Topic: Multitude reported a strong set of Q3 figures with improved bottom-line and confirmed its FY24 EBIT guidance. Further, the company announced to continue with a new CEO from FY25 onwards and provided a guidance for FY25. In detail:

• Interest income increased to € 65.1m (11% yoy, 1% qoq vs eNuW: € 68.3m), thanks to strong growth in the SME banking to € 8.6m (4% qoq, 46% yoy, vs eNuW: € 8.3m) and in the Wholesale Banking to € 3.5m (25% qoq, 152% yoy, vs eNuW: € 2.8m). Consumer Banking topline improved only slightly by 4% yoy to € 52.9m. The net loan book (NAR – including debt investments of € 101m) grew to € 726m (4% qoq, 24% yoy, vs eNuW: € 720m).
• EBIT jumped to € 18.9m (13% qoq, 57% yoy), mainly driven by credit losses that decreased further to only € 21.5m (-10% qoq, 3% yoy, vs eNuW: € 26.6m) or 33% of sales, while S&M, personnel and other operating expenses remained stable. With interested expenses raising to € 12.8m (12% qoq, 99% yoy, eNuW: € 9.6m), we should have seen the peak here for the moment, expecting lower relative levels going forward. Still, EBT of € 6.2m (15% qoq, -2% yoy) is in line with expectations (eNuW: € 6.6m), carried by the lower credit losses.

Overall, Multitude delivered another strong quarter thanks to further significant improvements in the risk management, visible in declining credit losses paired with ongoing tight cost control stabilizing OPEX. On the back of the 1) strong NAR over all segments, 2) credit losses to remain on moderate levels and 3) ongoing tight cost control, we see further meaningful EBIT improvements. Hence, the confirmed EBIT guidance of € 67.5m looks achievable. As interest expenses should have peaked in Q3, the newly introduced net profit guidance for FY25 of 23m looks achievable as well (eNuW: € 24.5m). Further, CEO and founder Jorma Jokela decided to step down as CEO of the Group at year end to focus i.e. on M&A and hand over to Antti Kuplainen (currently CEO of Multitude Bank) – a sensible move in our view.

For a growing, highly profitable, resilient and dividend paying company 4.6x PE´25 looks dirt cheap. Consequently, we reiterate BUY with an unchanged PT of € 12, based on our residual income model. Multitude remains a NuWays Alpha pick.