Multitude extensive report: Profitable niche player in the digital lending space

Multitude has had an impressive profit growth track record during the last years, while simultaneously derisking its balance sheet. However, the main profit contributor remains consumer lending and the SME Banking and Wholesale Banking need to continue their currently good trend to start contributing more to the Group numbers. The risk profile of Multitude is still above traditional banks, but in our view that is reflected more than enough in the valuation (2026e P/E 6x). We reiterate our EUR 7.8 target price and Buy recommendation.

Digital bank serving overlooked consumers, SMEs and other fintechs

Multitude (originally Ferratum), a Frankfurt-listed digital bank established in Finland, offers lending and online banking services to consumers, SMEs and other fintechs that are overlooked by traditional banks. Multitude operates in 17 countries and through three business units: Consumer Banking (Ferratum), SME Banking (CapitalBox) and Wholesale Banking (Multitude Bank). Consumer Banking is clearly the largest segment and generates most of the Group’s profit. SME banking is still loss-making, but the company is aiming to turn the segment profitable this year. Wholesale Banking is the newest segment, but it’s growing fast and has already reached profitability.

Consumer lending is Multitude’s crown jewel

We believe that Multitude is a strong player in its “overlooked customer” –niche, but the position is clearly strongest among consumer lending where the company has operated for a long time and developed strong underwriting capabilities. Given the weaker track record in SME Banking, we view that the company hasn’t yet found a competitive edge.

Profit growth ambitions are high

Multitude has an impressive track record of meeting or exceeding its multi-year guidance set in 2021 onwards. Currently, the company is expecting to reach 30 MEUR net profit in 2026 and 20% per annum growth in 2027-2028. The company aims to achieve this target by continued growth, improved asset quality and cost/income ratio. When it comes to growth, the revenue mix has started to diversify from purely net interest income also to fee and commission income from partner business in Consumer Banking as well as Payment Solution business in Wholesale Banking. Fee income are asset-light and high-margin revenue streams that have an important role to play in profit growth and capital efficiency going forward. The impairment losses (% of loan book) have also steadily declined in recent years and this trend should continue, but a massive drop like in 2025 due to Micro Loan business divestments, is unlikely. Even though the riskiness of Multitude’s loan portfolio has decreased, it still is riskier compared to traditional or other digital banks.

Valuation remains very low

In our valuation, we look at Multitude as a bank, although fee income growth is creating more asset-light income streams for the company, which can also support acceptable valuation levels if the growth continues (through higher ROE-%). In our view, a ratio of 0.85-1.15x is currently acceptable for Multitude, derived from assumptions about sustainable return on equity and cost of equity. When we treat the perpetual bonds on the balance sheet as debt, Multitude’s 2026 estimated P/B is 0.85x, which is at the bottom of the acceptable range. The P/E ratio based on this year's estimates is 6.0x. Multitude's risk profile is high compared to other banks, but we also see its return potential as high. The earnings growth will be negative at least in Q1, but the company should return to earnings growth latest in H2. Overall, we consider the risk/reward ratio to be very attractive given the current valuation.