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Multitude SE Interim / Quarterly Report 2024
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Interim / Quarterly Report
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MULTITUDE
9M 2024 REPORT
MULTITUDE
Contents
Interim Board of Directors' Report 9M 2024 4
Key business highlights 6
Consumer Banking - Ferratum 8
SME Banking - CapitalBox 10
Wholesale Banking - Multitude Bank 12
Key figures and ratios 14
Key developments and progress in 9M 2024 16
Statement pursuant to Capital Markets Rule 5.75.3 issued by the Malta Financial Services Authority 23
Unaudited condensed consolidated interim financial statements 9M 2024 24
Condensed consolidated statement of profit or loss 24
Condensed consolidated statement of comprehensive income 25
Condensed consolidated statement of financial position 26
Condensed consolidated statement of cash flows 27
Condensed consolidated statement of changes in equity 28
Notes to condensed consolidated interim financial statements 29
Interim Board of Directors' Report 9M 2024
Multitude in Brief
In this report, "Multitude," "the Group," and "we" are used interchangeably. Multitude is a listed European FinTech company offering digital lending and online banking services to consumers, small and medium-sized enterprises (SMEs), and other FinTechs overlooked by traditional banks. We provide services through three independent business units, supported by our internal Banking-as-a-Service growth platform.
Our business units operate in Consumer Banking (Ferratum), SME Banking (CapitalBox) and Wholesale Banking (Multitude Bank). Multitude ceased reporting SweepBank as an independent business unit. Instead, its technology and products now serve as a foundational component supporting an expanded range of services at Ferratum and CapitalBox to better meet our customers' needs. This integration enables Ferratum and CapitalBox to provide their customers comprehensive digital banking services, including credit cards.
Since 1 July 2024, our ultimate parent company has been headquartered at ST Business Centre 120, The Strand, Gzira, GZR 1027, Malta. Concurrently, it changed its legal form to a public limited liability company, becoming Multitude p.l.c. (business identity code C 109441).
Before that, the former ultimate parent company, Multitude SE, was established in 2005 and, as of 30 June 2024, was headquartered at Ratamestarinkatu 11 A, Helsinki, 00520, Finland. As of 31 December 2024, it will relocate to Zug, Switzerland, changing its legal name to Multitude AG.
As a Group, we employ over 700 people and actively provide services to customers in 16 countries. The Group owns Multitude Bank p.l.c., licensed by the Malta Financial Services Authority (MFSA). It is a significant part of the Group that allows it to provide financial services and products to European Economic Area (EEA) member states. Multitude p.l.c. is listed on the Prime Standard segment of the Frankfurt Stock Exchange. Since its relocation to Malta, the ticker symbol is "E4I", previously "FRU".
Multitude Group 9M 2024 - Interim Board of Directors' Report
OUR CURRENT BUSINESS UNITS
CONSUMER BANKING
fe ferratum
SME BANKING
CapitalBox
WHOLESALE BANKING
MULTITUDEBANK
COMPANY FACTS
+
Founded in Finland in 2005
€230m
Group Revenue 2023
400,000+
Customers
700+
Employees
16
Countries
Multitude Group 9M 2024 – Interim Board of Directors' Report
5
Key business highlights
9M in Brief
KEY HIGHLIGHTS:
- Group revenue increased by 15.1% to EUR 193.9 million y-o-y
- Group EBIT increased by 42.1% to EUR 47.2 million y-o-y
- We are on track to achieve our EUR 67.5 million EBIT guidance for 2024
- In October 2024, Multitude Bank acquired a strategic stake in Lea Bank ASA
- Antti Kumpulainen appointed as CEO of Multitude Group, effective 1 January 2025
Company structure and business model
Multitude Group is an international provider of digital financial services. Nordic-born and focused on the European market, the Group actively provides services to customers in 16 countries. Backed by over 19 years of solid track record in building and scaling financial technology, its ambition is to become the most valuable financial platform for overlooked customers. Overlooked customers include individuals and businesses that traditional financial players may neglect due to unconventional financial profiles or overlooked communities with limited access to financial services.
Multitude growth platform
The core of Multitude's strategy lies in its internal growth platform with services designed to be accessible to anyone, anywhere and anytime. We have built the business on these principles from the first day of operations. This platform enables scalable Banking-as-a-Service, emphasising accessibility, scalability, and customer value. By leveraging its expertise in credit risk scoring and digital-first approach, Multitude aims to serve overlooked customers effectively.
Multitude Group 9M 2024 - Interim Board of Directors' Report
Multitude Group 9M 2024 – Interim Board of Directors' Report
Our centralised and standardised operations, which enable scalability and provide Banking-as-a-Service to create value for our independent business units, are built on six key elements:
- Compliance framework
- Banking licence
- Technology stack
- Big data and AI
- Product library
- Customer management systems and processes
Our platform serves over 400,000 customers through our three internal business units: Consumer Banking (Ferratum brand), SME Banking (CapitalBox brand), and Wholesale Banking (Multitude Bank brand). These customers have or have had an active loan balance with at least one of the business units within Multitude within the past 12 months or are active users of the SweepBank app. The SweepBank app will be used by Consumer and SME Banking business units to offer additional digital banking services to its customers.
7
fe
ferratum
Business Unit: Consumer Banking - Ferratum
Ferratum offers five products—Micro Loan, Plus Loan, Prime Loan, Credit Limit, and Credit Card—designed to address diverse and immediate financial needs. These products are tailored to help individuals manage unplanned, short-term expenses arising from unexpected life events. Applying for any of Ferratum's loans is simple, requiring only minimal data entry from the customer. The rest is managed by Ferratum's in-house developed, AI-powered scoring algorithms. This fully digital, automated process ensures that applications are completed and scored within minutes, with approved loan amounts typically deposited into the customer's bank account in less than 15 minutes.
In 9M 2024, Ferratum operated in 13 markets: Bulgaria, Croatia, Czechia, Denmark, Estonia, Finland, Germany, Latvia, the Netherlands, Norway, Romania, Slovenia, and Sweden with two product categories, instalment loans and revolving loans.
Instalment loans
Micro Loan
Micro Loans, so-called bullet loans, are for instant, short-term financing with quick repayment. They range from EUR 25 to EUR 1,000, which customers pay back in one instalment within 7-60 days.
Plus Loan
A Plus Loan caters to a customer's higher need for instant finance. Loan amounts range from EUR 300 to EUR 4,000, the maturity periods are between 2 and 18 months, and the loan is repaid in equal instalments over the loan term.
Prime Loan
Prime Loans are longer-term instalment loans for consumers that enable higher purchases, like home renovations, cars and other more significant purchases. The loans can amount to up to EUR 15,000 with loan maturities ranging between 1 and 7 years.
Revolving loans
Credit Limit
The Credit Limit, the most popular product under Ferratum, is a pre-approved credit line, also called revolving credit, which enables financial flexibility on a more continuous basis. Eligible customers are pre-approved for up to EUR 5,000 and can withdraw money and repay without fixed amounts or timelines.
Credit Card
The Credit Card, a Mastercard® without annual or monthly fees, allows financing purchases of up to EUR 8,000. The card offers free liability coverage for purchases with it and up to 60 days interest-free period. Customers can also use the card as a flexible credit facility by withdrawing money from it directly into their bank account, a feature that is growing in popularity among customers.
Multitude Group 9M 2024 - Interim Board of Directors' Report
9M 2024 highlights
Consumer Banking remains focused on sustaining its momentum through consistently executing its established strategies and robust portfolio.
In the first 9M of 2024, Ferratum's financial results have shown steady progress. Interest income showed positive 8.3% growth (EUR 12.4 million) from EUR 148.2 million in 9M 2023 to EUR 160.6 million in 9M 2024. The amount of loans to customers increased by 5.6% from EUR 453.0 million at the end of 9M 2023 to EUR 478.4 million at the end of 9M 2024. The organic growth of portfolio over the year contributed to a 3.9% increase in impairment loss on loans to customers from EUR 59.9 million in 9M 2023 to EUR 62.2 million in 9M 2024.
In Latvia, the business unit has successfully launched the SweepBank Debit Card and Current Account for existing customers. Customers with an existing Ferratum Credit Limit can now view and manage it through the SweepBank app. They can make near-instantaneous withdrawals from their Credit Limit to their SweepBank Current Account. These funds can then be conveniently used via the Debit Card or for paying invoices, enhancing overall convenience and financial management. This development is a prime example of the synergies and added value of integrating SweepBank into all business units as an underlying service provider.
Outlook
Ferratum continues to drive innovation by enhancing user data analysis and refining digital marketing tactics to sustain growth within its markets. The business unit is focused on shifting lending operations towards higher-profit countries and broadening its product portfolio to capitalise on emerging opportunities.
Additionally, Ferratum is benefiting from its scalable operating model, and will continue to focus on improving operational efficiency whilst maintaining the growth momentum.
Multitude Group 9M 2024 - Interim Board of Directors' Report
CapitalBox
Business Unit: SME Banking - CapitalBox
Small and medium-sized enterprises (SMEs) make up an impressive 99.8% of European businesses. Nonetheless, they frequently encounter inadequate support or outright neglect from traditional banking systems. The outdated methods and services offered by traditional banks no longer sync with the dynamic and evolving needs of today's SMEs within the contemporary business landscape.
The SME Banking business unit provides essential financial solutions to SMEs through its credit lines and instalment loans under the CapitalBox brand. Through a streamlined, fully digitalised process, funds can be made available to SMEs in a matter of minutes after the application approval. This speed and efficiency position CapitalBox as the perfect ally for meeting short-term business financing requirements. Powered by advanced technology, experience, and Multitude's growth platform resources, CapitalBox delivers a swift and dependable offering.
In 9M 2024, CapitalBox operated in five markets: Finland, Sweden, Denmark, Lithuania, and the Netherlands, offering five distinct products.
Instalment Loans
One of CapitalBox's key offerings is its Instalment Loan, which extends up to EUR 350,000. These loans come with flexible repayment periods spanning 6 to 48 months. They are tailored to assist SMEs in funding operations such as expansion, inventory management, marketing efforts, hiring new personnel, and acquiring or leasing equipment. On average, businesses borrow around EUR 21,300 with a typical loan duration of 22 months.
Invoice Purchasing
CapitalBox acquired Omniveta. Omniveta's invoice purchasing product is the basis for CapitalBox's Invoice Purchasing offering for SMEs in Denmark. Currently, CapitalBox purchases invoices with a due period ranging from 8 days (with credit insurance guarantee) to 90 days and discount rate ranging from 1.4% to 6.5%. CapitalBox intends to expand this product line to other countries where it operates.
Credit Line
The Credit Line is a dynamic form of financing that grants SMEs access to a credit limit ranging from EUR 2,000 to EUR 150,000. Additionally, CapitalBox collaborates with retail partners to offer financing solutions to their business customers, enabling them to make financed purchases right at the point of sale. The Credit Line is available in all markets in which CapitalBox operates.
Secured Loan
The Secured Loan was launched initially in Finland and Lithuania and is planned to be rolled out in other markets. The Secured Loan is designed to support larger investments to drive growth for SMEs, addressing a gap in the industry where smaller FinTech firms might lack capacity, and traditional banks might choose not to provide secured loans. The loan amount is up to EUR 3 million.
Multitude Group 9M 2024 - Interim Board of Directors' Report
Multitude Group 9M 2024 – Interim Board of Directors' Report
Purchase Finance (BNPL)
CapitalBox introduced a tailored Purchase Financing or Buy Now, Pay Later (BNPL) product explicitly designed for SMEs. This financial solution provides businesses flexible access to up to EUR 20,000 in funding without collateral. The product, currently available in Finland, is strategically designed to help SMEs manage cash flow effectively, allowing them to invest in growth opportunities and finance purchases without relying on their daily capital or experiencing immediate financial strain.
9M 2024 highlights
Multitude's growth strategy is centred around three key pillars: organic growth, strategic partnerships, and mergers and acquisitions (M&A). CapitalBox has made significant progress in each of these areas. Furthermore, CapitalBox continues to forge strategic partnerships that enhance service offerings and market reach, integral to their growth strategy and helping to deliver more value to customers. Additionally, CapitalBox successfully completed an acquisition in Denmark (Omniveta). This acquisition strengthens market position and opens new avenues for contributing to growth and expansion.
CapitalBox leverages cutting-edge technology from SweepBank to enhance its operational efficiency and customer experience. The technology integration allows the business unit to offer innovative financial solutions tailored to the unique needs of SMEs.
In the first 9M of 2024, CapitalBox's loan portfolio expanded by 44.9%, growing from EUR 92.9 million at the end of 9M 2023 to EUR 134.6 million at the end of 9M 2024. Interest income increased by 44.6% (EUR 7.6 million), from EUR 17.1 million in 9M 2023 to EUR 24.7 million in 9M 2024, as a result of investment in the new loan portfolio. Apart from the strong organic growth, impairment losses on loans to customers increased substantially due to the unfavourable economic performance of customers in the construction, transportation, and car sales sectors when comparing 9M 2023 (EUR 4.5 million) to 9M 2024 (EUR 11.1 million). The business unit took actions to limit the risk through more rigid underwriting, resulting in improved credit loss dynamics starting with Q2 2024.
Outlook
Looking ahead, CapitalBox is preparing to launch a comprehensive daily banking offering for SMEs across all its markets. Starting in Sweden, it will introduce current accounts, payment services, and business cards, with plans to expand these offerings throughout the next year. This strategic initiative will significantly enhance the business unit's value proposition and solidify its position as a leading financial partner for SMEs.
MULTITUDE
BANK
Business Unit: Wholesale Banking - Multitude Bank
The Wholesale Banking business unit focuses on delivering high-impact, institutional-grade solutions through two core offerings: Secured Debt and Payment Solutions. Operating with speed and precision, it targets complex scenarios where agility and bespoke structuring set it apart in a competitive market. The business initially launched in 2023 under the SweepBank unit, with Wholesale Banking established as a separate business unit in January 2024.
Performance metrics for the first 9M of 2024 indicate strong growth momentum, with substantial increases in both debt investments and interest income. These gains reinforce the Group's role as a high-growth enabler, highlighting its ongoing expansion and robust financial performance.
Target customers - Institutions seeking bespoke financial solutions
The unit serves a diverse institutional client base, including SMEs, FinTechs, and payment institutions. These clients seek specialised solutions that address complex needs in secured financing or payment processing. Multitude's approach focuses on tailored, high-quality outcomes, ensuring clients can operate and grow with confidence.
Secured Debt - Tailored financing backed by expertise
Secured Debt Solutions specialises in originating and executing sophisticated, tailored transactions, focusing on niche opportunities that others may hesitate to pursue. Leveraging nearly two decades of expertise and advanced analytics, the unit ensures stringent risk management and reliable growth for institutions looking to capitalise on strategic opportunities. With an emphasis on smart risk rather than volume, this approach fosters high-value partnerships grounded in flexibility and execution. Secured Debt Solutions utilises institutional-grade funding backed by a rigorous underwriting process and advanced risk management tools, providing capital against diversified loan portfolios or other collateral. Continuous oversight on asset performance ensures both security and flexibility, optimising credit risk while unlocking growth potential.
Payment Solutions - Institutional infrastructure for modern finance
Payment Solutions offers institutional clients a seamless and secure infrastructure for transaction processing and financial operations. With a deep understanding of the evolving payment landscape, the unit provides end-to-end solutions that enable efficient transaction processing and support long-term growth and operational efficiency for financial institutions.
Multitude Group 9M 2024 - Interim Board of Directors' Report
9M 2024 highlights
In the first 9M of 2024, Wholesale Banking's financial results have shown further growth of the portfolio. The combined portfolio of loans to customers and debt investments expanded by 179.0%, growing from EUR 40.5 million at the end of 9M 2023 to EUR 112.9 million at the end of 9M 2024. As a result, interest income showed 169.9% growth (EUR 5.5 million) from EUR 3.2 million in 9M 2023 to EUR 8.7 million in 9M 2024. The increase in assets led to impairment loss of EUR 0.2 million in 9M 2024.
Outlook - Strategic growth in a high-potential market
Multitude Wholesale Banking is poised for continued growth, targeting high-quality, overlooked market segments. With a disciplined approach to risk, robust collateral structures, and a focus on institutional clients, the unit is well-positioned to capture niche opportunities. Ongoing investments in talent and technology will further enhance origination capabilities, ensuring sustained performance in an evolving financial landscape.
Multitude Group 9M 2024 - Interim Board of Directors' Report
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Key figures and ratios
| EUR '000 | Q3 2024 | 9M 2024 | Restated* Q3 2023 | Restated 9M 2023 |
|---|---|---|---|---|
| Net interest income | 53,602 | 163,759 | 52,997 | 154,251 |
| Profit before income taxes | 6,194 | 14,596 | 5,670 | 15,324 |
| Net cash flows from / (used in) operating activities | 77,701 | (25,601) | (22,995) | 35,148 |
| Net cash flows (used in) investing activities | (2,883) | (10,063) | (3,173) | (9,052) |
| Net cash flows (used in) / from financing activities | (26,753) | 19,108 | (3,671) | (12,084) |
| Net increase / (decrease) in cash and cash equivalents | 48,065 | (16,556) | (29,838) | 14,012 |
*In all tables throughout this report, "restated" denotes quarterly figures adjusted as described in the 2023 annual report.
| EUR '000 | 30 September 2024 | 31 December 2023 |
|---|---|---|
| Loans to customers | 624,738 | 575,948 |
| Impaired loan coverage ratio, in % | 17.2 | 16.6 |
| Debt investments | 101,196 | 62,114 |
| Deposits from customers | 773,384 | 732,350 |
| Cash and cash equivalents | 267,067 | 283,712 |
| Non-current assets | 354,059 | 288,289 |
| Current assets | 713,767 | 702,589 |
| Total assets | 1,067,826 | 990,878 |
| Non-current liabilities | 347,732 | 299,798 |
| Current liabilities | 532,401 | 507,434 |
| Total liabilities | 880,133 | 807,232 |
| Total equity | 187,693 | 183,646 |
| Equity ratio, in % | 17.6 | 18.5 |
| Net equity ratio, in % | 23.4 | 26.0 |
| Net debt to equity ratio | 3.27 | 2.85 |
| Calculation of key financial ratios | ||
| --- | --- | --- |
| Impaired loan coverage ratio (%) = | 100x | Credit loss allowance |
| Gross loans to customers | ||
| Total equity | ||
| Equity ratio (%) = | 100x | Total assets |
| Total liabilities - cash and cash equivalents | ||
| Net debt to equity ratio = | Total equity | |
| Total equity | ||
| Net equity ratio (%) = | 100x | Total assets - cash and cash equivalents |
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Multitude Group 9M 2024 - Interim Board of Directors' Report
Key developments and progress in 9M 2024
Financial overview
Statement of profit or loss:
The Group delivered strong financial performance in the first 9M 2024, showing consistent improvement over the same period in 2023. Key financial metrics, such as net interest income and EBIT displayed positive trends, showing persistent organic growth and effective long-term planning. Interest income increased by 15.1% (EUR 25.4 million) from EUR 168.5 million in 9M 2023 to EUR 193.9 million in 9M 2024, driven by a 11.1% growth (EUR 18.2 million) in interest income on loans to customers and a substantial increase (EUR 5.3 million, 180.2%) in interest income on debt investments from EUR 3.0 million in 9M 2023 to EUR 8.3 million in 9M 2024. The main difference to comparative period is a result of significant investment into portfolio of Wholesale Banking business unit.
On the other hand, due to growth in the loan portfolio, the impairment loss on loans to customers increased by 14.3% (EUR 9.2 million, from EUR 64.4 million in 9M 2023 to EUR 73.6 million in 9M 2024). Interest expense grew by 112.1% (EUR 15.9 million) from EUR 14.2 million EUR in 9M 2023 to EUR 30.1 million in 9M 2024 as a result of overall interest rate growth, general portfolio growth, bond redemption costs, and the delayed impact due to renewal of long-term customer deposits.
Personnel expense increased by 9.3% (EUR 2.3 million) from EUR 25.2 million in 9M 2023 to EUR 27.5 million in 9M 2024 mainly driven by a 9.5% growth (EUR 2.0 million) in wages and salaries (from EUR 20.5 million in 9M 2023 to EUR 22.5 million in 9M 2024). The main driver for the increase is growing employee count, which grew as a result of acquisition of Omniveta business and organic growth of operations in Wholesale Banking business unit.
During the 9M 2024, general and administrative expense increased by 13.0% (EUR 3.0 million), rising from EUR 22.9 million in the same period of 2023 to EUR 25.9 million. This increase was primarily due to a 41.3% (EUR 3.3 million) rise in professional fees which grew from EUR 8.1 million in 9M 2023 to EUR 11.4 million in 9M 2024. The main drivers were several strategic projects, external IT services, legal advice, ESG and audit related services.
The decrease in depreciation and amortisation by 18.4% (EUR 2.1 million), from EUR 11.5 million in 9M 2023 to EUR 9.4 million in 9M 2024 was attributed to the decrease in the amortisation of intangible assets (22.0%, EUR 2.1 million). Reduction in amortisation expense was due to end of the amortisation.
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Multitude Group 9M 2024 – Interim Board of Directors' Report
tion cycle of system features introduced in 2018 and 2019 for Mobile App. The software as a whole remains in use and continues to provide economic benefits to the company. The depreciation of right-of-use assets and properties, plants and equipment are at a similar level in 9M 2024 as in 9M 2023 (EUR 1.9 million).
The decrease in selling and marketing expense by 5.9% (EUR 0.7 million from EUR 11.0 million in 9M 2023 to EUR 10.3 million in 9M 2024) was mainly due to a focus on high performance acquisition channels in Consumer Banking which was partially offset by additional marketing activities in SME Banking.
Statement of financial position:
Assets
Total assets rose by 7.8% (EUR 76.9 million), from EUR 990.9 million at the end of 2023 to EUR 1,067.8 million by the end of 9M 2024. This growth was primarily driven by a substantial increase in Multitude's debt investment portfolio, which expanded by EUR 39.1 million, or 62.9%, from EUR 62.1 million at the end of 2023 to EUR 101.2 million at the end of 9M 2024. Additionally, loans to customers grew by 8.5% (EUR 48.8 million), from EUR 575.9 million at the end of 2023 to EUR 624.7 million at the end of 9M 2024.
Right of use asset line item is stable at EUR 4.9 million at the end of 9M 2024 as there were no substantial changes in the scope of lease. The decrease in cash and cash equivalents by 5.9% (EUR 16.6 million) from EUR 283.7 million at the end of 2023 to EUR 267.1 million at 9M 2024 was driven mainly by the growth of income-generating assets.
Liabilities
Total liabilities increased by 9.0% (EUR 72.9 million) from EUR 807.2 million at the end of 2023 to EUR 880.1 million at the end of 9M 2024. The main changes in total liabilities occurred due to changes in deposits from customers and debt securities. Deposits from customers increased by 5.6% (EUR 41.0 million) from EUR 732.4 million at the end of 2023 to EUR 773.4 million at the end of 9M 2024. Debt securities increased by 59.1% (EUR 28.3 million) from EUR 47.8 million at the end of 2023 to EUR 76.1 million at the end of 9M 2024.
Multitude Group 9M 2024 - Interim Board of Directors' Report
The increase in provisions, accruals, and other liabilities—up 58.4% from EUR 13.4 million at the end of 2023 to EUR 21.2 million at the end of 9M 2024—was primarily driven by a EUR 7.5 million rise in other financial liabilities. The largest contributor to this increase was the receipt of security deposits associated with CapitalBox's Invoice Purchasing business and Wholesale Banking Secured Debt. The remaining difference is attributable to accrued expenses for services consumed by various Group companies.
Equity
Total equity increased by 2.2% (EUR 4.1 million) from EUR 183.6 million at the end of 2023 to EUR 187.7 million at the end of 9M 2024. Profit for 9M 2024 equals EUR 12.7 million which is a 1.4% increase as compared to EUR 12.5 million in 9M 2023. The total amount of dividends for 2023 paid in 2024 equals EUR 4.1 million.
Key performance changes in the reporting period
The impaired loan coverage ratio increased by 0.6% from 16.6% at the end of 2023 to 17.2% at the end of 9M 2024, due to the higher growth in loss allowances as compared to gross loans to customers. The growth in loss allowance is mainly explained by prioritised growth opportunities within the SME segment, accepting a measured increase in expected credit losses as part of our strategic expansion efforts at the start of the year.
The net equity ratio decreased by 2.6% from 26.0% at the end of 2023 to 23.4% at the end of 9M 2024. Net debt to equity ratio increased from 2.85 at the end of 2023 to 3.27 at the end of 9M 2024. Basic earnings per share remained stable at EUR 0.38 for both 9M 2023 and 9M 2024.
Change in accounting policy and correction of errors
At the end of 2023, the Group made changes in its accounting policies regarding the presentation of financial statements. This involved reclassifying certain line items in the financial statements, correcting errors in accounting treatments and transitioning to a liquidity-based approach for the statement of financial position. As part of this endeavour, we included collection costs in estimation of expected credit losses, providing a more accurate portrayal of credit risks. Additionally, the classification of reminder fees was changed to be part of interest income. We also revised practices regarding scoring costs, capitalising them as incremental costs directly linked to loan issuance, impacting the effective interest rate calculation and interest income.
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Multitude Group 9M 2024 - Interim Board of Directors' Report
These revisions resulted in changes to the overall presentation of the Group's financial results and positions, reflecting the best practices in the lending industry for the comparative period (Note 15). The condensed consolidated statement of financial position includes a comparative date of 1 January 2023, with other statements and disclosures for 2023 labelled as "restated".
Events occurring after the reporting period
Following the conclusion of 9M, Multitude Group has experienced two noteworthy developments, which are expected to positively impact our strategic direction and operational capabilities.
Multitude Group's subsidiary, Multitude Bank p.l.c., has acquired a 9.9% stake in Lea Bank ASA. The transaction, finalised on 9 October 2024, involves an acquisition cost of around EUR 8.4 million for the initial investment. Additionally, Multitude Bank has agreed to increase its stake by a further 8.7%, contingent upon regulatory approvals, which would establish it as the largest shareholder with a total ownership of 18.6%.
This strategic investment has been fully funded from Multitude Bank's existing liquidity. This investment not only enables Multitude Group to achieve favorable financial returns through its share of the associate's earnings and an attractive dividend yield but also opens significant opportunities for long-term value creation and growth. Enhanced prospects for referrals, collaborative product offerings, and increased cross-selling initiatives are anticipated to further strengthen its market position.
Additionally, effective 1 January 2025, Antti Kumpulainen, who has been the CEO of Multitude Bank since April 2021, will transition to the role of Multitude Group CEO. He will succeed Jorma Jokela, who has effectively led the company for the past 20 years and will remain on the Board of Directors. This leadership transition is designed to ensure continuity and stability. Antti Kumpulainen brings nearly a decade of invaluable experience within Multitude and deep expertise in the banking and FinTech sectors. His leadership will be instrumental as he oversees the Group's operational business.
These developments align with our long-term growth strategy and commitment to enhancing shareholder value.
Multitude Group 9M 2024 - Interim Board of Directors' Report
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Multitude Group 9M 2024 – Interim Board of Directors' Report
Treasury update
By the end of 9M 2024, Multitude's cash position stood at EUR 267.1 million. Out of this amount a significant portion is invested in short-term deposits with other banks, hereby generating additional interest income.
Notably, Multitude Bank has a highly diversified depositor base, with 99% of its deposits originating from customers covered by the Depositor Compensation Scheme. On 15 February 2024, Fitch Ratings revised Multitude p.l.c.'s and its fully owned Multitude Bank p.l.c.'s outlook from Stable to Positive, while affirming their Long-Term Issuer Default Ratings (IDRs) at 'B+'.
On 12 June 2024, Multitude Capital Oyj, an issuance vehicle wholly owned by Multitude p.l.c., successfully launched a 4-year senior unsecured bond issue amounting to EUR 80 million. This transaction was conducted under a EUR 150 million issuance program, allowing for additional volume increases at a later stage. The proceeds from this bond were used for the full redemption of the EUR 50 million bond of Multitude p.l.c. (formerly Multitude SE) issued in December 2022, including settlement of the call option premium.
Personnel update
The average number of employees in 9M 2024 is equal to 760 (9M 2023 - 683) with related personnel expense amounting to EUR 27.5 million (9M 2023 - EUR 25.2 million).
1. Alain Nydegger appointed as Tribe CEO of Wholesale Banking
Effective 15 April 2024, Alain Nydegger has been appointed as the Tribe CEO for Wholesale Banking and has joined the Group Leadership Team. Alain has previously held the CEO position at Pala Assets, where he has enhanced their global high-yield credit portfolio and has led the successful restructuring efforts across various sectors.
In addition to his finance background, Alain co-founded 21Celsius Ventures and Fashion Vestis, driving growth in tech and e-commerce platforms. He holds an Executive MBA from IMD and a bachelor's degree in Banking and Finance from HWZ University of Applied Sciences in Business Administration Zurich. Alain's extensive experience and strategic leadership will be invaluable to Wholesale Banking at Multitude.
2. Julie Chatterjee steps down from her role as Chief Commercial Officer
Julie Chatterjee has resigned from her role as Chief Commercial Officer of Multitude Bank and stepped down from the Group Leadership Team and Bank Executive Committee, effective 10 May 2024. Julie was instrumental in building Sweep Bank and in positioning it for integration into the Consumer Banking and SME Banking business units.
The Leadership Team members express their gratitude for Julie's valuable contribution and professionalism during her tenure and wish her every success in her future endeavours.
Alternative performance measures
Pursuant to Article 16 of Regulation 1095 / 2010 / EU, the European Securities and Markets Authority (ESMA) has issued specific guidelines on the presentation criteria for Alternative Performance Measures (APMs) included by European issuers in regulated information, where such measures are not defined or provided for in the rules on financial reporting.
According to the definition provided in the ESMA Guidelines, an APM is a financial measure of historical or future financial performance, financial position, or cash flows, other than a financial measure defined or specified in the applicable financial reporting framework. APMs are typically based on financial statement line items prepared in accordance with applicable financial reporting rules. What sets them apart is that APMs are not defined in the financial reporting framework, yet their use is still widespread, with the role of conveying a view of the Group's performance that is closer to the Leadership Team's perspective than would be possible using only the defined measures.
To facilitate the understanding of the consolidated statement of profit or loss after a change in presentation of consolidated financial statements in 2023, Multitude introduced profit before interest expense and taxes (EBIT) as APM as compared to prior years where it was directly reported in the consolidated statement of profit or loss. The reason for the application of APM is matching the profit guidance given by the Board to the public on the development of Group's profitability in the future.
It is calculated by adding back income tax, interest expense, and fair value and foreign exchange gains and losses to profit for the period in the consolidated statement of profit or loss:
EBIT = Profit for the period + Income tax + Interest expense + Fair value and foreign exchange losses (net)
EBIT for the consolidated Group in 9M 2024 and 9M 2023:
| EUR '000 | Q3 2024 | 9M 2024 | Restated Q3 2023 | Restated 9M 2023 |
|---|---|---|---|---|
| Profit for the period | 5,454 | 12,706 | 4,932 | 12,528 |
| Interest expense | 11,462 | 30,131 | 5,375 | 14,207 |
| Income tax expense | 740 | 1,890 | 739 | 2,796 |
| Fair value and foreign exchange losses (net) | 1,238 | 2,466 | 1,107 | 3,670 |
| Profit before interest expense and taxes (EBIT) | 18,894 | 47,193 | 12,153 | 33,201 |
It should be noted in this regard that the APM presented is complementary to the measures defined within the IFRS Accounting Standards. The figures and inputs, used in the derivation of the said APM, are based on presentation and / or disclosure requirements emanating from the IFRS Conceptual Framework and include reconciliation items from such presentation / disclosures of financial statements.
Multitude Group 9M 2024 - Interim Board of Directors' Report
Risk factors and risk management
Multitude takes moderate and calculated risks in conducting its business. The prudent management of risks minimises the probability of unexpected losses and threats to our reputation. Therefore, we can enhance profitability and shareholder value.
The Leadership Team and business unit CEOs monitor operations regularly and are responsible for adequate risk management and ensuring that the Group is able to control and monitor its risks. Each Leadership Team member bears responsibility for identifying and controlling the risks related to their functions in line with instructions from the Board. The Board is ultimately charged with, inter alia, the overall responsibility to oversee the risk management of the Group via its Risk Committee.
We proactively follow all legal regulations, monitor changes that might occur in the countries we operate in and, where necessary, adjust operations accordingly.
The Group's risk exposures can be divided into three main categories:
- Credit risks (mainly receivables from customers and debt investments)
1.1 Consumer Banking and SME Banking
Exposure to credit risks arises principally from the Group's lending activities. The credit risk is managed by experienced risk teams from the Risk Management function, which manage the Group's scoring system and credit policies. The Risk Management function is also responsible for the measurement of the payment behaviour of the credit portfolio on a daily, weekly, and monthly basis. This is done through proprietary risk management tools, which assist Group companies in evaluating the customer's payment behaviour. These tools, which are continuously updated and refined, ensure that only customers with a satisfactory credit profile are accepted.
1.2 Wholesale Banking
The Group is also exposed to credit risk arising from its exposure to debt investments. The debt investments mainly reflect the Group's acquisition of secured bonds. Such bonds are mainly secured either by loan portfolios or real estate, which are pledged in favour of Multitude Bank, and are subject to a number of covenants including predetermined ratios of ageing portfolios and advance rates and Loan to Values. Such covenants are monitored regularly by Multitude Bank and its relevant Committees.
- Market and liquidity risks (including foreign exchange risk, interest rate risk and other price risks)
Multitude uses foreign currency forward contracts to hedge foreign transaction risk exposures. Market risks arise from open positions in the interest rate and products in foreign currency. They are managed by the Group's Treasury function, in close cooperation with FP&A, which is also responsible for the Group's cash flow planning and to ensure the necessary liquidity level for all Group companies.
- Operational risks (such as IT risk, legal and regulatory risk and other operational risks)
IT, legal and regulatory risks are highly relevant to us. The Group's Legal function manages regulatory and legal risks in close cooperation with the authorities in the respective countries and relevant stakeholders. Potential or foreseeable changes in applicable laws are analysed on an ongoing basis and any necessary modifications to the Group's operations are implemented proactively.
Multitude Group 9M 2024 - Interim Board of Directors' Report
Statement pursuant to Capital Markets Rule 5.75.3 issued by the Malta Financial Services Authority
We hereby confirm that to the best of our knowledge:
The unaudited condensed consolidated interim financial statements set out herein give a true and fair view of the assets, liabilities and financial position of the Group as at 30 September 2024, and of its financial performance and cash flows for the period then ended, in accordance with International Financial Reporting Standards as adopted by the EU applicable to Interim Financial Reporting (IAS 34); and
The Interim Board of Directors' Report includes a fair review of the information required in terms of Capital Markets Rules 5.81 to 5.84.
Gzira, 14 November 2024
| Ari Tiukkanen | Chairman of the Board |
|---|---|
| Lea Liigus | Member of the Board |
| Jorma Jokela CEO | Member of the Board |
| Marion Khüny | Member of the Board |
| Kristiina Leppänen | Member of the Board |
| Goutam Challagalla | Member of the Board |
Multitude Group 9M 2024 - Interim Board of Directors' Report
Unaudited condensed consolidated interim financial statements 9M 2024
Condensed consolidated statement of profit or loss
| EUR '000 | Notes | Q3 2024 | 9M 2024 | Restated Q3 2023 | Restated 9M 2023 |
|---|---|---|---|---|---|
| Interest income | 5 | 65,064 | 193,890 | 58,372 | 168,458 |
| Interest expense | 5 | (11,462) | (30,131) | (5,375) | (14,207) |
| Net interest income | 53,602 | 163,759 | 52,997 | 154,251 | |
| Fee and commission income | 32 | 53 | 40 | 47 | |
| Fair value and foreign exchange losses (net) | 6 | (1,238) | (2,466) | (1,107) | (3,670) |
| Other income | 7 | 1 | 276 | - | 2 |
| (Loss) / profit for the period from investment in associates | (76) | (229) | 22 | 34 | |
| Net operating income | 52,321 | 161,393 | 51,952 | 150,664 | |
| Operating expenses: | |||||
| Impairment loss on loans to customers | 8, 12 | (21,496) | (73,601) | (22,162) | (64,372) |
| Personnel expense | 8 | (8,663) | (27,536) | (8,405) | (25,197) |
| General and administrative expense | 8 | (9,422) | (25,932) | (7,483) | (22,940) |
| Depreciation and amortisation | 8 | (2,904) | (9,380) | (3,908) | (11,497) |
| Selling and marketing expense | 8 | (3,642) | (10,348) | (3,833) | (10,997) |
| Other expense | 7 | - | - | (490) | (337) |
| Profit before income taxes | 6,194 | 14,596 | 5,670 | 15,324 | |
| Income tax expense | 9 | (740) | (1,890) | (739) | (2,796) |
| Profit for the period | 5,454 | 12,706 | 4,932 | 12,528 | |
| Earnings per share: | |||||
| Basic earnings per share, EUR | 10 | 0.18 | 0.38 | 0.15 | 0.38 |
| Diluted earnings per share, EUR | 10 | 0.18 | 0.38 | 0.15 | 0.38 |
24
Multitude Group 9M 2024 - Condensed Consolidated Interim Financial Statements (Unaudited)
Condensed consolidated statement of comprehensive income
| EUR '000 | Q3 2024 | 9M 2024 | Restated Q3 2023 | Restated 9M 2023 |
|---|---|---|---|---|
| Profit for the period | 5,454 | 12,706 | 4,932 | 12,528 |
| Other comprehensive income / (expense): | ||||
| Items that may be reclassified to profit or loss | ||||
| Currency translation difference | 5 | (163) | 1,157 | 56 |
| Total other comprehensive income / (expense) | 5 | (163) | 1,157 | 56 |
| Total comprehensive income for the period | 5,459 | 12,543 | 6,089 | 12,584 |
Multitude Group 9M 2024 - Condensed Consolidated Interim Financial Statements (Unaudited)
Condensed consolidated statement of financial position
| EUR '000 | Notes | 30 September 2024 | 31 December 2023 | Restated 1 January 2023 |
|---|---|---|---|---|
| ASSETS | ||||
| Cash and cash equivalents | 13 | 267,067 | 283,712 | 153,325 |
| Derivative financial assets | 13 | 95 | 299 | 3,180 |
| Loans to customers | 12, 13 | 624,738 | 575,948 | 507,075 |
| Debt investments | 13 | 101,196 | 62,114 | 21,107 |
| Current tax assets | 1,852 | 1,832 | 2,230 | |
| Other financial assets | 13 | 23,619 | 19,435 | 19,413 |
| Prepaid expenses and other assets | 2,857 | 2,841 | 237 | |
| Intangible assets | 32,294 | 29,468 | 31,400 | |
| Right-of-use assets | 4,887 | 4,819 | 4,613 | |
| Property, plant and equipment | 2,594 | 2,896 | 3,081 | |
| Investments accounted for using the equity method | 793 | 1,022 | - | |
| Deferred tax assets | 5,834 | 6,492 | 7,574 | |
| Total assets | 1,067,826 | 990,878 | 753,235 | |
| EQUITY AND LIABILITIES | ||||
| Liabilities: | ||||
| Derivative financial liabilities | 13 | 2,263 | 5,323 | 446 |
| Deposits from customers | 13 | 773,384 | 732,350 | 503,378 |
| Current tax liabilities | 987 | 2,268 | 921 | |
| Provisions, accruals and other liabilities | 21,182 | 13,372 | 15,576 | |
| Debt securities | 13 | 76,065 | 47,805 | 47,416 |
| Lease liabilities | 4,940 | 4,963 | 4,566 | |
| Deferred tax liabilities | 1,312 | 1,151 | 966 | |
| Total liabilities | 880,133 | 807,232 | 573,269 | |
| Equity: | ||||
| Share capital | 40,190 | 40,134 | 40,134 | |
| Treasury shares | (645) | (103) | (142) | |
| Retained earnings | 92,010 | 87,258 | 75,685 | |
| Unrestricted equity reserve | 14,652 | 14,708 | 14,708 | |
| Translation differences | (3,545) | (3,382) | (3,050) | |
| Other reserves | 31 | 31 | 2,631 | |
| Total equity attributable to the shareholders of the parent company | 142,693 | 138,646 | 129,966 | |
| Perpetual bonds | 45,000 | 45,000 | 50,000 | |
| Total equity | 187,693 | 183,646 | 179,966 | |
| Total equity and liabilities | 1,067,826 | 990,878 | 753,235 |
26
Multitude Group 9M 2024 - Condensed Consolidated Interim Financial Statements (Unaudited)
Condensed consolidated statement of cash flows
| EUR '000 | Q3 2024 | 9M 2024 | Restated Q3 2023 | Restated 9M 2023 |
|---|---|---|---|---|
| CASH FLOWS FROM OPERATING ACTIVITIES | ||||
| Profit for the period | 5,454 | 12,706 | 4,932 | 12,528 |
| Adjustments for: | ||||
| Impairment loss on loans to customers | 21,496 | 73,601 | 22,162 | 64,372 |
| Depreciation and amortisation | 2,904 | 9,380 | 3,907 | 11,497 |
| Net interest income | (53,602) | (163,759) | (52,997) | (154,251) |
| Fair value and foreign exchange losses (net) | 1,238 | 2,466 | 1,107 | 3,670 |
| Income tax expense | 740 | 1,890 | 739 | 2,796 |
| Other adjustments | 152 | 780 | 146 | 432 |
| Changes in operating assets: | ||||
| Increase (-) in gross loans to customers | (52,533) | (122,391) | (49,643) | (100,934) |
| Decrease (+) / increase (-) in debt investments | 2,086 | (39,082) | (1,938) | (19,215) |
| Decrease (+) / increase (-) in derivative financial instruments (net) | 832 | (2,856) | 589 | 819 |
| Increase (-) / decrease (+) in other assets | (2,851) | (4,199) | 3,722 | 3,524 |
| Changes in operating liabilities: | ||||
| Increase (+) / decrease (-) in deposits from customers | 95,073 | 41,034 | (16,815) | 52,935 |
| Increase (+) in other liabilities | 4,603 | 7,788 | 4,614 | 5,991 |
| Interest paid | (9,833) | (29,002) | (2,953) | (7,628) |
| Interest received | 61,998 | 187,749 | 59,493 | 159,159 |
| Income taxes paid | (56) | (1,706) | (61) | (547) |
| Net cash flows from / (used in) operating activities | 77,701 | (25,601) | (22,995) | 35,148 |
| CASH FLOWS FROM INVESTING ACTIVITIES | ||||
| Purchase of tangible assets | (92) | (345) | (126) | (126) |
| Disposal of tangible assets | - | - | (146) | - |
| Purchase of intangible assets | (2,791) | (9,191) | (2,901) | (7,910) |
| Purchase of investments accounted for using the equity method | - | - | - | (1,016) |
| Purchase of business combinations | - | (527) | - | - |
| Net cash flows (used in) investing activities | (2,883) | (10,063) | (3,173) | (9,052) |
| CASH FLOWS FROM FINANCING ACTIVITIES | ||||
| Payment of perpetual bonds interest | (1,688) | (4,442) | (1,581) | (4,426) |
| Repayment of perpetual bonds | - | - | (1,390) | (3,265) |
| Dividends paid | - | (4,116) | 2 | (2,591) |
| Proceeds from debt securities | 1,963 | 76,144 | - | - |
| Repayment of debt securities | (25,808) | (46,000) | - | - |
| Repayment of lease liabilities | (723) | (1,892) | (698) | (1,802) |
| Purchase of treasury shares | (497) | (586) | - | - |
| Net cash flows (used in) / from financing activities | (26,753) | 19,108 | (3,671) | (12,084) |
| Cash and cash equivalents, at the start of the period | 218,996 | 283,712 | 196,707 | 153,326 |
| Exchange gains / (losses) on cash and cash equivalents | 6 | (89) | 171 | (298) |
| Net increase / (decrease) in cash and cash equivalents | 48,065 | (16,556) | (29,838) | 14,012 |
| Cash and cash equivalents, as at 30 September | 267,067 | 267,067 | 167,040 | 167,040 |
Multitude Group 9M 2024 - Condensed Consolidated Interim Financial Statements (Unaudited)
Condensed consolidated statement of changes in equity
| EUR '000 | Share capital | Treasury shares | Retained earnings | Perpetual bonds | Unrestricted equity reserve | Translation differences | Other reserves | Total equity |
|---|---|---|---|---|---|---|---|---|
| At 1 January 2023 | 40,134 | (142) | 75,685 | 50,000 | 14,708 | (3,050) | 2,631 | 179,966 |
| Comprehensive income | ||||||||
| Profit or loss for the period | - | - | 12,528 | - | - | - | - | 12,528 |
| Currency translation difference | - | - | (695) | - | - | 751 | - | 56 |
| Total comprehensive income | - | - | 11,832 | - | - | 751 | - | 12,584 |
| Transactions with owners | ||||||||
| Repayment of perpetual bonds | - | - | - | (3,500) | - | - | - | (3,500) |
| Perpetual bonds interests payments (net of tax) | - | - | (4,281) | - | - | - | - | (4,281) |
| Share-based payments | - | 46 | 331 | - | - | - | - | 377 |
| Other changes | - | - | - | - | - | - | (9) | (9) |
| Dividend distribution | - | - | (2,591) | - | - | - | - | (2,591) |
| Total transactions with owners | - | 46 | (6,541) | (3,500) | - | - | (9) | (10,005) |
| Restated at 30 September 2023 | 40,134 | (97) | 80,978 | 46,500 | 14,708 | (2,297) | 2,622 | 182,547 |
| At 1 January 2023 | 40,134 | (142) | 75,685 | 50,000 | 14,708 | (3,050) | 2,631 | 179,966 |
| Comprehensive income | ||||||||
| Profit or loss for the period | - | - | 16,438 | - | - | - | - | 16,438 |
| Currency translation difference | - | - | - | - | - | (333) | - | (333) |
| Total comprehensive income | - | - | 16,438 | - | - | (333) | - | 16,105 |
| Transactions with owners | ||||||||
| Repayment of perpetual bonds | - | - | 445 | (5,000) | - | - | - | (4,555) |
| Perpetual bonds interests payments (net of tax) | - | - | (5,831) | - | - | - | - | (5,831) |
| Share-based payments | - | 39 | 511 | - | - | - | - | 550 |
| Dividend distribution | - | - | (2,591) | - | - | - | - | (2,591) |
| Release of reserves | - | - | 2,600 | - | - | - | (2,600) | - |
| Total transactions with owners | - | 39 | (4,866) | (5,000) | - | - | (2,600) | (12,427) |
| At 31 December 2023 | 40,134 | (103) | 87,258 | 45,000 | 14,708 | (3,382) | 31 | 183,646 |
| At 1 January 2024 | 40,134 | (103) | 87,258 | 45,000 | 14,708 | (3,382) | 31 | 183,646 |
| Comprehensive income | ||||||||
| Profit or loss for the period | - | - | 12,706 | - | - | - | - | 12,706 |
| Currency translation difference | - | - | - | - | - | (163) | - | (163) |
| Total comprehensive income | - | - | 12,706 | - | - | (163) | - | 12,543 |
| Transactions with owners | ||||||||
| Perpetual bonds interests payments (net of tax) | - | - | (4,475) | - | - | - | - | (4,475) |
| Share-based payments | - | 44 | 637 | - | - | - | - | 681 |
| Dividend distribution | - | - | (4,116) | - | - | - | - | (4,116) |
| Purchase of treasury shares | - | (586) | - | - | - | - | - | (586) |
| Increase in share capital | 56 | - | - | - | (56) | - | - | - |
| Total transactions with owners | 56 | (542) | (7,954) | - | (56) | - | - | (8,496) |
| At 30 September 2024 | 40,190 | (645) | 92,010 | 45,000 | 14,652 | (3,545) | 31 | 187,693 |
28
Multitude Group 9M 2024 - Condensed Consolidated Interim Financial Statements (Unaudited)
Notes to condensed consolidated interim financial statements
1. General information
In this report, "Multitude," "the Group," and "we" are used interchangeably. Multitude is a listed European FinTech company offering digital lending and online banking services to consumers, small and medium-sized enterprises (SMEs), and other FinTechs overlooked by traditional banks. We provide services through three independent business units, supported by our internal Banking-as-a-Service growth platform. The parent company Multitude p.l.c. (business identity code C 109441) was established in 2005 and as of 30 June 2024 was headquartered at Ratamestarinkatu 11 A, Helsinki, 00520, Finland. Since 1 July 2024, the parent company is headquartered at ST Business Centre 120, The Strand, Gzira, GZR 1027, Malta. On 31 December 2024, the parent company will relocate to Zug, Switzerland and it will change its legal name to Multitude AG.
Multitude p.l.c. is listed on the Prime Standard of Frankfurt Stock Exchange under the symbol "E4I" (formerly under "FRU"). The Group owns Multitude Bank p.l.c., licensed by the Malta Financial Services Authority (MFSA), which is a significant part of the Group, and allows it to provide financial services and products to European Economic Area (EEA).
1.1 Significant changes in the current reporting period
Relocation
On 5 January 2024, Multitude announced its plan to relocate the parent company from Finland to Switzerland while maintaining its legal personality and without dissolution. On 17 January 2024, Multitude p.l.c. (then Multitude SE) announced that as a first phase of the plan to relocate to Switzerland, the company would move to Malta.
The transfer of the registered office from Finland to Malta was followed by a conversion of Multitude SE into a public limited liability company, governed by the laws of Malta and then an application to have the parent company registered in Switzerland, pursuant to applicable Maltese and Swiss laws, by the end of the year 2024. On 21 March 2024, Multitude's shareholders held an Extraordinary General Meeting and approved the proposal of transferring the registered office of Multitude p.l.c. (then Multitude SE) from Finland to Malta in accordance with the Council Regulation (EC) No 2157 / 2001 of 8 October 2001 on the Statute for a European Company (SE).
In anticipation and in pursuance of the transfer of the registered office, the Extraordinary General Meeting resolved to amend the parent company's current Articles of Association to introduce a nominal value for Multitude's shares by adding a new Article 10 in the Articles of Association which reads as follows: The nominal value of the shares is EUR 1.85. The Extraordinary General Meeting resolved to increase the parent company's share capital by EUR 55,766 from EUR 40,133,560 to EUR 40,189,326. The increase has been carried out by transferring the necessary amount from the invested unrestricted equity reserve to the share capital.
The Extraordinary General Meeting also resolved to appoint Ganado Services Limited (Registration Number: C10785) having its registered office at 171, Old Bakery Street, Valletta VLT1455, Malta as the company secretary of the parent company, with effect from the date of registration of the parent company with the Malta Business Registry.
Upon the registration of the parent company with the Malta Business Registry, Pricewaterhouse Coopers (Registration Number: AB / 26 / 84 / 38), domiciled at 78, Mill Street, Qormi, Malta was
Multitude Group 9M 2024 - Condensed Consolidated Interim Financial Statements (Unaudited)
appointed as the auditors of parent company until the close of the Annual General Meeting to be held in year 2024. The Group's Audit Committee will be authorised to fix their remuneration and sign any engagement letter as may be required for the purposes of finalising the engagement of the auditors. PricewaterhouseCoopers AG, Birchstrasse 160, 8050 Zürich, CHE-106.839.438, was elected as auditor, subject to the redomiciliation to Switzerland becoming effective.
On 23 October 2024, the Extraordinary General Meeting of Multitude p.l.c. approved the company's special purpose final accounts, including financial statements and the Board of Directors' report for the period from 1 January to 30 June 2024. This approval covered financial statements that had not yet been presented at a previous Shareholders' General Meeting.
The meeting also resolved to discharge the Board of Directors and the CEO from liability for the period covered by the special purpose final accounts, in line with the Maltese Companies Act (Chapter 386 of the laws of Malta) and Finnish market practices. The meeting was held following the transfer of the company's registered office from Finland to Malta in accordance with Article 8 of the Council Regulation (EC) No 2157 / 2001 of 8 October 2001 on the Statute for a European company (SE) on 30 June 2024, in order to adopt the company's special purpose final accounts as required pursuant to Section 11 of the Finnish European Companies Act (742 / 2004, as amended) and to make certain related resolutions.
The relocation to Switzerland is not expected to cause any adverse tax consequence in respect of the Group's tax management policy and future dividend distribution to Multitude's shareholders.
Acquisition of Omniveta
CapitalBox acquired the business of Copenhagen-based Omniveta Finance in an asset-transaction on 1 March 2024. The transaction has been classified as a business combination, since the transaction included the transfer of customer lists, software, processes and systems necessary to run the aggregate as a business.
Details of the purchase consideration, the net assets acquired, and goodwill are as follows. Purchase consideration at the acquisition date:
| EUR '000 | |
|---|---|
| Purchase consideration: | |
| Cash paid at the acquisition date | 425 |
| Contingent consideration | 370 |
| Total purchase consideration | 795 |
If certain predetermined KPIs would have been achieved, a consideration of EUR 370 thousand would have been paid out (contingent consideration). The fair value of the contingent consideration was estimated based on the expected future outflows.
At the acquisition date, the Group recognised the identifiable assets acquired and the liabilities assumed in the business combination:
| EUR '000 | |
|---|---|
| Software | 513 |
| Customer list | 321 |
| Other assets | 24 |
| Employee related liabilities | (83) |
| Total | 775 |
Multitude Group 9M 2024 - Condensed Consolidated Interim Financial Statements (Unaudited)
A goodwill of EUR 20 thousand has been recognised as a result of the business combination. The goodwill is attributable to the synergies expected by combining the business of the acquiree with the existing CapitalBox product portfolio. The goodwill will not be deductible for tax purposes.
The above disclosed amounts differ from the amounts disclosed in the Q1 2024 interim report, as at the date of finalisation of the named report, the fair values included were still provisional. Subsequent to publication of the Q1 2024 report, the contingent consideration has been paid out, and the calculation of the fair values of the acquired assets and liabilities has been finalised, therefore the business combination can be considered complete.
Purchase consideration - cash outflow:
| EUR '000 | |
|---|---|
| Outflow of cash to acquire the business: | |
| Cash paid at the acquisition date | 425 |
| Final contingent consideration paid in cash | 102 |
| Net cash outflow - investing activities | 527 |
The difference between the fair value of the contingent consideration and the amount finally paid after foreign currency retranslation (EUR 259 thousand) has been recognised as a gain and presented in other income line item in the statement of profit and loss.
Acquisition-related costs of EUR 103 thousand are included in the general and administrative expense line item in the statement of profit or loss.
Other costs of EUR 70 thousand have been included in the personnel expense line item in the statement of profit or loss. These costs are related to services provided before the business combination, therefore have not been included in the calculation of the consideration transferred.
New business unit
In January 2024, Multitude implemented its previously announced plans to optimise its business units. As a result, the Wholesale Banking business unit has been established. This unit incorporates parts of SweepBank, which has since ceased to exist as a separate business unit. The Wholesale Banking business unit, operating under the Multitude Bank brand, is led by Alain Nydegger, who was appointed as its CEO in 2024. Wholesale Banking offers Secured Debt and Payment Solutions. The Secured Debt product was previously reported under the SweepBank business unit, with the underlying financial assets presented as debt investments in the consolidated statement of financial position.
Placing of EUR 80 million guaranteed unsecured bond
On 13 June 2024, Multitude p.l.c. announced the successful placement of EUR 80 million senior unsecured bonds (ISIN: NO0013259747) with maturity in June 2028 (the "Bonds"). The Bonds have been issued by Multitude Capital Oyj, a wholly owned Finnish subsidiary of Multitude p.l.c. Multitude p.l.c. has acted as guarantor of the Bonds.
The net proceeds from the Bonds have been used towards refinancing Multitude p.l.c.'s outstanding senior bonds maturing in December 2025 (ISIN: NO0012702549), for which a call option has been exercised simultaneously, and general corporate purposes of the Group.
Multitude Group 9M 2024 - Condensed Consolidated Interim Financial Statements (Unaudited)
The Bond issuance saw strong demand from both existing and new investors and will carry a floating rate coupon of 3-month Euribor plus 6.75% and was priced at 97.6% of the nominal amount. On 28 June 2024, the bonds have been listed on the Frankfurt Stock Exchange Open Market. A secondary listing on a regulated market is expected by the end of the year.
Fitch Ratings has previously assigned Multitude p.l.c. with a Long-Term Issuer Default Rating (IDR) at 'B+' with a Positive Outlook and the long-term rating of the outstanding senior unsecured bonds issued by Multitude p.l.c. at 'B+'. The new Bonds received 'B+' rating by Fitch Ratings on 14 June 2024 following receipt of the final issue documents.
Conversion of the parent company into a Public Limited Liability Company
Extraordinary General Meeting of Multitude p.l.c. held on 21 August 2024 approved a conversion of the parent company from a societas europaea (SE) to a public limited liability company (p.l.c.) in accordance with Council Regulation (EC) No. 2571/2011. The conversion is an essential part of relocation of parent company to Switzerland by end December 2024, announced earlier this year.
2. Summary of material accounting policies
2.1 Basis of preparation
This condensed consolidated interim financial report for the nine-month reporting period ended 30 September 2024 has been prepared in accordance with IAS 34 Interim Financial Reporting. The interim report does not include all the notes of the type normally included in an annual financial report. Accordingly, this report is to be read in conjunction with the annual report for the year ended 31 December 2023 and any public announcements made by Multitude during the interim reporting period.
The condensed consolidated interim financial statements have been prepared on a historical cost basis, except for derivative financial instruments which are measured at fair value through profit or loss (FVPL). The condensed consolidated interim financial statements are presented in thousand Euros ("EUR 000"). Multitude has applied similar accounting judgements, estimates, and assumptions for this interim report as those included in the annual report for the year ended 31 December 2023. The Group has prepared its condensed consolidated interim financial statements on the basis that it will continue to operate as a going concern.
2.2 Statement of compliance
The condensed consolidated interim financial statements of the Group have been prepared in accordance with IFRS accounting standards as issued by the International Accounting Standards Board (IASB) and adopted by the European Union.
In terms of Capital Markets Rule 5.75.5, these condensed consolidated interim financial statements have not been audited by the Group's independent auditors.
2.3 Presentation of financial statements
The Group presents its statement of financial position in order of liquidity based on Multitude's intention and perceived ability to recover / settle the majority of assets / liabilities of the corresponding financial statement line item. An analysis regarding recovery or settlement within 12 months after the reporting date (current) and more than 12 months after the reporting date (non-current) is presented in Note 11.
Multitude Group 9M 2024 - Condensed Consolidated Interim Financial Statements (Unaudited)
Multitude Group 9M 2024 – Condensed Consolidated Interim Financial Statements (Unaudited)
33
2.4 New standards and amendments
This chapter provides a summary of (a) new standards and amendments that are effective for the first time for periods commencing on or after 1 January 2024 (i.e. year ending 31 December 2024) and (b) IFRS Interpretations Committee agenda decisions issued in the last nine months, that the Group has applied for the first time in this condensed interim report.
(a) New standards and amendments – applicable 1 January 2024
The following standards and interpretations apply for the first time to financial reporting periods commencing on or after 1 January 2024:
| Title | Key requirements if relevant |
|---|---|
| Classification of Liabilities as Current or Non-current- Amendments to IAS 1 | Not relevant. The Group does not apply classification of current and non-current items in the consolidated statement of financial position. |
| Non-Current Liabilities with Covenants – Amendments to IAS 1 | |
| Supplier finance arrangements – Amendments to IAS 7 and IFRS 7 | Not relevant. The Group does not enter into supplier finance arrangements, therefore the amendments are not expected to have a material impact on the Group's financial statements. |
| Amendments to IFRS 16 Leases: Lease Liability in a Sale and Leaseback | Not relevant. The Group does not enter into sale and leaseback transactions. Therefore, these amendments are not expected to have a material impact on the Group's financial statements. |
The amendments described in the table above did not have any material impact on the Group's accounting records.
(b) IFRS Interpretations Committee agenda decisions issued in the last nine months, the following agenda decisions were issued that might be relevant for the preparation of annual and interim reports in 2024. The date issued refers to the date of approval by the IASB as per the IASB's website.
| Date issued | Topic |
|---|---|
| 30 January 2024 | Merger between a Parent and Its Subsidiary in Separate Financial Statements (IAS 27). |
| 5 March 2024 | Climate-related Commitments (IAS 37 Provisions, Contingent Liabilities and Contingent Assets), Payments Contingent on Continued Employment during Handover Periods (IFRS 3 Business Combinations). |
| 30 May 2024 | Amendments to IFRS 9 and IFRS 7 - Amendments to the Classification and Measurement of Financial Instruments. |
The Group does not expect any new accounting standards or interpretations to have material impact.
3. Changes in Group companies
During 9M 2024, the following entities have been established:
- Multitude GmbH, domiciled in Zug, Switzerland, established with the sole purpose of protecting the Multitude brand during the relocation process and until the complete relocation of Multitude p.l.c.
- Multitude Capital Oyj, domiciled in Helsinki, Finland, established for the purpose of the bond placement mentioned in Note 1.1. above.
There were no new entities created as a result of the business combination with Omniveta, as the transaction has been structured as an asset purchase. Acquired assets have been integrated into CapitalBox AB.
34
Multitude Group 9M 2024 – Condensed Consolidated Interim Financial Statements (Unaudited)
4. Segment information
Multitude has three business units, Consumer Banking (under Ferratum brand), SME Banking (under CapitalBox brand) and Wholesale Banking (under Multitude Bank brand), which are considered operating and reportable segments within the definition described in IFRS 8. Multitude Bank is a regulatory service provider for each business unit within the Group. The Chief Operating Decision Maker (CODM) is defined as Group CEO, who is supported by business unit CEOs. The measurement principles and allocation between business units follow the information provided to the CODM as required by IFRS 8.
The CODM monitors the operating results of its business units separately for the purpose of making decisions about resource allocation and performance assessment. Business unit performance is evaluated via multiple key indicators and is reconciled consistently to profit before income tax in the consolidated financial statements.
The presentation of segments was changed and comparative period for this Note was restated without change in the consolidated results. In November 2023, Multitude announced plans to improve its organisational structure and introduce a new business unit, Wholesale Banking. This was done by reorganising part of the SweepBank business. Operational since 1 January 2024, the new business unit is active under the Multitude Bank brand and offers two products: Secured Debt and Payment Solutions.
Simultaneously, in its financial reports, the Group renamed the Ferratum business unit to the Consumer Banking business unit while keeping the brand Ferratum. CapitalBox's business unit was renamed SME Banking, keeping CapitalBox as the brand name. The reorganisation led to the real-location of interest income, expenses and receivables of Prime Loans to Ferratum, Sales Finance to CapitalBox and the redistribution of overhead costs among the three business units. These changes have been incorporated into the segment reporting, and the financial results of business units for the comparative periods have been restated to ensure comparability. The reconciliation between the previous presentation and the new one was published in the separate stock exchange release on 15 May 2024.
Consumer Banking - Ferratum
Ferratum offers digital loans for the individuals' daily needs, such as unplanned, short-term financing needs resulting from unexpected life events. By the end of 9M 2024, Ferratum offered two distinct product categories: Instalment loans (including Plus Loans, Micro Loans, and Prime Loans) and revolving loans (Credit Limit and Credit Cards). The business unit's operations spanned across 13 markets: Bulgaria, Croatia, Czechia, Denmark, Estonia, Finland, Germany, Latvia, the Netherlands, Norway, Romania, Slovenia and Sweden.
SME Banking - CapitalBox
CapitalBox provides financing solutions to small and medium-sized enterprises (SMEs). By the end of 9M 2024, CapitalBox had established five distinct products: Secured Loans, Instalment Loans, Credit Lines, Purchase Financing (BNPL) and Invoice Purchasing. CapitalBox operated in five markets: Finland, Sweden, Denmark, Lithuania, and the Netherlands.
Wholesale Banking - Multitude Bank
Wholesale Banking is Multitude's newest business unit and offered under the Multitude Bank brand. The Wholesale Banking business unit provides Secured Debt funding against lending portfolios or other assets pledged as collateral, while loan-to-value ratios protect against credit losses. The robust experience of nearly two decades, digital approach, efficient risk management tools, and internal and external data utilisation allow for an exceptionally swift underwriting process - typically concluding in just around six weeks.
Wholesale Banking offers all the necessary elements for successful end-to-end payment operations for other banks, payment institutions and electronic money institutions. This Payment Solutions product supports core payment processes and serves as a reliable daily business support or a fallback option for managing payment rails, facilitating receiving and making payments, and managing accounts efficiently.
The results of operations from the Group's operating and reportable segments for the current period Q3 2024, 9M 2024 and comparable period Q3 2023, 9M 2023 are shown in the following tables.
Operating and reportable segments for Q3 2024
| EUR '000 | Consumer Banking | SME Banking | Wholesale Banking | Total |
|---|---|---|---|---|
| Interest income | 52,916 | 8,626 | 3,522 | 65,064 |
| Interest expense | (7,376) | (2,312) | (1,774) | (11,462) |
| Net interest income | 45,540 | 6,314 | 1,748 | 53,602 |
| Fee and commission income | 32 | - | - | 32 |
| Fair value and foreign exchange losses (net) | (964) | (274) | - | (1,238) |
| Other income | 1 | - | - | 1 |
| Loss for the period from investment in associates | - | - | (76) | (76) |
| Net operating income | 44,609 | 6,040 | 1,672 | 52,321 |
| Operating expenses: | ||||
| Impairment loss on loans to customers | (18,262) | (3,138) | (96) | (21,496) |
| General and administrative expense | (7,038) | (1,839) | (545) | (9,422) |
| Personnel expense | (6,010) | (2,132) | (521) | (8,663) |
| Selling and marketing expense | (2,311) | (1,295) | (36) | (3,642) |
| Depreciation and amortisation | (2,446) | (357) | (101) | (2,904) |
| Profit (loss) before income tax | 8,542 | (2,721) | 373 | 6,194 |
| Loans to customers | 478,414 | 134,584 | 11,740 | 624,738 |
| Debt investments | - | - | 101,196 | 101,196 |
Multitude Group 9M 2024 - Condensed Consolidated Interim Financial Statements (Unaudited)
Operating and reportable segments for 9M 2024
| EUR '000 | Consumer Banking | SME Banking | Wholesale Banking | Total |
|---|---|---|---|---|
| Interest income | 160,553 | 24,669 | 8,668 | 193,890 |
| Interest expense | (19,943) | (5,968) | (4,220) | (30,131) |
| Net interest income | 140,610 | 18,701 | 4,448 | 163,759 |
| Fee and commission income | 53 | - | - | 53 |
| Fair value and foreign exchange losses (net) | (1,925) | (541) | - | (2,466) |
| Other income | 14 | 261 | 1 | 276 |
| Profit for the period from investment in associates | - | - | (229) | (229) |
| Net operating income | 138,752 | 18,421 | 4,220 | 161,393 |
| Operating expenses: | ||||
| Impairment loss on loans to customers | (62,234) | (11,123) | (244) | (73,601) |
| Personnel expense | (19,044) | (6,777) | (1,715) | (27,536) |
| General and administrative expense | (19,331) | (5,043) | (1,558) | (25,932) |
| Selling and marketing expense | (6,654) | (3,592) | (102) | (10,348) |
| Depreciation and amortisation | (8,048) | (1,054) | (278) | (9,380) |
| Profit (loss) before income tax | 23,441 | (9,168) | 323 | 14,596 |
| Loans to customers | 478,414 | 134,584 | 11,740 | 624,738 |
| Debt investments | - | - | 101,196 | 101,196 |
Operating and reportable segments for restated Q3 2023
| EUR '000 | Consumer Banking | SME Banking | Wholesale Banking | Total |
|---|---|---|---|---|
| Interest income | 51,088 | 5,895 | 1,388 | 58,373 |
| Interest expense | (4,044) | (1,038) | (293) | (5,375) |
| Net interest income | 47,044 | 4,857 | 1,096 | 52,997 |
| Fee and commission income | 39 | - | - | 39 |
| Fair value and foreign exchange losses (net) | (954) | (153) | - | (1,107) |
| Other income | (170) | (1) | (11) | (182) |
| Profit for the period from investment in associates | - | - | 22 | 22 |
| Net operating income | 45,960 | 4,702 | 1,107 | 51,769 |
| Operating expenses: | ||||
| Impairment loss on loans to customers | (20,166) | (1,997) | - | (22,162) |
| Personnel expense | (6,216) | (1,728) | (462) | (8,405) |
| General and administrative expense | (6,002) | (1,112) | (367) | (7,483) |
| Depreciation and amortisation | (3,561) | (277) | (69) | (3,907) |
| Selling and marketing expense | (3,023) | (805) | (5) | (3,833) |
| Other expense | (335) | 27 | - | (308) |
| Profit (loss) before income tax | 6,657 | (1,191) | 203 | 5,671 |
| Loans to customers | 453,005 | 92,862 | 157 | 546,024 |
| Debt investments | - | - | 40,322 | 40,322 |
36
Multitude Group 9M 2024 - Condensed Consolidated Interim Financial Statements (Unaudited)
Operating and reportable segments for restated 9M 2023
| EUR '000 | Consumer Banking | SME Banking | Wholesale Banking | Total |
|---|---|---|---|---|
| Interest income | 148,185 | 17,061 | 3,211 | 168,458 |
| Interest expense | (10,659) | (2,900) | (648) | (14,207) |
| Net interest income | 137,526 | 14,161 | 2,564 | 154,251 |
| Fee and commission income | 47 | - | - | 47 |
| Fair value and foreign exchange losses (net) | (3,058) | (612) | - | (3,670) |
| Other income | 2 | - | - | 2 |
| Profit for the period from investment in associates | - | - | 34 | 34 |
| Net operating income | 134,518 | 13,548 | 2,598 | 150,664 |
| Operating expenses: | ||||
| Impairment loss on loans to customers | (59,908) | (4,459) | (5) | (64,372) |
| Personnel expense | (18,920) | (5,132) | (1,145) | (25,197) |
| General and administrative expense | (18,419) | (3,422) | (1,098) | (22,940) |
| Depreciation and amortisation | (10,581) | (797) | (119) | (11,497) |
| Selling and marketing expense | (8,730) | (2,221) | (46) | (10,997) |
| Other expense | (335) | (2) | - | (337) |
| Profit (loss) before income tax | 17,625 | (2,486) | 184 | 15,324 |
| Loans to customers | 453,005 | 92,862 | 157 | 546,024 |
| Debt investments | - | - | 40,322 | 40,322 |
5. Interest income and expense
Interest income is the main income from the Group's operations, and hence it is disaggregated into categories for analysis purposes based on the source asset types.
Interest income
| EUR '000 | Q3 2024 | 9M 2024 | Restated Q3 2023 | Restated 9M 2023 |
|---|---|---|---|---|
| Interest income on loans to customers | 60,973 | 182,304 | 56,466 | 164,125 |
| Interest income on debt investments | 3,382 | 8,284 | 1,258 | 2,957 |
| Interest income on bank deposits | 709 | 3,302 | 648 | 1,376 |
| Total interest income | 65,064 | 193,890 | 58,372 | 168,458 |
Multitude Group 9M 2024 - Condensed Consolidated Interim Financial Statements (Unaudited)
The Group analyses interest income by type and the geographic market that represents how economic factors impact the nature, amount, timing, uncertainty, and cash flows of the above income streams. Interest income is recognised per geographic area, showing the included countries, for the current and comparative periods, as follows:
Interest income by geographic market
| EUR '000 | Q3 2024 | 9M 2024 | Restated Q3 2023 | Restated 9M 2023 | |
|---|---|---|---|---|---|
| Country of domicile* | - Finland | 8,137 | 21,451 | 6,483 | 19,070 |
| - Malta | - | - | - | - | |
| Northern Europe/ | Sweden, Denmark, Norway | 21,311 | 63,706 | 18,676 | 54,005 |
| Western Europe | Germany, Netherlands, Spain | 11,807 | 37,163 | 11,051 | 31,529 |
| Eastern Europe | Bulgaria, Croatia, Czechia, Estonia, Latvia, Lithuania, Poland, Romania | 23,320 | 69,986 | 21,684 | 62,575 |
| Other | Australia, Brazil, Mexico, Cyprus | 489 | 1,584 | 479 | 1,279 |
| Total interest income | 65,064 | 193,890 | 58,373 | 168,458 |
- The country of domicile was changed to Malta since 1 July 2024.
A breakdown of interest expense by type for the current reporting period and comparative period is presented in the table below.
Interest expense
| EUR '000 | Q3 2024 | 9M 2024 | Restated Q3 2023 | Restated 9M 2023 |
|---|---|---|---|---|
| Interest expense on debt securities | (4,092) | (8,315) | (1,176) | (4,072) |
| Interest expense on deposits from customers | (7,201) | (21,465) | (4,079) | (9,802) |
| Interest expense on lease liabilities | (89) | (271) | (120) | (333) |
| Other interest expense* | (80) | (80) | - | - |
| Total interest expense | (11,462) | (30,131) | (5,375) | (14,207) |
-
Other interest expense includes interest due to corporate loans received by Multitude.
-
Fair value and foreign exchange losses (net)
| EUR '000 | Q3 2024 | 9M 2024 | Restated Q3 2023 | Restated 9M 2023 |
|---|---|---|---|---|
| Realised foreign exchange (loss) / gain | (284) | 575 | (39) | (550) |
| Unrealised foreign exchange (loss) | (474) | (1,736) | (475) | (1,281) |
| Realised (loss) / gain on derivative financial assets and liabilities | (424) | (1,553) | 210 | 2,496 |
| Unrealised (loss) / gain on derivative financial assets and liabilities | (56) | 248 | (803) | (4,335) |
| Total fair value and foreign exchange losses (net) | (1,238) | (2,466) | (1,107) | (3,670) |
Most of the foreign exchange impact on the profit and loss statement is generated by Swedish Krona monetary items on the balance sheets of Group companies. The impact is mitigated by the utilisation of foreign exchange forward contracts.
Multitude Group 9M 2024 - Condensed Consolidated Interim Financial Statements (Unaudited)
7. Other income and expenses
| EUR '000 | Q3 2024 | 9M 2024 | Restated Q3 2023 | Restated 9M 2023 |
|---|---|---|---|---|
| OTHER INCOME: | ||||
| Gain from disposal of property, plant and equipment | - | 1 | - | - |
| Gain from disposal of right-of-use assets | 1 | 2 | - | - |
| Other income* | - | 273 | - | 2 |
| Total other income | 1 | 276 | - | 2 |
| OTHER EXPENSES: | ||||
| Loss from disposal of non-current assets | - | - | (490) | (337) |
| Total other expenses | - | - | (490) | (337) |
- Out of which 259 thousand relates to gain on revaluation of contingent consideration for the purchase of Omniveta business.
8. Operating expenses
The Group manages expenses mostly by their nature. The disclosure of the expenses by their nature for the current financial period and the comparative period is presented in the table below:
| EUR '000 | Q3 2024 | 9M 2024 | Restated Q3 2023 | Restated 9M 2023 |
|---|---|---|---|---|
| Impairment loss on loans to customers | (21,496) | (73,601) | (22,162) | (64,372) |
| Personnel expense | (8,663) | (27,536) | (8,405) | (25,197) |
| General and administrative expense | (9,422) | (25,932) | (7,483) | (22,940) |
| Depreciation and amortisation | (2,904) | (9,380) | (3,908) | (11,497) |
| Selling and marketing expense | (3,642) | (10,348) | (3,833) | (10,997) |
| Total operating expenses | (46,127) | (146,797) | (45,791) | (135,003) |
Impairment loss on loans to customers includes EUR 3.3 million of invoicing and collection costs in 9M 2024 (9M 2023: EUR 2.9 million). The year-over-year increase in impairment loss is primarily due to SME loans to customers in Q1 2024, with an improvement in the trend observed in Q2 and Q3 2024.
Personnel expense increased year-over-year due to the additional hires and increase in share-based payment expense related to matching share plans. Share-based payment expense increased from EUR 377 thousand in 9M 2023 to EUR 554 thousand in 9M 2024. The rest of the increase was due to the organic growth of Wholesale Banking business and acquisition of Omniveta that brought additional employees into the Group.
General and administrative expense includes depositor compensation scheme contributions for the total amount of EUR 0.6 million in 9M 2024 (9M 2023: EUR 1.0 million). The increase in general and administrative expense in 9M 2024 is primarily attributed to professional fees, which rose from EUR 8.1 million in 9M 2023 to EUR 11.4 million in 9M 2024, driven by several strategic projects, external IT services, legal advice, ESG and audit related services.
Share-based payment expense was included in the condensed consolidated statement of cash flows as an adjustment to working capital in the line other adjustments. Apart from that, other adjustments line item includes share of profit from investment in associates.
Multitude Group 9M 2024 - Condensed Consolidated Interim Financial Statements (Unaudited)
9. Income tax expenses
| EUR '000 | Q3 2024 | 9M 2024 | Restated Q3 2023 | Restated 9M 2023 |
|---|---|---|---|---|
| Current income tax expense | (657) | (1,162) | (256) | (1,394) |
| Deferred tax expense | (83) | (728) | (483) | (1,402) |
| Total income tax expense | (740) | (1,890) | (739) | (2,796) |
Income tax expense is recognised based on estimate of the weighted average effective annual income tax rate expected for the full financial year. The estimated average annual tax rate used for the year to 30 September 2024 is 13%.
10. Earnings per share
Calculation of earnings per share attributable to shareholders of the Group includes an adjustment for interests paid due to perpetual bonds minus tax benefit on the interest expense arising from a classification of the perpetual bonds as liability (and deductibility of associated interest expense) according to Finnish tax regulations. Calculation of basic earnings per share is shown in the table below.
| Q3 2024 | 9M 2024 | Restated Q3 2023 | Restated 9M 2023 | |
|---|---|---|---|---|
| Profit for the period (EUR '000) | 5,454 | 12,706 | 4,932 | 12,528 |
| Perpetual bonds interests recognised directly in retained earnings, net of tax (EUR '000) | (1,572) | (4,475) | (1,775) | (4,281) |
| Profit for the period, after perpetual bond interest (EUR '000) | 3,882 | 8,231 | 3,157 | 8,247 |
| Weighted average number of ordinary shares in issue | 21,621 | 21,621 | 21,578 | 21,578 |
| Basic earnings per share attributable to the ordinary equity holders, EUR | 0.18 | 0.38 | 0.15 | 0.38 |
Calculation of diluted earnings per share is shown in the table below.
| Q3 2024 | 9M 2024 | Restated Q3 2023 | Restated 9M 2023 | |
|---|---|---|---|---|
| Profit for the period (EUR '000) | 5,454 | 12,706 | 4,932 | 12,528 |
| Perpetual bonds interests recognised directly in retained earnings, net of tax (EUR '000) | (1,572) | (4,475) | (1,775) | (4,281) |
| Profit for the period, after perpetual bond interest (EUR '000) | 3,882 | 8,231 | 3,157 | 8,247 |
| Weighted average number of ordinary shares and potential ordinary shares* | 21,849 | 21,849 | 21,658 | 21,658 |
| Diluted earnings per share attributable to the ordinary equity holders, EUR | 0.18 | 0.38 | 0.15 | 0.38 |
*Weighted number of ordinary shares is adjusted by weighted number of potential shares derived from matching and performance share plans.
40
Multitude Group 9M 2024 - Condensed Consolidated Interim Financial Statements (Unaudited)
The calculation of weighted average number of ordinary shares used in determination of earnings per share is shown in the table below.
| '000 | Q3 2024 | 9M 2024 | Restated Q3 2023 | Restated 9M 2023 |
|---|---|---|---|---|
| Weighted average number of ordinary shares used as the denominator in calculating basic earnings per share | 21,621 | 21,621 | 21,578 | 21,578 |
| Adjustments for calculation of diluted earnings per share: | ||||
| - Matching share plan | 203 | 203 | 80 | 80 |
| - Performance share plan | 25 | 25 | - | - |
| Weighted average number of ordinary shares and potential ordinary shares used as the denominator in calculating diluted earnings per share | 21,849 | 21,849 | 21,658 | 21,658 |
11. Current and non-current assets and liabilities
Asset and liability line items by amounts recovered or settled within or after one year as at 30 September 2024:
| EUR '000 | Within one year | After one year | Total as at 30 September 2024 |
|---|---|---|---|
| ASSETS: | |||
| Cash and cash equivalents | 267,067 | - | 267,067 |
| Derivative financial assets | 95 | - | 95 |
| Loans to customers | 425,791 | 198,947 | 624,738 |
| Debt investments | 1,459 | 99,737 | 101,196 |
| Current tax assets | 1,852 | - | 1,852 |
| Other financial assets | 14,646 | 8,973 | 23,619 |
| Prepaid expenses and other assets | 2,857 | - | 2,857 |
| Intangible assets | - | 32,294 | 32,294 |
| Right-of-use assets | - | 4,887 | 4,887 |
| Property, plant and equipment | - | 2,594 | 2,594 |
| Investments accounted for using the equity method | - | 793 | 793 |
| Deferred tax assets | - | 5,834 | 5,834 |
| Total | 713,767 | 354,059 | 1,067,826 |
| LIABILITIES: | |||
| Derivative financial liabilities | 2,263 | - | 2,263 |
| Deposits from customers | 510,833 | 262,551 | 773,384 |
| Current tax liabilities | 987 | - | 987 |
| Provisions, accruals and other liabilities | 16,397 | 4,785 | 21,182 |
| Debt securities | 242 | 75,823 | 76,065 |
| Lease liabilities | 1,679 | 3,261 | 4,940 |
| Deferred tax liabilities | - | 1,312 | 1,312 |
| Total | 532,401 | 347,732 | 880,133 |
Multitude Group 9M 2024 - Condensed Consolidated Interim Financial Statements (Unaudited)
Asset and liability line items by amounts recovered or settled within or after one year as at 31 December 2023:
| EUR '000 | Within one year | After one year | Total as at 31 December 2023 |
|---|---|---|---|
| ASSETS: | |||
| Cash and cash equivalents | 283,712 | - | 283,712 |
| Derivative financial assets | 299 | - | 299 |
| Loans to customers | 400,356 | 175,592 | 575,948 |
| Debt investments | 1,067 | 61,047 | 62,114 |
| Current tax assets | 1,832 | - | 1,832 |
| Other financial assets | 12,483 | 6,952 | 19,435 |
| Prepaid expenses and other assets | 2,840 | 1 | 2,841 |
| Intangible assets | - | 29,468 | 29,468 |
| Right-of-use assets | - | 4,819 | 4,819 |
| Property, plant and equipment | - | 2,896 | 2,896 |
| Investments accounted for using the equity method | - | 1,022 | 1,022 |
| Deferred tax assets | - | 6,492 | 6,492 |
| Total | 702,589 | 288,289 | 990,878 |
| LIABILITIES: | |||
| Derivative financial liabilities | 5,323 | - | 5,323 |
| Deposits from customers | 484,230 | 248,120 | 732,350 |
| Current tax liabilities | 2,268 | - | 2,268 |
| Provisions, accruals and other liabilities | 13,372 | - | 13,372 |
| Debt securities | 293 | 47,512 | 47,805 |
| Lease liabilities | 1,948 | 3,015 | 4,963 |
| Deferred tax liabilities | - | 1,151 | 1,151 |
| Total | 507,434 | 299,798 | 807,232 |
12. Loans to customers
The expected credit loss (ECL) for loans to customers are determined by projecting the probability of default (PD), estimated exposure of default (EAD), and loss given default (LGD) at a collective portfolio level as allowable under IFRS 9 in the case of retail portfolios comprising individually insignificant exposures that are homogenous in nature. These three components are multiplied together effectively calculating the forward-looking ECL, which is then discounted back to the reporting date. The discount rate used in the ECL calculation is the actual effective interest rate or an approximation thereof.
The 12-month ECL is calculated by multiplying the 12-month PD, LGD, and EAD. Lifetime ECL is calculated on a similar basis for the residual life of the exposure.
The PD, EAD and LGD parameters are derived from internally developed statistical models and other historical data, adjusted to reflect forward-looking information as described below in this Note.
The PD represents the likelihood of a borrower defaulting on its financial obligation (as per definition of default and credit-impaired above), either over the next 12 months (12M PD), or over the
Multitude Group 9M 2024 - Condensed Consolidated Interim Financial Statements (Unaudited)
remaining lifetime (Lifetime PD) of the obligation. Accordingly, the 12-month and lifetime PDs represent the probability of default occurring over the next 12 months and the remaining maturity of the instrument, respectively.
In the case of micro lending facilities with bullet repayment characteristics, the Group utilises roll-rate methodology to estimate its PDs. This methodology employs statistical analysis of historical data and experience of delinquency and default to estimate the amount of loans that will eventually be written off as unrecoverable. This methodology is applied at territory or country level with adaptations to reflect the different nature of the respective markets in which the Group operates. Under this methodology, loans are grouped into ranges according to the number of days past due and statistical analysis is used to estimate the likelihood that loans in each range will progress through the various stages of delinquency, and ultimately prove irrecoverable.
In the case of credit facilities with characteristics of instalment loans or revolving facilities, the Group utilises a curve-stitching methodology in order to estimate its PDs. Under this approach, an analysis of historical default data is carried out in order to estimate cumulative monthly loss rates at various snapshot dates. Subsequently, statistical analysis is employed in order to combine curves with different historical performance windows into a single PD curve over the expected lifetime of the micro-credit exposures. This methodology is also applied at territory or country level to incorporate adaptations to reflect the nature of the different markets in which the Group operates. Under this approach, loans are also grouped into ranges according to the number of days past due, with an individual lifetime PD curve being calculated for each range.
EAD is based on the amounts Multitude expects to be owed at the time of default, over the next 12 months (12M EAD) or over the remaining lifetime (Lifetime EAD). EAD represents the expected exposure in the event of a default (including any expected drawdowns of committed facilities).
The 12-month and lifetime EADs are determined based on the total balance of receivable at the reporting date, taking into account the total amount receivable from borrowers inclusive of principal, interest and fees that are accounted for as part of the effective interest rate. This is deemed an adequate representation of the expected balance at default in the case of the Multitude's credit facilities given that the Group models its ECLs on a collective portfolio level with the modelling of the EAD for each future month on an individual loan-by-loan basis not being deemed practical. Additionally, in the case of revolving credit facilities the Group also factors in expected drawdowns of committed facilities.
The LGD represents the Group's expectation of the extent of loss on a defaulted exposure. Hence, the LGD represents expected credit losses on the EAD given the event of default, taking into account, among other attributes, the mitigating effect of collateral values (if any) at the time it is expected to be realised and the time value of money. The LGD is determined based on the factors which impact the recoveries made post default.
Given that its credit facilities are generally unsecured in nature, the Group estimates LGD parameters based on the history of recovery rates in respect of claims against defaulted customers, which rates are highly impacted by collective debt recovery strategies. Moreover, the Group's LGDs comprise the effects of the Multitude's ability to dispose of overdue loans originated in specific territories to other parties at pre-established prices, that are dependent on the credit quality or ageing of the loans. Estimated LGDs are also impacted by historical one-off portfolio sales and the expected future uncontracted portfolio sales activity. Recoveries from loan portfolio sales are calculated on a discounted cash flow basis using the contractual interest rate as the discounting factor.
Multitude Group 9M 2024 - Condensed Consolidated Interim Financial Statements (Unaudited)
43
The Group has a number of contractual agreements in place with third parties by virtue of which loans which are within the stipulated days past due will be sold to a third party in batch at an agreed price. The Group is also capable of selling loans on the market.
The ECL is measured from the initial recognition of the financial asset. The maximum period considered when measuring ECL (be it 12-month or lifetime ECL) is the maximum contractual period over which Multitude is exposed to credit risk. With respect to non-revolving credit facilities, the contractual life of the facility is considered. In the case of revolving credit facilities, provided that such facilities do not have a fixed term or repayment structure, the Group defines the lifetime of such exposures as 24 months in line with observed borrower behaviour in the respective territories. The lifetime of revolving credit facilities is re-assessed by the Group at a territory level based on more recent borrower behaviour patterns on a periodic basis.
The Group performs a historical analysis to identify the key economic variables affecting credit risk and expected credit losses for each product portfolio at a territory level. These economic variables and their associated impact on the PD, EAD and LGD may vary by portfolio or territory.
The tables below show the Group's gross outstanding loans to customers balances, risk grading, and basis for ECL recognition and measurement, including the movements and balances of loss allowances for loans to customers for the periods presented:
Gross outstanding loans to customers risk grading and basis for ECL recognition
| Risk grade | Category | Basis for ECL | Days past due* | UTP | 30 September 2024 | 31 December 2023 | |
|---|---|---|---|---|---|---|---|
| Lower range | Upper range | ||||||
| Regular | Performing | Stage 1 (12-month ECL) | 0 to 30 | - | 582,862 | 532,234 | |
| Watch | Underperforming | Stage 2 (lifetime ECL) | 31 - 45 | 31 - 60 | - | 24,594 | 26,955 |
| Substandard | Underperforming | Stage 2 (lifetime ECL) | 46 - 60 | 61 - 90 | - | 13,359 | 17,309 |
| Doubtful | Non-performing | Stage 3 (lifetime ECL) | 61 - 180 | 91 - 180 | Yes | 29,791 | 21,661 |
| Loss | Non-performing | Stage 3 (lifetime ECL) | More than 180 days | - | 104,154 | 92,458 | |
| Total | 754,760 | 690,617 |
*Lower and upper ranges of days past due are based on DPD thresholds of 60 and 90 days, respectively, to be considered as non-performing.
44 Multitude Group 9M 2024 - Condensed Consolidated Interim Financial Statements (Unaudited)
At and for the period ended 30 September 2024:
| EUR '000 | 30 September 2024 | |||
|---|---|---|---|---|
| Stage 1 | ||||
| 12-month ECL | Stage 2 | |||
| Lifetime ECL | Stage 3 | |||
| Lifetime ECL | Total | |||
| GROSS LOANS TO CUSTOMERS | ||||
| At 1 January 2024 | 532,234 | 44,264 | 114,119 | 690,617 |
| Total changes in gross carrying amounts arising from transfers in stages, originations and derecognitions | 53,609 | (6,116) | 77,998 | 125,491 |
| Financial assets written off and sold during the period | - | - | (57,488) | (57,488) |
| Exchange differences | (2,981) | (194) | (685) | (3,860) |
| Net changes in gross loans to customers | 50,628 | (6,310) | 19,825 | 64,143 |
| Gross loans to customers as at 30 September 2024 | 582,862 | 37,954 | 133,945 | 754,760 |
| LOSS ALLOWANCES | ||||
| At 1 January 2024 | 31,282 | 14,361 | 69,026 | 114,669 |
| Increase in allowances - charged to profit or loss | 1,856 | (1,747) | 73,492 | 73,601 |
| Other movements | ||||
| Unwind of discount | - | - | (93) | (93) |
| Financial assets written off and sold during the period | - | - | (57,487) | (57,487) |
| Exchange differences | (169) | (64) | (435) | (668) |
| Net changes in loss allowances | 1,687 | (1,811) | 15,477 | 15,353 |
| Loss allowance as at 30 September 2024 | 32,969 | 12,550 | 84,503 | 130,022 |
| Impaired loan coverage ratio (“ILCR”) | 5.66% | 33.07% | 63.09% | 17.23% |
At and for the period ended 30 September 2023:
| EUR '000 | 30 September 2023 | |||
|---|---|---|---|---|
| Stage 1 | ||||
| 12-month ECL | Stage 2 | |||
| Lifetime ECL | Stage 3 | |||
| Lifetime ECL | Total | |||
| GROSS LOANS TO CUSTOMERS | ||||
| At 1 January 2023 | 464,238 | 35,617 | 119,939 | 619,794 |
| Total changes in gross carrying amounts arising from transfers in stages, originations and derecognitions | 47,646 | 2,763 | 52,467 | 102,876 |
| Financial assets written off and sold during the period | - | - | (50,537) | (50,537) |
| Exchange differences | (4,109) | (308) | (978) | (5,396) |
| Net changes in gross loans to customers | 43,536 | 2,455 | 952 | 46,943 |
| Gross loans to customers as at 30 September 2023 | 507,775 | 38,071 | 120,892 | 666,737 |
| LOSS ALLOWANCES | ||||
| At 1 January 2023 | 24,949 | 11,024 | 74,359 | 110,332 |
| Increase in allowances - charged to profit or loss | 4,950 | 1,170 | 58,252 | 64,372 |
| Other movements | ||||
| Unwind of discount | - | - | 108 | 108 |
| Financial assets written off and sold during the period | - | - | (53,457) | (53,457) |
| Exchange differences | (158) | (64) | (419) | (641) |
| Net changes in loss allowances | 4,793 | 1,106 | 4,483 | 10,381 |
| Loss allowance as at 30 September 2023 | 29,741 | 12,130 | 78,842 | 120,713 |
| Impaired loan coverage ratio (“ILCR”) | 5.86% | 31.86% | 65.22% | 18.11% |
Multitude Group 9M 2024 - Condensed Consolidated Interim Financial Statements (Unaudited)
The table below summarises the Group's movements and the balances of loss allowances for loans to customers for the year ended and as at 31 December 2023:
| EUR '000 | Stage 1
12-month ECL | Stage 2
Lifetime ECL | Stage 3
Lifetime ECL | Total |
| --- | --- | --- | --- | --- |
| GROSS LOANS TO CUSTOMERS | | | | |
| As at 1 January 2023 | 464,238 | 35,617 | 119,939 | 619,794 |
| Transfers in between stages: | | | | |
| Transfers out of Stage 1 | (48,992) | 20,086 | 28,906 | - |
| Transfers out of Stage 2 | 3,171 | (12,861) | 9,690 | - |
| Total changes from transfers in between Stages | (45,821) | 7,225 | 38,596 | - |
| Other changes in gross loans to customers | | | | |
| New financial assets originated during the period | 777,408 | 40,590 | 65,294 | 883,292 |
| Financial assets sold and repaid during the period | (663,086) | (39,110) | (101,137) | (803,334) |
| Financial assets written off during the period | - | - | (8,397) | (8,397) |
| Exchange differences | (505) | (57) | (176) | (739) |
| Net changes in gross loans to customers | 67,996 | 8,647 | (5,821) | 70,823 |
| Gross loans to customers as at 31 December 2023 | 532,234 | 44,264 | 114,119 | 690,617 |
| LOSS ALLOWANCES | | | | |
| Loss allowances, as at 1 January 2023 | 27,337 | 11,024 | 74,359 | 112,719 |
| Transfers in between stages: | | | | |
| Transfers out of Stage 1 | (3,275) | 1,292 | 1,983 | - |
| Increase due to transfers out of Stage 1 | - | 5,089 | 13,675 | 18,764 |
| Transfers out of Stage 2 | 854 | (3,837) | 2,984 | - |
| (Decrease) / Increase due to transfers out of Stage 2 | (552) | - | 2,957 | 2,405 |
| Increase due to changes in DPD buckets | 448 | 36 | 9,492 | 9,976 |
| Total changes from transfers in between Stages | (2,525) | 2,580 | 31,090 | 31,145 |
| Other changes in loss allowances: | | | | |
| New financial assets originated during the year | 44,413 | 13,296 | 31,479 | 89,187 |
| Financial assets sold and repaid during the period | (38,822) | (12,540) | (63,517) | (114,879) |
| Financial assets written off during the period | - | - | (8,397) | (8,397) |
| Remeasurements from changes in model | 908 | 22 | 4,094 | 5,025 |
| Unwind of discount | - | - | 46 | 46 |
| Exchange differences | (29) | (20) | (129) | (178) |
| Net changes in loss allowances | 3,945 | 3,337 | (5,334) | 1,949 |
| Loss allowances as at 31 December 2023 | 31,282 | 14,361 | 69,025 | 114,669 |
| Impaired loan coverage ratio ("ILCR") | 5.88% | 32.44% | 60.49% | 16.60% |
Transfers out of Stage 1 are driven by the underlying gross loans to customers to have significant increase in credit risks since initial recognition (Stage 2) or become credit-impaired (Stage 3). In contrast, transfers out of Stages 2 or 3 result from the underlying gross loans to customers no longer meeting said definitions.
46
Multitude Group 9M 2024 – Condensed Consolidated Interim Financial Statements (Unaudited)
Transfers in between Stages or changes within DPD buckets that do not necessarily impact the ECL model stages could also increase (decrease) loss allowances during the year.
Remeasurements from changes in ECL model, inputs and assumptions are mainly driven by updating the calculations, statistics and modelling parameters relating to EAD, PD, LGD, and EIR based on the most recent available information at the reporting date. The unwind of discount is driven by the amortisation of the ECL present value for long outstanding loans to customers.
Reconciliation of impairment loss on loans to customers to changes in loss allowances
The following table shows the breakdown of movement in loss allowances with reconciliation to profit or loss for 2023:
| LOSS ALLOWANCES | Stage 1 | Stage 2 | Stage 3 | Total |
|---|---|---|---|---|
| Loss allowances as at 1 January 2023 | 27,337 | 11,023 | 74,359 | 112,719 |
| Transfers in between stages: | ||||
| Transfers out of Stage 1 | (3,275) | 1,292 | 1,983 | - |
| Increase due to transfers out of Stage 1 | - | 5,089 | 13,675 | 18,764 |
| Transfers out of Stage 2 | 854 | (3,838) | 2,984 | - |
| (Decrease) / Increase due to transfers out of Stage 2 | (552) | - | 2,956 | 2,404 |
| Increase due to changes in DPD buckets | 448 | 36 | 9,492 | 9,976 |
| Total net changes from transfers in between Stages | (2,525) | 2,579 | 31,090 | 31,144 |
| Other changes in loss allowances: | ||||
| Net remeasurement of ECLs due to repayments of financial assets | (12,156) | (3,927) | (19,888) | (35,971) |
| New financial assets originated during the period | 44,413 | 13,296 | 31,479 | 89,188 |
| Remeasurements from changes in model | 908 | 22 | 4,094 | 5,024 |
| Unwind of discount | - | - | 46 | 46 |
| Exchange differences | (29) | (20) | (129) | (178) |
| Net changes in loss allowances recognised through profit or loss statement | 30,611 | 11,950 | 46,692 | 89,253 |
| Financial assets sold during the period | (26,666) | (8,611) | (43,629) | (78,906) |
| Financial assets written off during the period | - | - | (8,397) | (8,397) |
| Net changes in loss allowances | 3,945 | 3,339 | (5,334) | 1,949 |
| Loss allowances as at 31 December 2023 | 31,282 | 14,362 | 69,025 | 114,669 |
Multitude Group 9M 2024 - Condensed Consolidated Interim Financial Statements (Unaudited)
Macro-economic variables
The calculation of ECL incorporates forward-looking information as input for critical accounting estimate. The Group has identified key drivers of credit risk and credit losses for each portfolio of financial instruments and using an analysis of historical data, has analysed relationships between macroeconomic variables, credit risk and credit losses. This analysis is conducted at a territory and sub portfolio level in order to take into consideration possible differences in customer behaviour and default experience arising from different product characteristics.
To be able to determine the way economic conditions will be impacting the ECL estimates, the Group first performs an assessment to select the Macroeconomic Variable (MEV) which has the highest correlation to credit risk factors for a certain country and product. The Group does this through the implementation of a one-step Error Correction Model (ECM). The ECM is a multiple regression model that automatically corrects short-term deviations from the long-term equilibrium relationship such that the defaulted loan amount is restored back to its long-term equilibrium at a specific speed of adjustment.
Through the utilisation of this model the Group has determined a set of four MEVs to which the Group's portfolios are the most sensitive, namely Gross Domestic Product, Personal Disposable Income, and Unemployment Rate for consumer loans (Micro Loans, Plus Loans, Credit Limit facilities, Credit Cards and Prime Loans), whereas Consumption Rate Private is the key driver for SME loans (Secured Loans, Instalment Loans, Credit Lines, BNPL and Invoice Purchasing) and corporate loans included in Wholesale Banking business unit. The choice of macroeconomic variable to be used for a particular territory and product is determined through an optimised approach in which the ECM is run separately for each of these variables. The variable that is ultimately applied for the territory / product is the one that produces the most statistically significant result.
In order to capture a range of possible future outcomes, three possible scenarios are considered in the determination of the Group's ECL. The 'base line' scenario represents the most likely outcome. It is based on forecasted economic variables, provided by Oxford Economics, and provides the best estimate view of each respective country within the Group's lending portfolio. Apart from the 'base line' scenario, the Group considers two other macroeconomic scenarios - 'Upside' and 'Downside' scenarios - which respectively represent a more optimistic and a more pessimistic outcome, as further explained in this section.
Each scenario is weighted by a probability of occurrence, determined by a combination of macroeconomic research and expert credit judgement, taking account the range of possible outcomes, each chosen scenario represents.
The weightings assigned to each economic scenario, which are unchanged from 2022 were 60%, for the 'Base' scenario, 20% for the 'Downside' scenario and 20% for the 'Upside' scenario. The number of scenarios used is based on the analysis of each major product type to ensure that non-linearities are captured. The number of scenarios and their attributes are reassessed at each reporting date. The probability weightings assigned to the respective scenarios reflect an unbiased evaluation of the range of possible outcomes.
In relation to the debt investments, the Group also incorporates these macroeconomic forecasts in its periodical assessments on the pledged loan portfolios, in order to assess whether the Group should provide for expected credit losses. Such assessments are based on the credit information supplied by the bond issuers which the Multitude Group has invested in. In order for its ECL methodology to represent an appropriate estimation of its credit risk emanating from said investments, the Group assesses the ECL on each credit portfolio securing the Group's investment separately.
48 Multitude Group 9M 2024 - Condensed Consolidated Interim Financial Statements (Unaudited)
The pertinent macroeconomic variables relating to the Group's lending portfolio as at 30 September 2024, utilised in the multiple regression, are sourced from Oxford Economics and are listed below:
Unemployment rate
| In % | 2024 | 2025 | 2026 | ||||||
|---|---|---|---|---|---|---|---|---|---|
| Base | Down | Up | Base | Down | Up | Base | Down | Up | |
| Bulgaria | 4.31 | 4.32 | 4.30 | 3.98 | 4.32 | 3.89 | 3.76 | 4.27 | 3.61 |
| Czechia | 3.83 | 3.84 | 3.83 | 3.96 | 4.21 | 3.87 | 3.80 | 4.33 | 3.61 |
| Denmark | 2.90 | 2.92 | 2.90 | 2.78 | 3.10 | 2.69 | 2.59 | 3.17 | 2.47 |
| Netherlands | 3.67 | 3.68 | 3.67 | 3.89 | 4.26 | 3.81 | 4.11 | 4.74 | 3.97 |
| Poland | 5.09 | 5.10 | 5.08 | 4.85 | 5.10 | 4.65 | 4.60 | 5.23 | 4.35 |
| Romania | 3.12 | 3.14 | 3.11 | 3.17 | 3.59 | 3.00 | 3.12 | 3.82 | 2.89 |
Personal disposable income
| Billion units | 2024 | 2025 | 2026 | |||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Cur. | Base | Down | Up | Base | Down | Up | Base | Down | Up | |
| Croatia | EUR | 39.41 | 39.37 | 39.43 | 39.99 | 39.70 | 40.08 | 40.48 | 40.34 | 40.45 |
| Finland | EUR | 135.30 | 135.15 | 135.34 | 136.32 | 135.21 | 136.60 | 137.43 | 135.96 | 137.67 |
| Lithuania | EUR | 33.90 | 33.84 | 33.91 | 34.93 | 34.61 | 35.04 | 36.05 | 35.80 | 36.08 |
| Netherlands | EUR | 465.81 | 465.53 | 465.92 | 473.15 | 469.96 | 474.41 | 480.96 | 475.99 | 482.29 |
| Norway | NOK | 1,873.67 | 1,872.34 | 1,873.92 | 1,919.59 | 1,918.44 | 1,919.83 | 1,963.45 | 1,967.34 | 1,961.68 |
| Sweden | SEK | 3,076.46 | 3,074.70 | 3,077.46 | 3,113.55 | 3,103.11 | 3,120.41 | 3,151.88 | 3,134.07 | 3,158.48 |
Consumption rate private
| Billion units | 2024 | 2025 | 2026 | |||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Cur. | Base | Down | Up | Base | Down | Up | Base | Down | Up | |
| Denmark | DKK | 1166.94 | 1166.56 | 1167.16 | 1195.92 | 1182.73 | 1199.27 | 1234.34 | 1209.33 | 1238.29 |
| Sweden | SEK | 2787.01 | 2785.76 | 2787.34 | 2848.03 | 2823.22 | 2857.86 | 2912.43 | 2863.88 | 2930.08 |
Gross domestic product
| Billion units | 2024 | 2025 | 2026 | |||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Cur. | Base | Down | Up | Base | Down | Up | Base | Down | Up | |
| Bulgaria | BGN | 113.05 | 112.98 | 113.07 | 116.35 | 115.07 | 116.71 | 118.95 | 116.97 | 119.56 |
| Croatia | EUR | 61.34 | 61.32 | 61.34 | 62.42 | 61.94 | 62.51 | 63.35 | 62.45 | 63.54 |
| Estonia | EUR | 24.28 | 24.26 | 24.28 | 25.55 | 25.30 | 25.62 | 26.82 | 26.49 | 26.96 |
| Germany | EUR | 3,614.31 | 3,613.17 | 3,614.60 | 3,633.05 | 3,582.79 | 3,646.34 | 3,678.07 | 3,581.94 | 3,701.08 |
| Latvia | EUR | 30.33 | 30.29 | 30.33 | 29.74 | 29.45 | 29.80 | 30.66 | 30.32 | 30.79 |
| Netherlands | EUR | 941.31 | 940.83 | 941.42 | 954.28 | 940.35 | 957.57 | 968.87 | 944.29 | 974.45 |
| Romania | RON | 1,218.09 | 1,217.40 | 1,218.48 | 1,256.72 | 1,239.34 | 1,262.83 | 1,289.72 | 1,259.53 | 1,300.13 |
| Slovenia | EUR | 49.85 | 49.79 | 49.86 | 51.21 | 50.63 | 51.38 | 52.51 | 51.77 | 52.76 |
Multitude Group 9M 2024 - Condensed Consolidated Interim Financial Statements (Unaudited)
13. Financial assets and liabilities classification and fair value
Financial assets
The table below summarises the Group's financial assets presented based on their classification based on their subsequent measurement, at amortised cost or FVPL; and based on their fair value measurement hierarchy, level 1, 2 or 3; as at 30 September 2024 and as at 31 December 2023:
| EUR '000 | Fair value hierarchy | 30 September 2024 | 31 December 2023 | ||
|---|---|---|---|---|---|
| Carrying amount | Fair value | Carrying amount | Fair value | ||
| FINANCIAL ASSETS AT FVPL | |||||
| Derivative financial assets | Level 2 | 95 | 95 | 299 | 299 |
| FINANCIAL ASSETS AT AMORTISED COST | |||||
| Loans to customers | Level 3 | 624,738 | 624,738 | 575,948 | 575,948 |
| Cash and cash equivalents | Level 1 | 267,067 | 267,067 | 283,712 | 283,712 |
| Debt investments | Level 3 | 101,196 | 101,196 | 62,114 | 62,114 |
| Other financial assets: | |||||
| - Loans to related parties | Level 3 | 10,235 | 10,235 | 10,048 | 10,048 |
| - Receivables from banks | Level 3 | 4,206 | 4,206 | 4,362 | 4,362 |
| - Receivables from sold portfolios | Level 3 | 1,367 | 1,367 | 1,476 | 1,476 |
| - Other receivables | Level 3 | 7,811 | 7,811 | 3,549 | 3,549 |
| Total | 1,016,715 | 1,016,715 | 941,508 | 941,508 |
The fair value of derivative financial assets is determined using level 2 fair value hierarchy. The derivative assets include only foreign currency forward contracts where the Group agrees to sell a predetermined amount of its foreign currency exposure at a predetermined price.
Cash and cash equivalents are measured at level 1 in the fair value hierarchy because they are highly liquid assets.
Debt investments at 30 September 2024 include investments in secured bonds. The value of this item is determined using level 3 fair value hierarchy due to the private placement of instruments.
Other financial assets mainly include loans to related parties, receivables from banks and receivables from sold portfolios. Receivables from banks include mandatory deposits held with other banks as a collateral for the purpose of hedging. Loans to related parties comprise the corporate loan to Sortter Oy and loans to members of the Leadership Team. There were no significant changes in the balances with related parties during the reporting period.
The fair values of the other financial assets measured at amortised cost are determined using level 3 fair value hierarchy based significantly on unobservable inputs. The Group estimates that the carrying amounts of these financial assets reasonably approximate their fair values as it is derived from the purchased price agreed in orderly transactions at 30 September 2024 and 31 December 2023.
50
Multitude Group 9M 2024 - Condensed Consolidated Interim Financial Statements (Unaudited)
Financial liabilities
The table below summarises the Group's financial liabilities presented based on their classification and based on their subsequent measurement, at amortised cost or FVPL; and based on their fair value measurement hierarchy, level 1, 2 or 3; as at 30 September 2024 and as at 31 December 2023:
| EUR '000 | Fair value hierarchy | 30 September 2024 | 31 December 2023 | ||
|---|---|---|---|---|---|
| Carrying amount | Fair value | Carrying amount | Fair value | ||
| FINANCIAL LIABILITIES AT FVPL | |||||
| Derivative financial liabilities | Level 2 | 2,263 | 2,263 | 5,323 | 5,323 |
| FINANCIAL LIABILITIES AT AMORTISED COST | |||||
| Deposits from customers | Level 3 | 773,384 | 773,384 | 732,350 | 732,350 |
| Debt securities | Level 1 | 76,065 | 78,078 | 47,805 | 46,676 |
| Provisions, accruals and other liabilities: | Level 3 | ||||
| - Other financial liabilities | 16,792 | 16,792 | 9,331 | 9,331 | |
| Lease liabilities | 4,940 | - | 4,963 | - | |
| Total | 873,444 | 870,517 | 799,772 | 793,680 |
The fair value of derivative financial liabilities is determined using level 2 fair value hierarchy. Derivative financial liabilities include only foreign currency forward contracts where the Group agrees to sell a predetermined amount of its foreign currency exposure at a predetermined price.
The fair value of debt securities that includes only listed bonds (2024 Multitude Capital Oyj senior unsecured bonds and 2022 Multitude Bank tranche bonds) is determined using level 1 fair value hierarchy based on the published quotes in the Frankfurt Stock Exchange Open Market and Malta Stocks Exchange, respectively.
The fair value of the remaining financial liabilities measured at amortised cost is determined using level 3 fair value hierarchy based significantly on unobservable inputs. The Group estimates that the carrying amounts of these financial liabilities reasonably approximate their fair values as it is derived from the purchased price agreed in orderly transactions at 30 September 2024 and 31 December 2023.
2024 Multitude Capital Oyj senior unsecured bonds
On 13 June 2024, Multitude Capital Oyj issued senior unsecured bonds (ISIN: NO0013259747) with a coupon rate of 3-month Euribor plus 6.75%, maturing in June 2028. The Group incurred EUR 3.0 million in issuance costs and discounts, which are included in the interest paid line item in the consolidated statement of cash flows. As of 30 September 2024, the senior unsecured bonds are recognised as debt securities in the Group's consolidated statement of financial position, with an outstanding nominal amount of EUR 76.1 million and a carrying amount of EUR 73.2 million.
Redemption of the 2022 Multitude p.l.c. senior unsecured bond
On 13 June 2024, Multitude p.l.c. announced the exercise of its option to redeem all outstanding senior unsecured floating rate bonds maturing in December 2025 (ISIN: NO0012702549), under Clause 9.3 (Voluntary Total Redemption (call option)) of the bond terms. The final redemption was executed on 8 July 2024, with each 2022 Bond redeemed at a call option price of 103.75% of the nominal value, plus accrued and unpaid interest, with payments made to bondholders on record as of 1 July 2024. Following the redemption, the 2022 Bonds were delisted from the Frankfurt Stock Exchange Open Market (Freiverkehr) and Nasdaq Stockholm.
Multitude Group 9M 2024 - Condensed Consolidated Interim Financial Statements (Unaudited)
As a result of this early redemption, an additional expense of EUR 3.0 million was recorded in the consolidated statement of profit or loss under interest expense, covering the amortisation of previously capitalised issuance costs and the call premium. The call premium for the amount of EUR 1.9 million was included in the interest paid line item in the consolidated statement of cash flows.
2022 Multitude Bank tranche bonds
On 13 April 2022, Multitude Bank p.l.c. issued tranche bonds (Series No. 1 / 2022 - ISIN: MT0000911215) with a 6% coupon rate, maturing on 13 April 2032. Of the total EUR 5.1 million issued, EUR 2.0 million was allocated to Multitude p.l.c., which was eliminated at the Group level through the consolidation process. As of 30 September 2024, tranche bonds are recognised as debt securities in the Group's consolidated statement of financial position, with an outstanding nominal amount of EUR 3.1 million and a carrying amount of EUR 2.9 million.
14. Dividends
The Board of Multitude p.l.c. proposed (and AGM approved) EUR 0.19 per share of dividend distribution in the total amount of EUR 4.1 million in relation to the results of operations for the financial year 2023 that was paid in May 2024. For the comparative period, the Group declared a dividend of EUR 0.12 per share in the total amount of EUR 2.6 million for the financial year 2022 that was paid in May 2023.
15. Correction of a prior period errors and a change of presentation
During the financial year 2023, the Group implemented modifications to its accounting policies pertaining to the presentation of financial statements and rectification of prior period errors. This section shows adjustments in the comparative period of 9M 2023. The reasons and impact of change in accounting policies and correction of prior period errors in financial statements are described below.
a) Change in accounting policy - Adoption of new presentation:
In 2023, the Group has undertaken a strategic initiative to enhance the presentation of its financial results, with the aim of providing reliable and more relevant information about the Group's financial position and performance, aligning the presentation of primary statements with the common practice within the financial industry. As a result, the Group, starting with the financial year ended 31 December 2023:
- changed the presentation of the statement of financial position from current / non-current classification to presentation based on the order of liquidity;
- has restructured the statement of profit or loss to present the net interest income, net fair value and foreign exchange gains and losses and other items;
- made corresponding changes in the presentation of the statement of cash flows, to align the presentation with the financial industry and to include the cash flows of operating financial assets and financial liabilities in the cash flows from operating activities in line with IAS 7.
Multitude Group 9M 2024 - Condensed Consolidated Interim Financial Statements (Unaudited)
b) Corrections of prior period errors:
- Inclusion of collection costs in the calculation of expected credit losses
Previously, the Group recognised collection costs as incurred and presented them in general and administrative expense. Debt collection costs are considered incremental and directly attributable to the recovery of cash flows of the granted loans in the event of a default, and as such, they should rather be incorporated into the estimate of the expected credit losses. After the correction, debt collection costs are included in the calculation of expected credit losses by incorporating them in the net expected cash flows of loans to customers to which the collection costs directly relate to.
- Classification of reminder fees as interest income
The Group has revised its treatment of reminder fees. Historically these fees have been classified as fee and commission income in the statement of profit or loss and accounted for under IFRS 15. Reminder fees are a standard feature of loans to customers and they are collected from the inception of the loan contract over the lifetime of a loan, and similarly to interest. From the financial year ended 31 December 2023 onwards, the Group accounts for these fees in line with IFRS 9, and factors the reminder fees in the calculation of interest income by applying the effective interest method.
- Scoring costs
Scoring costs consist of credit information, credit rating and similar checks conducted when a customer applies for a loan or product and reaches a certain stage in this process. Historically, scoring costs have been recognised as incurred and presented in general and administrative expense. However, whenever such scoring costs relate to a loan which is granted to the customer, the costs should be treated as a directly attributable transaction cost to such loan, and should be included in the loan balance at inception and in the calculation of the effective interest rate of that loan, thus decreasing the interest income. This restatement only applies to scoring costs related to loans issued. These changes, together with any potential impact in recognised deferred taxes, have been applied consistently, by adjusting the comparative period and the opening balances for the earliest period presented for each affected financial statement line item.
The following tables summarise the impacts on the Group's condensed consolidated interim financial statements. The tables below show restatement of comparative nine-month period ended on 30 September 2023.
Multitude Group 9M 2024 - Condensed Consolidated Interim Financial Statements (Unaudited)
Condensed consolidated statement of financial position as at 30 September 2023
| EUR '000
Old FSLI | New FSLI | Reported 30
September 2023 | Adjustment
amount | Adjustment
number | Restated 30
September 2023 |
| --- | --- | --- | --- | --- | --- |
| ASSETS | ASSETS | | | | |
| Non-current assets | | | | | |
| Deferred tax assets | Deferred tax assets | 6,348 | 394 | 4 | 6,742 |
| Loans to customers | Loans to customers | 111,193 | 434,831 | 1,5 | 546,024 |
| Other non-current
financial assets | Debt investments | 43,368 | (3,046) | 3 | 40,322 |
| Investments
accounted for using
the equity method | Investments
accounted for using
the equity method | 1,050 | - | | 1,050 |
| Current assets | | | | | |
| Loans to customers | Loans to customers | 437,046 | (437,046) | 1 | - |
| Other current financial
assets | Other financial assets | 11,604 | 1,744 | 2,3 | 13,348 |
| Prepaid expenses and
other current assets | Prepaid expenses
and other assets | 1,477 | 1,302 | 2 | 2,779 |
| Total assets | Total assets | 819,534 | (1,821) | | 817,713 |
| EQUITY | EQUITY | | | | |
| Retained earnings | Retained earnings | 82,798 | (1,821) | 4,5 | 80,977 |
| Total equity | Total equity | 184,368 | (1,821) | | 182,547 |
| LIABILITIES | LIABILITIES | | | | |
| Non-current liabilities | | | | | |
| Deposits from
customers | Deposits from
customers | 192,164 | 364,148 | 6,9 | 556,312 |
| Lease liabilities | Lease liabilities | 3,353 | 1,942 | 7 | 5,295 |
| Current liabilities | | | | | |
| Deposits from
customers | Deposits from
customers | 355,504 | (355,504) | 6 | - |
| Lease liabilities | Lease liabilities | 1,942 | (1,942) | 7 | - |
| Trade payables | Provisions, accruals
and other liabilities | 10,615 | 10,953 | 8,9 | 21,568 |
| Accruals and other
current liabilities | Provisions, accruals
and other liabilities | 19,597 | (19,597) | 8 | - |
| Total liabilities | Total liabilities | 635,167 | - | | 635,167 |
| Total equity and
liabilities | Total equity and
liabilities | 819,534 | (1,821) | | 817,713 |
54
Multitude Group 9M 2024 - Condensed Consolidated Interim Financial Statements (Unaudited)
Description of adjustments to condensed consolidated statement of financial position as at 30 September 2023
| Number | Amount, EUR '000 | Description |
|---|---|---|
| 1 | 437,046 | Current and non-current loans to customers have been merged due to change of the presentation of consolidated statement of financial position based on the order of liquidity. |
| 2 | 1,302 | Part of the prepaid expenses (which in economic terms should be presented as financial assets, such as receivables under the depositor compensation scheme) has been reclassified into other financial assets financial statement line item for a more accurate presentation of information. |
| 3 | 3,046 | Current portion of debt investments has been reclassified from other financial assets line item to debt investments line item. |
| 4 | 394 | An additional deferred tax asset generated as a result of compliance with IAS 8 has been recognised as result of increased ECL provision. |
| 5 | 2,215 | An additional ECL generated as a result of compliance with IAS 8 has been recognised due to collection costs classification as part of ECL. |
| 6 | 355,504 | Current and non-current deposits from customers have been merged due to change of the presentation of consolidated statement of financial position based on the order of liquidity. |
| 7 | 1,942 | Current and non-current lease liability have been merged due to change of the presentation of consolidated statement of financial position based on the order of liquidity. |
| 8 | 19,597 | Trade payables line item has been merged with accruals and other current liabilities line item and renamed to provisions, accruals and other liabilities. |
| 9 | 8,644 | Interest accrual liability has been reclassified from provisions, accruals and other liabilities to deposit from customers. |
Condensed consolidated statement of profit or loss for Q3 2023
| EUR '000
Old FSLI | New FSLI | Reported
Q3 2023 | Adjustment
amount | Adjustment
number | Restated
Q3 2023 |
| --- | --- | --- | --- | --- | --- |
| Interest revenue | Interest income | 57,189 | 1,183 | 2, 6, 7, 9 | 58,372 |
| Fees | Fee and commission income | 676 | (637) | 6 | 40 |
| Impairment loss on
loans to customers | Impairment loss on loans
to customers | (21,255) | (908) | 3, 4 | (22,163) |
| Bank and lending costs | General and
administrative expense | (2,953) | 2,953 | 1 | - |
| Selling and marketing
expense | Selling and marketing
expense | (3,777) | (56) | 11 | (3,833) |
| General and
administrative expense | General and administrative
expense | (5,517) | (1,965) | 1, 3, 7, 8, 10, 11 | (7,482) |
| Profit before interests
and taxes (EBIT) | Profit before interest
expense and taxes (EBIT) | 11,561 | 570 | | 12,154 |
| Finance income | Interest income | 657 | (657) | 2 | - |
| Finance costs | Interest expense | (6,435) | 1,060 | 5, 8, 9 | (5,375) |
| Finance costs | Fair value and foreign
exchange losses (net) | - | (1,107) | 5 | (1,107) |
| Profit before income tax | Profit before income tax | 5,805 | (134) | | 5,671 |
| Income tax expense | Income tax expense | (931) | 192 | 10 | (739) |
| Profit for the period | Profit for the period | 4,874 | 58 | | 4,932 |
Multitude Group 9M 2024 - Condensed Consolidated Interim Financial Statements (Unaudited)
Description of adjustments to condensed consolidated statement of profit or loss for Q3 2023
| Number | Amount, EUR '000 | Description |
|---|---|---|
| 1 | 2,953 | Bank and lending costs line item has been merged with general and administrative expenses. |
| 2 | 657 | Finance income in relation to interest from loans to related parties and deposits with other banks has been merged with the interest income financial statement line item. |
| 3 | 966 | Invoicing and collection costs have been reclassified from general and administrative expense to impairment loss on loans to customers financial statement line item. |
| 4 | 58 | Impairment loss adjustment due to change in ECL estimate for collection costs. |
| 5 | 1,107 | A new financial statement line item titled fair value and foreign exchange losses (net) has been separated from interest expense previously reported under finance cost line item. |
| 6 | 637 | Reminder fee has been reclassified from fee and commission income to interest income financial statement line item. |
| 7 | 118 | Scoring costs have been reclassified from general and administrative expense to interest income as part of effective interest income. |
| 8 | (41) | Depositor compensation scheme contributions have been reclassified from interest expense to general and administrative expense. |
| 9 | 6 | Finance cost has been renamed to interest expense and reclassified to net interest income. |
| 10 | (192) | Withholding tax on consumer loans has been reclassified from general and administrative expense to income tax expense. |
| 11 | 56 | Bank and lending costs related to loan handling costs have been merged with general and administrative expense. |
Condensed consolidated statement of profit or loss for 9M 2023
| EUR '000
Old FSLI | New FSLI | Reported
9M 2023 | Adjustment
amount | Adjustment
number | Restated
9M 2023 |
| --- | --- | --- | --- | --- | --- |
| Interest revenue | Interest income | 165,222 | 3,236 | 2, 6, 7, 9 | 168,458 |
| Fees | Fee and commission income | 2,171 | (2,124) | 6 | 47 |
| Impairment loss on
loans to customers | Impairment loss on loans
to customers | (61,452) | (2,920) | 3, 4 | (64,372) |
| Bank and lending costs | General and
administrative expense | (8,913) | 8,913 | 1 | - |
| Selling and marketing
expense | Selling and marketing
expense | (10,821) | (176) | 10 | (10,997) |
| General and
administrative expense | General and administrative
expense | (16,708) | (6,232) | 1, 3, 7, 8, 10 | (22,940) |
| Profit before interests
and taxes (EBIT) | Profit before interest
expense and taxes (EBIT) | 32,470 | 697 | | 33,201 |
| Finance income | Interest income | 1,428 | (1,428) | 2 | - |
| Finance costs | Interest expense | (18,781) | 4,574 | 5, 8, 9 | (14,207) |
| Finance costs | Fair value and foreign exchange losses (net) | - | (3,670) | 5 | (3,670) |
| Profit before income tax | Profit before income tax | 15,151 | 173 | | 15,324 |
| Income tax expense | Income tax expense | (2,796) | - | | (2,796) |
| Profit for the period | Profit for the period | 12,355 | 173 | | 12,528 |
56
Multitude Group 9M 2024 - Condensed Consolidated Interim Financial Statements (Unaudited)
Description of adjustments to condensed consolidated statement of profit or loss for 9M 2023
| Number | Amount, EUR '000 | Description |
|---|---|---|
| 1 | 8,913 | Bank and lending costs line item has been merged with general and administrative expenses. |
| 2 | 1,428 | Finance income in relation to interest from loans to related parties and deposits with other banks has been merged with the interest income financial statement line item. |
| 3 | 3,093 | Invoicing and collection costs have been reclassified from general and administrative expense to impairment loss on loans to customers financial statement line item. |
| 4 | 173 | Impairment loss adjustment due to change in ECL estimate for collection costs. |
| 5 | 3,670 | A new financial statement line item titled fair value and foreign exchange losses (net) has been separated from interest expense previously reported under finance cost line item. |
| 6 | 2,124 | Reminder fee has been reclassified from fee and commission income to interest income financial statement line item. |
| 7 | 353 | Scoring costs have been reclassified from general and administrative expense to interest income as part of effective interest income. |
| 8 | 940 | Depositor compensation scheme contributions have been reclassified from interest expense to general and administrative expense. |
| 9 | 36 | Finance cost has been renamed to interest expense and reclassified to net interest income. |
| 10 | 176 | Bank and lending costs related to loan handling costs have been merged with general and administrative expense. |
Condensed consolidated statement of cash flows for Q3 2023
| EUR '000
Old FSLI | New FSLI | Reported Q3 2023 | Adjustment amount | Adjustment number | Restated Q3 2023 |
| --- | --- | --- | --- | --- | --- |
| Profit for the year | Profit for the period | 4,875 | 57 | 1 | 4,932 |
| Adjustments for: | Adjustments for: | | | | |
| Impairments on loans | Impairment loss on loans to customers | 21,255 | 907 | 1, 2 | 22,162 |
| Depreciation and amortisation | Depreciation and amortisation | 4,411 | (504) | 3 | 3,907 |
| Finance costs, net | Net interest income | 5,822 | (58,819) | 5, 6 | (52,997) |
| Fair value and foreign exchange gains and losses | Fair value and foreign exchange losses (net) | - | 1,107 | 5, 11 | 1,107 |
| Tax on income from operations | Income tax expense | 627 | 112 | 4 | 739 |
| Other adjustments | Other adjustments | (357) | 504 | 3 | 146 |
| Working capital changes: | Changes in operating assets: | | | | |
| Movements in gross portfolio | Decrease (+) / increase (-) in loans to customers | 11,514 | (61,157) | 10, 12, 14, 16, 17 | (49,643) |
| | Increase (-) in debt investments | - | (1,935) | 2, 4, 15, 17, 19 | (1,938) |
| | Decrease (+) in derivative financial instruments (net) | - | 589 | 18 | 589 |
| | Decrease (+) in other assets | - | 3,722 | 8, 12 | 3,722 |
Multitude Group 9M 2024 - Condensed Consolidated Interim Financial Statements (Unaudited)
58
Multitude Group 9M 2024 – Condensed Consolidated Interim Financial Statements (Unaudited)
| EUR '000
Old FSLI | New FSLI | Reported Q3 2023 | Adjustment amount | Adjustment number | Restated Q3 2023 |
| --- | --- | --- | --- | --- | --- |
| Changes in operating liabilities: | Changes in operating liabilities: | | | | |
| Deposits from customers | Decrease (-) in deposits from customers | - | (16,815) | 7, 14 | (16,815) |
| Increase (+) / Decrease (-) in trade payables and other liabilities | Decrease (-) / increase (+) in other liabilities | (746) | 5,360 | 16, 18 | 4,614 |
| Interest paid | Interest paid | (3,541) | 588 | 13 | (2,953) |
| Interest received | Interest received | 362 | 59,131 | 6, 13, 15 | 59,493 |
| Income taxes paid | Income taxes paid | (61) | - | | (61) |
| Movements in gross portfolio | Increase (-) in loans to customers | (50,098) | 50,098 | 10 | - |
| Net cash from (used in) operating activities | Net cash (used in) operating activities | (5,937) | (17,055) | | (22,994) |
| Cash flows from investing activities: | Cash flows from investing activities: | | | | |
| Proceeds from sale of investments and other assets | Decrease (+) in derivative financial instruments (net) | 4,795 | (4,795) | 8 | - |
| Proceeds from sale of investments and other assets | Increase (-) in derivative financial instruments (net) | (1,800) | 1,800 | 19 | - |
| Purchase of tangible and intangible assets | Purchase of tangible assets | - | (272) | 9 | (272) |
| Purchase of tangible and intangible assets | Purchase of intangible assets | (3,173) | 272 | 9 | (2,901) |
| Net cash used in investing activities | Net cash (used in) investing activities | (179) | (2,995) | 45 | (3,173) |
| Cash flows from financing activities: | Cash flows from financing activities: | | | | |
| Perpetual bonds interest | Repayment of perpetual bonds interest | (1,581) | - | - | (1,581) |
| Repayment of finance lease liabilities | Repayment of lease liabilities | (698) | - | - | (698) |
| Deposits from customers | Decrease (-) in deposits from customers | (19,686) | 19,686 | 7 | - |
| Net cash from (used in) financing activities | Net cash (used in) financing activities | (23,357) | 19,686 | 7 | (3,671) |
| Cash and cash equivalents at beginning of the period | Cash and cash equivalents at beginning of the period | 196,707 | - | - | 196,707 |
| Exchange losses on cash and cash equivalents | Exchange (losses) / gains on cash and cash equivalents | (194) | 364 | 11 | 171 |
| Net increase in cash and cash equivalents | Net decrease (-) in cash and cash equivalents | (29,474) | (364) | 11 | (29,838) |
| Cash and cash equivalents at the end of the period | Cash and cash equivalents at the end of the period | 167,040 | - | - | 167,040 |
Description of adjustments to the condensed consolidated statement of cash flows for Q3 2023
| Number | Amount, EUR '000 | Description |
|---|---|---|
| 1 | 57 | Change in accounting treatment of collection costs that led to increase in ECL provision for the loans to customers. |
| 2 | 964 | Invoicing and collection cost has been reclassified from general and administrative expense to impairment loss on loans to customers and hence deducted from movement in loans to customers. |
| 3 | (504) | Impairment on non-financial assets has been reclassified from other adjustments line. |
| 4 | 112 | An adjustment has been made regarding the change in accounting treatment of withholding tax on Romanian portfolio leading to reclassification of adjustment from movement in working capital to add back of income tax expense. |
| 5 | 1,471 | Finance cost, net has been split between net interest income and unrealised items included in fair value and fair values and foreign exchange gain or loss in the statement of profit or loss. |
| 6 | 57,348 | Finance cost, net has been split between net interest income and fair value and foreign exchange losses (net). |
| 7 | (19,686) | Reclassification of movement in deposits from customers to operating cash flow with subsequent renaming of line item. |
| 8 | 4,795 | Reclassification of changes in derivative assets and liabilities. |
| 9 | 272 | Separation of purchase of tangible assets from purchase of intangible assets. |
| 10 | 50,098 | Reclassification of movement of loans to customers with subsequent renaming of line item. |
| 11 | 364 | Reclassification of part of exchange gains / (losses) on cash and cash equivalents to fair value and foreign exchange losses (net). |
| 12 | 1,073 | Reclassification of part of accrued gain or loss from derivatives from other assets to movement in derivatives. |
| 13 | 588 | Adjustment of net interest income with netting of interest received and interest paid line items. |
| 14 | 2,871 | Reclassification of change in prepayment related to issue costs to loans to customers. |
| 15 | (2,371) | Separation of movement on interest accrual from loans to customers. |
| 16 | 5,949 | Netting of other liabilities with other assets to match movement on the statement of financial position. |
| 17 | (3,312) | Reclassification of movements in other liabilities related to unallocated payments to loans to customers to match movement on the statement of financial position. |
| 18 | (589) | Netting of other liabilities to other financial assets to match movement on the statement of financial position. |
| 19 | 1,800 | Reclassification of debt investment purchase from purchase of non-current financial investments to other financial assets. |
Multitude Group 9M 2024 - Condensed Consolidated Interim Financial Statements (Unaudited)
Condensed consolidated statement of cash flows for 9M 2023
| EUR '000
Old FSLI | New FSLI | Reported
9M 2023 | Adjustment
amount | Adjustment
number | Restated
9M 2023 |
| --- | --- | --- | --- | --- | --- |
| Profit for the year | Profit for the period | 12,356 | 172 | 1 | 12,528 |
| Adjustments for: | Adjustments for: | | | | |
| Impairments on loans | Impairment loss on
loans to customers | 61,452 | 2,920 | 1,2 | 64,372 |
| Depreciation and
amortisation | Depreciation and
amortisation | 11,582 | (85) | 3 | 11,497 |
| Finance costs, net | Net interest income | 16,435 | (170,686) | 5,6 | (154,251) |
| Fair value and foreign
exchange gains and losses | Fair value and foreign
exchange losses (net) | - | 3,670 | 5,11 | 3,670 |
| Tax on income from
operations | Income tax expense | 2,492 | 304 | 4 | 2,796 |
| Other adjustments | Other adjustments | 347 | 85 | 3 | 432 |
| Working capital
changes: | Changes in operating
assets: | | | | |
| Movements in gross
portfolio | Decrease (+) /
increase (-) in loans to
customers | 20,805 | (121,739) | 10,12,14,16,17 | (100,934) |
| | Increase (-) in debt
investments | - | (19,214) | 2,4,15,17,19 | (19,215) |
| | Decrease (+) in
derivative financial
instruments (net) | - | 819 | 18 | 819 |
| | Decrease (+) in other
assets | - | 3,524 | 8,12 | 3,524 |
| Changes in operating
liabilities: | Changes in operating
liabilities: | | | | |
| Deposits from
customers | Increase (+) in deposits
from customers | - | 52,935 | 7,14 | 52,935 |
| Increase (+) / Decrease
(-) in trade payables
and other liabilities | Decrease (-) /
increase (+) in other
liabilities | (3,034) | 9,025 | 16,18 | 5,991 |
| Interest paid | Interest paid | (7,545) | (83) | 13 | (7,628) |
| Interest received | Interest received | 819 | 158,340 | 6,13,15 | 159,159 |
| Income taxes paid | Income taxes paid | (547) | - | | (547) |
| Movements in gross
portfolio | Increase (-) in loans to
customers | (115,421) | 115,421 | 10 | - |
| Net cash from (used in)
operating activities | Net cash (used in) /
from operating
activities | (259) | 35,408 | | 35,149 |
| Cash flows from
investing activities: | Cash flows from
investing activities: | | | | |
| Proceeds from sale of
investments and other
assets | Decrease (+) in
derivative financial
instruments (net) | 4,774 | (4,774) | 8 | - |
| Proceeds from sale of
investments and other
assets | Increase (-) in
derivative financial
instruments (net) | (14,600) | 14,600 | 19 | - |
| Purchase of tangible
and intangible assets | Purchase of tangible
assets | - | (126) | 9 | (126) |
| Purchase of tangible
and intangible assets | Purchase of
intangible assets | (8,036) | 126 | 9 | (7,910) |
| Net cash used in
investing activities | Net cash (used in)
investing activities | (18,879) | 9,826 | 45 | (9,052) |
60
Multitude Group 9M 2024 – Condensed Consolidated Interim Financial Statements (Unaudited)
Multitude Group 9M 2024 – Condensed Consolidated Interim Financial Statements (Unaudited)
61
| EUR '000
Old FSLI | New FSLI | Reported
9M 2023 | Adjustment
amount | Adjustment
number | Restated
9M 2023 |
| --- | --- | --- | --- | --- | --- |
| Cash flows from
financing activities: | Cash flows from
financing activities: | | | | |
| Perpetual bonds
interest | Repayment of
perpetual bonds
interest | (4,426) | - | - | (4,426) |
| Repayment of finance
lease liabilities | Repayment of lease
liabilities | (1,802) | - | - | (1,802) |
| Deposits from
customers | Increase (+) in
deposits from
customers | 46,316 | (46,316) | 7 | - |
| Net cash from (used
in) financing activities | Net cash from (used
in) financing activities | 34,232 | (46,316) | 7 | (12,084) |
| Cash and cash
equivalents at
beginning of the period | Cash and cash
equivalents at
beginning of the period | 153,326 | - | - | 153,326 |
| Exchange losses on
cash and cash
equivalents | Exchange losses on
cash and cash
equivalents | (1,380) | 1,082 | 11 | (298) |
| Net increase in cash
and cash equivalents | Net increase (+) in
cash and cash
equivalents | 15,094 | (1,082) | 11 | 14,012 |
| Cash and cash
equivalents at the end
of the period | Cash and cash
equivalents at the
end of the period | 167,040 | - | - | 167,040 |
Description of adjustments to the condensed consolidated statement of cash flows for 9M 2023
| Number | Amount, EUR '000 | Description |
|---|---|---|
| 1 | 172 | Change in accounting treatment of collection costs that led to increase in ECL provision for the loans to customers. |
| 2 | 3,092 | Invoicing and collection cost has been reclassified from general and administrative expense to impairment loss on loans to customers and hence deducted from movement in loans to customers. |
| 3 | (85) | Impairment on non-financial assets has been reclassified from other adjustments line. |
| 4 | 304 | An adjustment has been made regarding the change in accounting treatment of withholding tax on Romanian portfolio leading to reclassification of adjustment from movement in working capital to add back of income tax expense. |
| 5 | 4,752 | Finance cost, net has been split between net interest income and unrealised items included in fair value and fair values and foreign exchange gain or loss in the statement of profit or loss. |
| 6 | 165,934 | Finance cost, net has been split between net interest income and fair value and foreign exchange losses (net). |
| 7 | 46,316 | Reclassification of movement in deposits from customers to operating cash flow with subsequent renaming of line item. |
| 8 | 4,774 | Reclassification of changes in derivative assets and liabilities. |
| 9 | 126 | Separation of purchase of tangible assets from purchase of intangible assets. |
| 10 | 115,421 | Reclassification of movement of loans to customers with subsequent renaming of line item. |
| 11 | 1,082 | Reclassification of part of exchange gains / (losses) on cash and cash equivalents to fair value and foreign exchange losses (net). |
| 12 | 1,250 | Reclassification of part of accrued gain or loss from derivatives from other assets to movement in derivatives. |
| 13 | (83) | Adjustment of net interest income with netting of interest received and interest paid line items. |
| 14 | 6,619 | Reclassification of change in prepayment related to issue costs to loans to customers. |
| 15 | 7,677 | Separation of movement on interest accrual from loans to customers. |
| 16 | 9,844 | Netting of other liabilities with other assets to match movement on the statement of financial position. |
| 17 | 8,895 | Reclassification of movements in other liabilities related to unallocated payments to loans to customers to match movement on the statement of financial position. |
| 18 | (819) | Netting of other liabilities to other financial assets to match movement on the statement of financial position. |
| 19 | 14,600 | Reclassification of debt investment purchase from purchase of non-current financial investments to other financial assets. |
62
Multitude Group 9M 2024 – Condensed Consolidated Interim Financial Statements (Unaudited)
16. Events occurring after the reporting period
Acquisition of a strategic stake in Lea Bank ASA
Multitude Bank, a subsidiary of Multitude p.l.c., has acquired a 9.9% stake in Lea Bank ASA, a digital bank serving Nordic and Spanish markets with consumer financing. The transaction, completed on 9 October 2024, reflects an acquisition cost of approximately EUR 8.4 million for the initial investment. Multitude Bank has also signed an agreement to increase its stake by an additional 8.7%, pending regulatory approvals, which would position it as the largest shareholder with an 18.6% ownership.
Under IFRS, the initial 9.9% stake will be recognised as investments accounted for using the equity method immediately. Additionally, Multitude will recognise a commitment for the second phase of the investment, pending regulatory approval. This transaction is expected to yield dividends and income from equity-accounted investments, enhancing financial returns.
This investment, fully funded from Multitude Bank's liquidity, not only aligns with Multitude's growth strategy through strategic partnerships but also serves important strategic purposes, such as diversification and a complementary fit in consumer lending. It offers considerable opportunities for enhancing value through referrals, product cooperations, and cross-selling initiatives.
Antti Kumpulainen appointed as CEO of Multitude Group
Antti Kumpulainen will take over from Jorma Jokela on 1 January 2025. Jorma, who has successfully led the company for the past two decades, will continue to serve on the Board of Directors. This change is aimed at maintaining continuity and ensuring stability within the organisation. Antti Kumpulainen, who has served as the CEO of Multitude Bank since April 2021, brings nearly ten years of significant experience with Multitude, along with extensive knowledge in the banking and FinTech industries.
Multitude Group 9M 2024 – Condensed Consolidated Interim Financial Statements (Unaudited)
Investor relations contacts
Lasse Mäkelä
Chief Strategy and IR Officer
E: [email protected]
M: +41 79 371 3417
Bernd Egger
Chief Financial Officer
E: [email protected]
M: +49 173 7931235
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www.multitude.com
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