Source: Inderes

Multitude will publish its Q2 results on the morning of August 13. We expect the top line to decline organically, mainly driven by the divestment of Micro Loan business entities and interest rate caps in Consumer Banking. To our understanding, Sortter is consolidated in the figures from around mid-quarter, bringing inorganic support. The company's 30 MEUR net profit guidance for the year leaves little room for error after a soft Q1, so our focus will be on the underlying earnings drivers and cost control that are crucial for the H2-loaded profit improvement.

We expect a rather flattish top line

We expect Multitude's Q2 total net operating income to decrease slightly to 54 MEUR (Q2'25: 55 MEUR). The minor contraction is driven by lower net interest income in the largest business unit, Consumer Banking, which continues to face headwinds from the divestment of Micro Loan businesses last year and the impact of interest rate caps in Sweden, although we expect the decline to have stopped on a quarter-to-quarter basis. We expect this softness in net interest income to be largely offset by growth in the other segments. We anticipate modest growth in SME Banking and strong growth in Wholesale Banking. Wholesale Banking's growth is supported by its expanding loan portfolio, which was recently strengthened by a 16 MEUR financing facility provided to UAB Nordecum.

Furthermore, the top line is supported by growth in fee and commission income. We have preliminarily allocated Sortter fully to fee and commission income, which gives the revenue item an inorganic boost. As we understand it, Sortter has been consolidated into the Group's figures since late May, when the deal was announced. The exact stake and valuation of the investment are not yet known, which will affect the share of results attributable to minority owners.

Sortter consolidation and the timing of earn-outs cause uncertainty in profit estimates

We estimate Q2 earnings before taxes (EBT) to decline to 7.7 MEUR (Q2'25: 8.0 MEUR), largely mirroring the topline development. We anticipate that the higher cost level seen in Q1 reflects a new baseline, which we believe will be seen in a worsening cost/income ratio. Thus, cost discipline remains a key watchpoint. We expect impairment losses to continue decreasing in both absolute terms and relative to the loan portfolio, reflecting the company's ongoing strategic shift towards lower-risk customers and the divestment of Micro Loan businesses. The consolidation of Sortter causes some uncertainty to profit estimates, as the run-rate profitability of Sortter is not known. The company will also book some earn-outs from last year's divestments, and the timing of these also causes uncertainty to the profit estimates. Earnings will be supported by income from associates, driven by Multitude's stake in Lea Bank (Sortter is consolidated into Group figures from Q2 onwards). We expect EPS to land at 0.22 EUR (Q2'25: 0.28 EUR).

Reaching the 2026 guidance requires a strong second half

Multitude's guidance for 2026 expects a net profit of 30 MEUR. Following a softer-than-expected Q1 (net profit of 4.4 MEUR), the earnings performance needs to improve drastically in the coming quarters to reach this target. We expect the company to reiterate its guidance, but we consider the safety margin to be limited. Our focus will be on the outlook for the earnings drivers in the second half of the year. The expected H2-weighted development is supported by the consolidation of Sortter, which we believe will provide a boost to earnings (only a partial effect on Q2 numbers). Additionally, we expect the company to receive earn-outs from the 2025 divestments, which would further support this year's bottom line. Regarding the soft Q1, it's good to note that Multitude's earnings distribution between quarters has historically been uneven, so one quarter alone should not be overinterpreted. The company noted in Q1 that it was progressing according to its internal budget and that the soft start to the year was expected. For business units, we find the performance of SME Banking especially interesting, as it has continued to be loss-making and faces a significant challenge in reaching its targeted profitability this year.