Multitude AG ($0R4W)

Good morning, and thank you for joining us. My name is Adam Hansson-Tonning. I'm the Head of IR and Treasury at Multitude. We appreciate taking the time to join us in today's call. Today, we're going to present Multitude's 2025 preliminary results. And joining us today in today's broadcast from Helsinki, Finland is Multitude's CEO, Antti Kumpulainen; and CFO, Bernd Egger. After the presentation, we will have a Q&A session, where participants have the opportunity to ask questions via telephone conference or using the chat function in the webcast. With no further ado, Antti.

Thank you, Adam, and welcome on my behalf as well. My name is Antti Kumpulainen, and I'm the CEO of Multitude Group. During this call, I will walk you through Multitude's earnings call and preliminary results for year 2025 with our CFO, Mr. Bernd Egger. The year 2025 was a strong showcase of increasing our profitability and meeting our guidance, which we adjusted already after the first quarter last year. Today, we want to share with you with some key takeaways. First, our revenue continued to be stable. Interest revenue decreased slightly, but it was largely compensated by increased recurring fee income. Secondly, we delivered again a strong net profit, which increased by almost 32% to EUR 26.6 million. Third, impairment losses on loans decreased over 15% year-on-year. Fourth, we confirm our net profit guidance with 20% net profit increase per annum for 2027 and '28. And fifth, we can state that our tri-pillar growth strategy is bringing the results we have been planning. I would also like to note that we have successfully refinanced our perpetual bond with an increased volume from EUR 45 million to EUR 70 million, and this is strengthening our financial position and enabling further growth for Multitude. I would like to recap briefly who we are and where we are heading. Multitude was founded in Finland in 2005. Our registered city is in Switzerland. We operate with a full EU-wide banking license and we are also listed on the Frankfurt Stock Exchange in the Prime Standard. We operate 3 independent business units on our growth platform, serving customers which are overlooked by traditional banks in consumer, SME and institutional client segments. Our operations expand to 17 European countries and we are focused in EEA markets. Net profit in 2025, like I said, was EUR 26.6 million, and we exceeded our guidance. Revenue in 2025 was almost EUR 257 million, and our ambition is to pay dividend between 25% and 50% of the net profits. Since the beginning of our company, we have always strived to build and offer services to customers who are overlooked by traditional banks. Our vision is to build the most valuable financial platform for them. We believe this can be achieved by offering an amazing customer experience that's digital, fast, easy and also a green choice. Our FinTech growth platform serves as the core with scalable components hosting our own business units. The platform currently serves our 3 business units which are: Consumer Banking with Ferratum brand; business banking, CapitalBox, which focuses on digital SME banking; and our newest business unit, Wholesale Banking, with Multitude Bank brand. Our focus on the platform is to enhance scalability and constantly seek and be ready for new opportunities. We have 2 investments in associated companies: Lea Bank, which is a Swedish bank; and Sortter, which is a digital loan broker. And Sortter was, by the way, recently listed in the top 1,000 fastest-growing companies in Europe by Financial Times. That's quite an achievement. Dynamics in our strategy, they are quite simple. We concentrate on our three-pillar growth strategy, which consists of organic growth, partnerships and M&A transactions. Creating true value for our customers is in the middle of everything we do, scalability, which comes through AI, automation and a tight cost control. Let's take a closer look into the performance of Multitude in 2025, which showed a strong net profit growth and further improved asset quality. Revenue development was stable and interest revenue was complemented with a significant increase in recurring fee revenue. Total revenue was EUR 257 million. Asset quality, this is important for us. That continued to improve, and impairments decreased by over 15% year-on-year, and we have seen this trend for a long time already. Net profit grew by over 32% to EUR 26.6 million, exceeding our guidance of EUR 24 million to EUR 26 million. As we stated out earlier during the year, we reduced 1/3 of our legal entities. Each of our business units, they are in different life cycle and each one is contributing to these results. Our investment in Lea Bank shares has continued, and our stake has increased to 29.7%, and we are the largest shareholder in Lea Bank. Going forward, we have clear focus. We are focusing on growing our business through our three-pillar growth model which are organic growth, partnerships and through selected M&A transactions; continue increasing our recurring fee income, and through that, we want to diversify our revenue profile in Multitude; maintaining high asset quality; we also need to achieve our net profit guidance of EUR 30 million in 2026, and after that, 20% growth per annum in years '27 and '28. Then let's go to our business units. Next up is our business units, which we'll start with Consumer Banking, Ferratum. Ferratum has been our core business unit for 20 years and is still growing as the assets grew by over 8% in 2025. Interest income reduced slightly, but it was largely compensated by recurring fee revenue as per our strategy. Asset quality continued to improve and impairments went down by whopping 18%. Three-year target in Ferratum is an EBT CAGR growth of 10% in the coming years. Focus for Ferratum is on high-profit markets, growth through partnerships and M&A opportunities. Streamlining of operations, scalability and continuing the increase of automation and extensive usage of data and rolling out AI are in the core of the activities. Next, we will take a look at our business banking unit, CapitalBox. Revenue and portfolio continued to grow as planned. Our target was to reach profitability in quarter level end of 2025 which, unfortunately, we did not achieve. The development was anyway really good and we managed to reduce the losses by more than half. Asset quality continued improving and it led to a decrease in impairments by 15%. Change in portfolio composition was clear and planned. Now 30% of the portfolio is in Secured Debt, and the total portfolio grew by over 8%. We have full focus in '26 to turn CapitalBox into profitability for the whole year of '26, and after that, 50% EBT CAGR following in the coming years. We believe we can make it. Our youngest business unit, Wholesale Banking, they had a great growth numbers. Revenue grew by almost 70%, EBT by over 160% and portfolio by over 80%. Those are amazing numbers. Focus is clear: grow both sides of the business, which are Secured Debt and Payment Solutions. There's a healthy mix of interest and recurring fee income in Wholesale Banking business units. Focus in this business unit is an EEA area. The team is now focusing on closing the secure debt pipeline, which is really strong at the moment. Same goes for the payment services. Now it is time to execute. Our 3-year target is growth in EBT by 50% CAGR. Next, you will hear more in detail about the financials from our CFO, Mr. Bernd Egger. Please.

Thank you, Antti. Time to execute, that's a good starting point. Let me take a look at the key messages I want to bring across for 2025. Message number one, top line development revenue, broadly stable with a shift from interest income to fee income. This is super important to us. We've been working on this for several years now. Message number two, impairment losses decreased by 15.5%. Message number three, maybe the most relevant, net profit is an all-time high level. The details. Interest income, EUR 242 million, down 7.3% from last year. However, fee income increased very significantly to EUR 15 million last year from EUR 2.6 million in 2024, so a factor of 6. Other income, EUR 3.3 million, including positive effects from entities sold during the year. And results from associates, Antti already highlighted that we have 2. That's Lea Bank, we hold close to 30%, and Sortter. To be precise, by the way, Sortter is not only amongst the top 1,000. It's in the top quartile. It's on position 234 of European fastest-growing companies. So really a top, top, top achievement. Operational expenses. Personnel expenses increased only slightly, mainly driven by growth initiatives. Selling and marketing and depreciation netting each other, also neutral. And that gets us to profit before tax of EUR 30.8 million, up by 1/3 from EUR 23.2 million last year. Net profit, as pointed out, EUR 26.6 million, exceeding the initial guidance, so 16.6% above the initial guidance level of EUR 23 million and 6.5% above the midrange of the guidance, EUR 24 million to EUR 26 million, that we had issued about a year ago. And again, this is all-time high. Balance sheet. Total assets increased by some 26%, EUR 1.4 billion altogether. Key drivers, loan portfolio and investments increased quite significantly by around about EUR 180 million. Positive statement here from our perspective, super important, all 3 business units are growing significantly. So Wholesale Banking, plus EUR 112 million portfolio size; Ferratum, plus EUR 40 million, so quite a significant increase in the consumer business; and EUR 25 million roundabout in the SME business. Cash and equivalents increased to EUR 304 million. This supports future growth for 2026. Investments in associates, I've highlighted that already. We're very happy with the investments that we are currently holding. Balance sheet liabilities and equity. Customer deposits remain the primary source of funding. We're exceeding the EUR 1 billion threshold for the first time. Current year-end, EUR 1.034 billion. Debt securities, up by around about EUR 30 million up to EUR 108 million. Key driver is regulatory capital. So you certainly know we have a bank in our group and have increased for the first time significant Tier 2 transaction on the level of the bank in 2025. Taking all that together, total equity increased to EUR 208 million, first time above the EUR 200 million threshold, up 7.3%. Perpetual bond qualified as equity, Antti has highlighted already. I will give a little bit more detail on this transaction and the rationale when we talk about funding. And finally, our net equity ratio prior to the new PB transaction was close to 22%, so 400 basis points headroom from relevant covenants. The segment view. Consumer Banking main focus from my perspective and from our perspective is profitability. We delivered continued high profitability, more than EUR 32 million profit before tax. That is the same level as last year. How do we get there? Interest income, we see a slight decrease, which we think is of temporary nature. Portfolio size increased quite significantly. A drop in interest income offset by a significant increase in the consumer business. Fee income, from EUR 2 million to EUR 12 million in a single year. In addition, we earned more than EUR 6 million from earnout from businesses that we sold, which is not reflected in revenue. So they have a positive cash impact on the organization at some point. Fair value might be adjusted upwards, but not reflected in revenue. Net operating income, EUR 176 million. And super important as well, impairment losses continue to decrease, down 18.1% to EUR 67 million. Profit before tax, as pointed out, stable on a super high level, EUR 32.5 million. So very happy with that. Still, the ambition is to grow profitability going forward. SME, as pointed out, we've made further progress towards sustainable profitability. So we are really almost there. And I'm convinced that in 2026, we will be there. Interest income increased to EUR 35 million. Net operating income, EUR 26 million. Impairment losses, this was one of the key focus areas in '25, reduced by almost 15% to EUR 11.8 million. And also something that is the result of quite an ambition during the year, operating expenses also reduced in absolute terms, not only relatively, but in absolute terms to EUR 18.7 million. And as a result of that, almost 2/3 of the losses from '27 could be cut in '25. So if we extrapolate linearly, then this makes us comfortable to achieve profitability in 2026. Wholesale Banking, that's an easy one in a way. Profitable already in '24. Profitability has increased very significantly during '25 from EUR 1.1 million to EUR 2.8 million in revenue. Interest income, EUR 20 million, an increase that is very significant, 2/3, from EUR 13 million. Fee income, again, something we've been striving for, for many years. Top performance, close to EUR 3 million from only EUR 0.5 million the year before, mainly coming from Payment Solutions. And all that reflects in EUR 2.8 million profit before tax in a still early business with huge potential. Just a very quick look. I will not run through the details. Key message on credit loss development is, number one, this continues. The improving asset quality continues to be a significant profitability driver. Number two, despite the fact that we had some external challenging factors to be considered, we are super resilient, super stable. So around about EUR 20 million, this is the quarterly credit loss level. On an aggregated level, pretty much stable throughout the year. Growing volume, stable. Credit losses that, in the end -- if you maybe could switch to the next slide because it doesn't work here anymore. Thank you. That is not the long-term perspective. I was referring to 2025 top performance. Long-term perspective, even more relevant from my perspective, highly resilient business, a clear downward trend which reflects improving asset quality. Funding structure. Deposit, we spoke about that. We have successfully managed to bring weighted average cost of debt funding down quite significantly from more than 4% to 3.6% during the last year, 3.68% in Q4. That makes us comfortable that this trend will continue, and that is the expectation, the plan for '26. Super important, Tier 2 transaction successfully placed from EUR 45 million to EUR 70 million. This helps us not only from a liquidity perspective, but also from a capital perspective. This qualifies as IFRS equity and supports growth, both organic growth of the organization, but also gives us a lot of flexibility when it comes to inorganic growth opportunities. With that, one final and confirming look on our capital market guidance. Statement number one, '25 exceeded, in fact, overachieved, and again, 16.6% above the initial guidance of EUR 23 million. '26 confirmed. We stick to the EUR 30 million net profit guidance. Operational targets, you are familiar with. A 20% return on tangible equity target that we have introduced for '28. We're getting there. '25, already 16.5% return on tangible equity. That is already very strong. And we are on the way to 20%. Cost-to-income ratio at 48%, very comfortable that we get down to 40% by '28. Key takeaways. Revenue, stable with a shift to fee income. That is something that is the reflection of our long-term strategy. Asset quality, improving significantly. Net profit up by almost 1/3 to EUR 26.6 million. '26 guidance confirmed, EUR 30 million plus 20% increase thereafter up until 2028. We continue to execute the tri-pillar strategy in delivering the growth. And finally, the information that you received already on the successful PB transaction. With that, I hand over to the team, and we are open and looking forward to receiving interesting questions.

Yes. Can you shift the slide? So we will now start the Q&A session, and we will start with live questions followed by questions from the chat. Perhaps we can start with a live question.

Roni Peuranheimo from Inderes. Congrats on the good quarter. So maybe if you're thinking about the '26 guidance, so could you maybe rank what is the most important driver? Is it returning to growth or continued lowering of the impairment losses or cost cuts?

If I start. Thank you, Roni. The most important drivers, you mentioned them all already. I believe we have to go really well to the growth path again. I remind you that we are in a good progress of increasing our recurring fee revenues. So this is something that we definitely will continue doing. Growth is coming from all 3 business units, so this is important. And we see that it's really coming from all 3. Cost control is something we have a really, really tight eye on all the time and usage of AI automization even more widely than we are using it today. These are not new things to us. We have been working with AI machine learning, for instance, in our risk management for years already. And everything is about scalability for our growth next year. That is where we're going to head.

Maybe then regarding the net interest income development. So how much concrete outlook do you have regarding that? And maybe if you can give some estimate about the timeline of the recovery.

Well, recovery, I'm not super happy, if I may be honest, with the recovery term because in 2 out of 3 businesses, net interest income is growing. In the third business, we have three factors to consider. One is, and I'm referring to Consumer now, a shift to fee income. This is not something that happened. This is something that we have intentionally tried to achieve. Now for the first time, we're achieving it. So that's not a negative thing. Secondly, we have sold businesses. They contribute also to fee income quite significantly. Quite significantly means EUR 5 million in H2. This is service fees, in the end, Software as a Service, Tech as a Service to external partners. And number three, not reflected in interest income at all is the EUR 6 million from earn-out. So we're selling business. We are getting back a profit contribution from the businesses that we're servicing for externals. And that is, whether we like it or not, the logic of IFRS is something we can debate, but it's not reflected. And if we add that back, then we have no drop in interest income at all in the organization. So long story short, I think also in Consumer, a EUR 40 million large portfolio, we are very well on track.

[Operator Instructions]

Shall we take some chat questions in between? Yes. All right. So we have a question from [ Thomas Keiser ]. Congratulations to the numbers. A share buyback program would deliver a lot of value. Is this something that you consider?

Do you want to start?

You can start.

I mean, share buyback program is a very interesting topic. We've done a share buyback program in 2025. This is something that is subject to quite heavy regulation so it's limited. So that means as limit is, in the end, some 25% of the shares that we are trading on average, I don't think that it necessarily is something that will be as attractive as some think it might be. We think that with the capital that we have in the organization, we can do a lot. We can build a substantial increase in business volume, in profitability, potentially engage in M&A transactions. So I don't want to preempt any discussions, but it's not something that I would expect over the next couple of weeks.

Two further questions from the same investor then. In terms of timing of CapitalBox getting into profitability, how do you look at that over the trend of the year, so to say?

I think this is pretty clear. Like Bernd already stated, that we managed to reduce the losses last year of almost 60%. And we can see that the same trajectory is going on. Of course, it doesn't happen over the night. But our target is not to be breakeven in CapitalBox at some point this year. We are talking about full year of 2026 to be profitable. This is our target. And yes, it's not going to happen perhaps in the first half of the year that we would already be on breakeven point or pretty close to it. But we are looking now for the full 2026. And there, we have a strong commitment of making a positive result for CapitalBox.

Very good. I think we have a question on the audio line.

The next question comes from Julius Neittamo from NuWays.

Congratulations on the results. I have just a very quick question here. So what was the contribution of Wholesale Banking to the fee and commission income in the last quarter?

Well, for the full year, it was EUR 2.9 million in the Wholesale Banking out of EUR 15 million together, consolidated. So EUR 15 million is the whole company, EUR 12 million, Consumer, and EUR 2.9 million, Wholesale. Wholesale, we have EUR 2.1 million is payment. And out of that, I think we see a clear trend to increase it over the year. So EUR 2.9 million Wholesale out of EUR 15 million, to cut the long story short.

Maybe to expand on the fee and commission income, a bit on the outlook for this year then. Where do you see it evolving from here? I mean we've seen kind of a spectacular growth here this year. How do you see it for this year then?

We see that we are growing this year in recurring fee income for sure. What are the exact numbers? We haven't been disclosing the split between interest revenue and recurring fee revenue. What I can say that the different sources for recurring fee, for instance, is coming from partnerships, which we are looking actively to expand on. And there, we can see more fee income. Payment side of the Wholesale Banking is growing. Onboarding of institutional clients is going all the time. So we do see a growth which is meaningful for 2026. It's not going to be only slightly. We see meaningful growth in 2026 on both business units on this, Consumer and Wholesale Banking.

All right. Thank you, Julius. We have a question from a private investor on the cash level. EUR 304 million is quite high. Is this level needed for operations? Or do we have any acquisition plans for usage of the cash?

This, I would direct perhaps to Bernd when we talk about money.

Thank you so much. I think there are three questions in this question. First of all, whether we need the cash for M&A transactions. The positive note is we have flexibility currently for M&A transactions both from a cash and from an equity perspective. So we would not be dependent on external funding for those transactions. So this is a very positive factor for us. Secondly, we have some cash minimum targets on operational level that are important to us that give us the flexibility. Here, we are slightly above the minimum levels. And the third one is the regulatory ratios that we need to factor in on the level of the bank that have to do with some net sales funding ratios, liquidity coverage ratios on the level of the bank need to be fulfilled at all times. Here, we have a little bit of overliquidity currently. We hope that we can deploy that, and we're optimistic that we can deploy that to business growth in Q1 and Q2.

Thank you. A tied question. What was the average cost of funding? I think we went it through. But how do we perhaps see the development of this going into '26 further?

Yes, if I may continue. Weighted average cost of debt in Q4 is slightly above 3.6%, coming from 4.2% around about a year ago. So that is a 60 basis points reduction in 1 year. Naturally, the ambition is to push down further. We do so by focusing fully to the extent possible on deposits. We have some old term deposits that we just needed to take in back then that were a bit expensive 24, 36 months. But those are melting off now. So from that perspective, without promising too much, I think the trend that you see on this slide showing the weighted average cost of debt development is a good indicator.

Thank you. And other financing-related question which we have received from multiple questioners. How do we see the dividend based on the results? We didn't mention it in the presentation.

No, we did not mention. The only thing we mentioned actually on the first slide, I believe, or second slide for myself was that, we have already told this in our Capital Markets Day, that we have a strong commitment of targeting 25% to 50% of the net profit of our dividends on an annual basis. And at this point, this is the only statement I will make about the dividends.

Good. And then the final question that we have currently is coming back again to the fee and the commission income and if you could provide some more color on the development of it. I think you already have. But how significant do you see the growth potential in the area is the exact question?

I see the growth potential is significant for sure. Let's remember that we had almost nothing in 2024 when it came to the recurring fee, going up to EUR 15 million in 2025. So we have just started on that path, and we really believe that we will grow significantly. Not to go into exact numbers, but we see a really, really good growth trajectory. There's lots of demand on payment side for us. There's lots of demand on partnership side, which we are doing really well at the moment. So I see no reason why we wouldn't grow in a meaningful way, contributing to Multitude results.

Thank you. I believe that marks the end of the Q&A session, and it's time to end this earnings call. We thank you for your interest. And we remind that we will publish our full annual report in 2 weeks. Thank you. See you next time.

Thank you. Have a good day.