attractive move from investors' perspective with a clear message that we wanted to bring across. As regards to Tier 2 instrument, this is a strategic move that we have also had planned for quite some time. Why? With the bank in our group that is in the regulatory backbone of the organization, which has a very, very strong equity base EUR 160 million equity, up until now, it was totally -- so the equity composition of that totally composed by Tier 1, so equity is the highest quality. What banks typically do is that they supplement core equity by additional instruments, Tier 2, additional Tier 1, AT1 type of instruments. We've not done that in the past. And we think this should be part of a healthy, not only funding, but in the end, capitalization needs of any bank that is growing. We have the ambition of growing also bank balance sheet going forward. So this is why from our perspective, it's not a contradiction at all. It's a strategic move that is in line with how we think the bank should be capitalized.

Great. Then on the cost question from Roni, what type of trend should we expect? And is it going to be a significant growth driver for the profit part? So the trend line at the moment, as Bernd already showed, is looking good. The trend line is moving -- is continuing on the right direction. And we think we will follow the trend line. Is it a significant driver? Yes, of course, it's a significant driver for the profit improvement, but we are not only looking to save cost or to cut the credit losses endlessly. What we need is a healthy top line growth at the same time as well, but the profit driver definitely will be that the credit losses are now in good control, and having them in good control in the future is definitely a significant driver on the profit side. Jorma, do you want to take the risk factors that you see? Or...

Yes, you can go.

I can go. Great. So the biggest risk factors, obviously, there are always macroeconomic things going on in the world, which perhaps I don't comment too much on the news, et cetera. But obviously, maintaining the good growth potential we have at the moment in all of the business units, and I think the biggest risk factors are macroeconomic parts, definitely. And then we are growing fast, so there's always risk that can we maintain the same growth. I believe we do. And it is to focus and to be disciplined in the future as well. We have maintained, for instance, good view going back to the credit cost perspective that we've seen that even though macroeconomic times have been challenging, we have been able to shift from last year Q1 and showing the Q3, Q4 extremely good credit loss control.

Good. Good. Thanks. And maybe one point what I personally see as the main challenge or main risk for us as a Multitude is a little bit -- I personally believe that operational risk is always biggest in our case because we have a so deep understanding on the market, so deep understanding, we have so much data that even when the macroeconomic situation changed a little bit, we can adapt the situation. But on the operational part, it's -- if we have a lot of initiatives and like Antti mentioned the growth, I agree that behind the growth is operational things that we -- because we have so many initiatives there, what we want to get done and what we have to do. So if we fail to execute at those part, it is a big risk for us that that's slowing down in our growth. And that's the reason why I'm very happy for Antti and his team and his management style because they are very, very operational and process-driven to get the things done there. So I mean that's the reason why I'm very, very -- I feel very good related to this risk. What I see is biggest. Good. Then there is a question about the relocation. It's -- maybe I can take this. The question comes from -- I don't see now -- from [ Max Reinhardt ], related about, can you give the more insight from our -- behind the relocation from Finland to Switzerland? And like we comment that in the 9-months earnings call there that we have 3 main reasons for this move or this change there. First, we want to bring the company closer to our investors. That was number one. Second, we need to simplify the process for the foreign shareholders to participation in our shareholder meetings where we have had some challenge on the history that you have the registration shares to Finland to get the right participation in AGM. Third one, we want to open up investment opportunities for the Finnish shareholder to invest in Multitude share. As we have it a challenge that as a Finnish company, what the share is only listed in the Frankfurt, the local shareholders, the Finnish shareholders, they have to hold. They all invest in through the local custody accounts and nominal register there, and that's make a really complicated, the investors, to Finnish investors to investment there. So practically, we want to increase the free flow to take involve the Finnish investors. We want to bring more closer our main shareholders, the foreign shareholders that we want to give access for all shareholder opportunity joining AGM. We are not planning there to relocate from people or the change in our tax residence or things like that. And that's not our part of this change here. It's more the technical change, like the registered seat change, what we have done there. Good. We are start running out of time. Did we have -- then we have one question. It's [ Daniel Eparu ]. Do you want to, Bernd, comment that one?

Yes. Maybe also the debt position as well?

Yes.

Daniel Eparu, congrats for great '24 financials. Are there any plans for raising additional liquidity by issuing a new bond? I think we have briefly elaborated on the perpetual topic. Bank, we are currently fine, a consolidated view. I would say that we have the instruments in place that we need. We have taken, by the way, EUR 20 million of the senior instrument on our own books, which if and to the extent needed, we can use and then sell to the market. So this is a transaction step by step that could actually happen in the course of '25. Other than that, I would rather tend to say not really unless there are discretionary events such as M&A transactions or similar. So case by case, but on a steady-state development basis, I think that issue is the only one that we would consider for this year. And then we have another one, an anonymous attendee. Net result per share as announced with EUR 0.66, slightly more than 20 million shares divided by EUR 20 million net profit results in close to EUR 1 per share. What explains this significant difference? The earnings per share calculation that we've reflected here is a little bit conservative one as it essentially deducts interest paid to perpetual bondholders as this technically is also an interest -- an equity instrument from the EUR 20 million net profit. So EUR 20.2 million net profit minus around about EUR 6 million interest paid to bondholders gets us to around about EUR 14 million, and that is 2/3 of the number of shares if you divide 21 million shares to EUR 14 million, that is exactly 2/3 or EUR 0.66.

Good. I think we are done with all our Q&A box questions as well and no more audio question, and we're running out of the time as well here. So I think it's a great opportunity, repeat, so really, really big thanks for our team. Amazing effort on the last year, really, really congratulations, you have done a great job there. Here, you can see, by the way, our last year, the 100 people, our key managers, the events, what we have organized every each year. And really big thanks to all of you. Thanks for the bond investors. Thanks for the equity investors. Thanks for the all stakeholders. And of course, Bernd, really big thanks for that as well.

Thank you.

And Antti, congratulations.

Thank you.

Put the things happening now.

We will definitely do that.

Super. Good.

Thanks, everybody, for joining the call. This concludes the call today. Thank you, and goodbye.

Thank you.

Thanks.