Here are Ron’s quick comments on the Q3 results published this morning.
Multitude’s growth in Q3 was slower than our expectations, but the result was largely in line with our forecasts, due to very good growth in fee income and the continued positive development of credit losses. The guidance was reiterated, which we believe does not require a very strong year-end. We have not yet heard about strategy updates or new financial targets, but we believe we will be better informed after the Capital Markets Day held this afternoon (registration here).
Ja tässä olisi Ronilta vielä yhtiöraportti Multitudesta.
Multitude’s Q3 figures were slightly below our estimates, but on the positive side, capital-light fee income continued its rapid growth and credit losses continued to decrease. Although the target level for the Capital Markets Day was high, we found the presentations informative and encouraging regarding the company’s medium-term outlook. Despite this, forecast changes were negative based on Q3 figures and the development of net interest income. We cut our target price to 7.8 euros (previously 8.0 euros) and reiterate our Add recommendation.
There has been very little discussion about Multitude here. I wrote a slightly longer report after the Capital Markets Day, so it’s worth reading or watching the CMD slides/webcast yourself! The investment story has progressed well this year for those who have followed the company, and otherwise the company has a good track record in achieving its promises after the 2021 earnings dip. The guidance and targets for the coming years are ambitious, but if these were to be achieved, the return potential is also good
It is indeed a bit strange why people are not interested in this. In 2021, it was completely obvious to me that the company had potential when Ferratum’s EBT alone was 30 M€. SweepBank and Capitalbox were indeed in bad shape then, but the idea was that the poor performance of these two could not be tolerated indefinitely, which would inevitably unlock Multitude’s value in some way.
Do other forum members have any thoughts on Multitude’s share price ‘downturn’? I can’t find many negative points in the latest Q3 report. There’s some pressure on the consumer bank’s net interest margins (due to falling Euribor?) and the result included a one-off +€2 million item due to the sale of a business unit. Everything else seems to be moving in the right direction, at least in my opinion.
From the owners’ side, I don’t see many risks, as Jorma Jokela’s 55% ownership should support risk management → I don’t believe anyone would voluntarily blow up such a position with poor risk management, but rather would ensure that no catastrophes occur.
Other pros:
Multitude owns 30% of Lea Bank AB. Market value: €35.7 million.
Ferratum almost single-handedly covers the entire company’s valuation, as I hinted in an earlier comment.
The company has developed in the right direction, and its guidance has held true, at least in recent years.
Cons:
Industry?
CapitalBox should turn profitable more quickly.
Having followed Multitude for a long time, I’ve often noted that this company’s share price truly lives a life of its own.
Below is a comparison between banks. I didn’t bother to dig up exactly similar banks, but rather took those that came to mind. Figures are mainly taken from TradingView. Hopefully, they are accurate. Compared to the other banks on the list, Multitude is not changing hands at very high multiples, at least.
Multitude
ROE: 15.72 %
ROA: 1.96 %
P/E: 5.8
P/B: 0.84
CET1-ratio: 17.24 %
Total capital ratio: 23.00 %
Credit Rating (Fitch): B+
Target to pay 25-50% of earnings as dividends.
Lea Bank AB
ROE: 8.49 %
ROA: 1.96 %
P/E: 12.85
P/B: 1.65
CET1-ratio: 15.57 %
Total capital ratio: 18.74 %
Credit Rating: ???
TF Bank AB
ROE: 27.05 %
ROA: 2.62 %
P/E: 6.18
P/B: 3.74
CET1-ratio: 14.3 %
Total capital ratio: 17.4 %
Credit Rating: ???
Santander Bank Polska SA
ROE: 17.69 %
ROA: 1.9%
P/E: 9.03
P/B: 1.51
CET1-ratio: 13.1 %
Total capital ratio: 17.1 %
It’s still strange that interest in this is so lukewarm. Could the Frankfurt listing explain it? You can buy the stock on Nordnet nowadays, at least. It’s certainly not very liquid. There are 84 owners on Nordnet. The company has been under Inderes coverage for a year now, and in my opinion, things look quite solid.
For me, at least the listing venue matters, meaning the costs (and the fact that I currently have enough banks in my portfolio).
My own “bank Excel” shows green for Multitude in terms of valuation, meaning the current share valuation is moderate for my taste. I haven’t combed through the balance sheet (since it’s not on my buy list), so I can’t assess if there’s anything there that wouldn’t please me.
This didn’t provide a crazy amount of new info about Multitude as an investment, so feel free to flag the post if you feel like it.
I have a small amount of Multitude bonds in my bond portfolio purchased through Mintos, with a coupon rate of 3-month Euribor + 6.75%. The YTM is approx. 7.4% p.a. if held until maturity.
Can Roni or someone else comment on whether the listing in Frankfurt makes sense? Trading volume seems to be around tens of thousands on average, yet the market cap is 129 MEUR. There are more of these types of listings in Stockholm. Antti Kumpulainen is, of course, also welcome to respond to this.
The headquarters are located in Zug, Switzerland, so is there some tax planning behind these locations?
You can read about the background of the company’s Frankfurt listing in this Kauppalehti article, for example, where founder and largest owner Jorma Jokela discusses the matter: Ferratum suuntaa mobiili edellä Frankfurtiin | Kauppalehti
Nowadays, the company has many shareholders and, as far as I know, bond investors specifically in the DACH region, so in that regard, the Frankfurt listing is quite logical. It doesn’t seem to have gained much attention from retail investors there either; after all, Germans are, on average, presumably quite conservative and risk-averse investors.
Thanks Roni for the fairly comprehensive answer. I need to do my own background work better in the future. I personally still believe that in light of the figures, or compared to the Stockholm peers for example, this is glaringly mispriced at the moment. I’m just trying to find some explanation for this; maybe that German conservatism is a good guess!
Awesome… Roni and Iikka have made a video about Multitude.
Topics:
00:00 Intro
00:09 Multitude as a company
01:47 Customer base
02:26 Earnings have grown strongly
04:51 Credit losses
06:45 Operations across Europe
07:46 P/E 6.5x – why is the stock cheap?
Great interview, Roni and Ilkka! Digitalization, scalability, a proven track record in risk management – I think there’s a lot of good here on top of an understandable business. The CEO has been with the company for a long time and there is a strong major owner; these are also things I like about this.
There has been talk in various media lately about the corporate restructuring/bankruptcy filings of the Järvisydän Group.
In today’s local newspaper, the administrator mentioned that there is a significant amount of debt and the creditor is Multitude Bank. A quick check of Multitude’s website shows a “reference” for over 20 million in financing for a tourism company located in South Savo.
I haven’t followed Multitude that closely, but this will likely have some impact on the company’s finances if write-downs have to be made—and they probably will be if the corporate restructuring goes through.
“Lomakylä Järvisydän - Backing Premium Hospitality Real Estate in Finland
A €23.5 million financing package from Wholesale Banking is supporting the continued growth of Lomakylä Järvisydän, a Finnish real estate company focused on high-end hospitality assets. The transaction enabled the acquisition and enhancement of multiple landmark hospitality properties in the Finnish Lakeland region. This case reflects Wholesale Banking’s ability to support established operators and developers in the tourism and real estate sectors with tailored, asset-backed financing solutions that fuel long-term growth”
The attached quote was found on the website, but I’m sure it could be found if one bothered to dig through the financial statements. As I understand it, this was apparently granted in 2024 or 2025.
Here are Ron’s pre-comments as Multitude releases its Q4 results on Thursday, March 12.
Multitude reports its preliminary 2025 results on the morning of March 12. We forecast that the decline in the largest segment will continue due to lower interest rates and the divestment of certain business units, while development in smaller segments is stable or shows moderate growth. The guidance anticipates a fairly clear decline in earnings for Q4, and our forecasts are in line with this expectation. The 2026 guidance is already known (EUR 30 million net profit), and we are largely focused on identifying concrete measures necessary to achieve this goal, as it requires strong earnings growth despite headwinds from a declining net interest margin.
