Multitude SE

Good morning from Helsinki, Finland, and welcome to Multitude Group's earnings call for the first six months ended 2026. My name is Adam Tunning, head of Iron Treasury, and I'll be your host today. Today's agenda, Multitude CEO Antti Kumpulainen will walk you through the appearance results, which will be followed by a financial review by our CFO, Bernd Egger. Following the presentations, we will open up for questions over voice and chat. Antti, please go ahead.

Thank you, Adam. Good morning and thank you for joining us. My name is Antti Kumpulainen, CEO of Multitude Group. During today's call, our CFO, Berne Egger, and I will walk you through Multitude's H1 2026 results. The first half reflects continued disciplined execution of our strategy. We are seeing stronger diversification of our revenue streams, further improvement in asset quality, and a clear acceleration in profitability from the first to the second quarter. Let me first briefly recap who we are and where we are heading. Multitude is a pan-European fintech operating with one single EU-wide banking license and serving customers across Europe. We operate three business units on one shared growth platform serving consumers, SMEs and institutional customers. The company was founded in Finland in 2005 and has been listed on the Frankfurt Stock Exchange. stock exchange in the prime standard since 2015. In 2025, we generated 257 million euros in revenue and 26.6 million euros in net profit. We also continue to maintain our dividend ambition of distributing between 25 and 50% of annual net profit. So this is a business with more than two decades of operating history as established regulated platform and significant opportunities for profitable growth ahead. Today, there are six key takeaways we would like to highlight. First, H1 net profit amounted to 13.1 million euros. Importantly, profitability accelerated clearly during the second quarter in line with the expected facing of profitability through 2026. Second, asset quality continued to improve. Impairment losses decreased by 17.7% year-on-year to 34.9 million euros, while our loan and investment portfolio continued to grow. Third, fee and commission income more than doubled to 12.6 million euros compared with 5.3 million euros in H1 last year. This demonstrates continued progress in diversifying our revenue base and building recurring fee income streams. Fourthly, we completed the acquisition of Sorter. The transaction supports our revenue diversification strategy and adds complementary capital light fee income business to the group. Fifth, our strategic investments continue to perform strongly, with our share of results from associates doubling to 2 million euros from 1 million euros last year. And sixth, we confirm our 30 million net profit guidance for 2026, together with the outlook of 20% annual net profit growth in years 2027 and 2028. Turning to the group highlights for the first half of the year Revenue was almost 127 million euros The development reflects deliberate changes in product offering and portfolio composition and the corresponding lower interest income partly offset by very strong growth in fee income fee and commission income increased by over 7 million euros year on year to 12.6 million euros driven mainly by consumer banking and now also including the contribution from Sorter since the consolidation date. Sorter will continue operating as an independent company under the current management who have demonstrated their ability to build, run and scale the business extremely well. Sorte is a pure digital financial platform and a market leader in Finland with more than 30 banking and financing partners on one side of the platform offering consumers and SMEs financial solutions and on the other side of the platform over 120 000 credit applications made last quarter only. Now it's your time to make your own evaluation about Sorter business and its impact for multitude strategic value as the Sorter full year run rate for revenue is 25 million and profit of 5 million euros with a 50% growth. During the first half, our asset quality also continued to strengthen. Impairment losses decreased by 17.7% to 34.9 million euros. Net loans and investments increased by 15% year-on-year to 980 million euros, demonstrating continued strong demand across our businesses. Net profit for the first half was 13.1 million euros. This is in line with our expectations and reflects the profitability facing we have communicated with a clear step up in the second quarter. Going forward, our focus remains unchanged. Accelerate profitable and scalable growth through organic execution, partnerships and selective M&A. Continue to diversify revenues through recurring fee income and maintain high asset quality as we go forward. consumer banking. This is our largest and closest business unit. The first half reflects continued portfolio optimization, improving asset quality, and very strong progress in fee income expansion. Interest income and profitability were impacted by deliberate changes in portfolio composition and product offering, in line with the asset quality initiatives we have been implementing. At the same time, fee income increased significantly to 11.3 million euros compared with 4.3 million euros in H1 last year, now also including the shorter contribution from the consolidation date in late May this year. The portfolio continued to grow by 6.2% year on year and is now at 537 million euros, while impairment decreased by more than 20%. That's a great result. This is exactly the direction we want to see. continued growth together with a stronger risk profile. Going forward, our focus remains on diversifying revenues, increasing recurring income streams, disciplined growth through organic execution, partnerships, and again, selective M&As, and further improvements in profitability, scalability through cost discipline, asset quality, and automation. In SME banking, the key focus remains execution, efficiency, and automation on our path toward profitable growth. We do recognize that the turnaround in SME banking has taken longer than we originally expected, and we have made changes to get there faster. We can already see the growth momentum in the portfolio. Net loans and investment increased by 15.5% year-on-year to 171 million euros. And the secure lending now represents 32% of total portfolio. Revenue increased slightly year-on-year, while the contribution from recently originated loans is expected to materialize progressively over time as the portfolio matures. Profitability in the first half reflects a temporary investment phase supporting future growth, including organizational transformation, product development and technology investments. Importantly, while the absolute level of impairments increased driven by portfolio growth, the impairment ratio remained broadly stable. We can already see that these actions and results will push us to sustainable profitability and growth. We are currently close to a point of a breakeven and we trust to deliver for a full year of 2027 a solid positive EBT. The transformation is happening already and we can already see it. Wholesale banking continued its very strong growth trajectory during the first half. Net loans and investment increased by 37% year-on-year to 271 million euros, supported by strong execution across the secure debt deal pipeline. Revenue increased by almost 65% to 15.7 million euros, while profit before tax increased to 3.5 million euros from 400,000 euros in H1 last year. That's a big jump. So profitability growth continued to significantly outperform revenue growth. We are also building more scalable origination capabilities through automation and faster credit decisioning in Secure Depth, while Payment Solutions continues to onboard new customers. Going forward, the focus remains on growing the Secure Depth portfolio, expanding the Payment Solutions customer base, and increasing cross-selling opportunities. Our ambition for wholesale banking remains very clear, and we continue to see substantial long-term growth and profit potential in this business unit. With that, I will now hand over to a CFO, Bern Egger, who will guide you through the H1 financials and, of course, the underlying dynamics in more detail.

Thank you. Thank you very much. Antti, welcome everybody. Good morning from pretty cool Helsinki, Finland. Let me walk you through the H1 results. The key messages on H1 are essentially threefold. First, and this is my personal favorite, I repeat that all the time, but I think it's really from a strategic perspective, really important. We are succeeding in diversifying our revenue composition. The income has meanwhile become a real meaningful contributor. Second, credit losses improved materially again compared with last year. And third, we see a clear net profit step up in Q2, especially from Q1 to Q2, almost doubling net profit, well on track for the guidance. Let us go to the details and start with revenue. Interest income 114.3 million in H126 compared to 128 last year, a decrease of around about 10%. But as pointed out, this reflects the actively driven change in portfolio composition and product offering in consumer banking. So exiting short-term non-recurring business, focusing on recurring sustainable business. That is what the game is about. This is consistent with our group-wide focus on higher quality and sustainable risk-adjusted returns. By the way, adjusting for the impact of exiting non-core businesses and for the impact of strategic product adjustments in those markets, like-for-like revenue would actually be above 25 levels. Fee and commission income. Extremely strong development in H1 increased to 12.6 million compared to 5.3 million, to a plus of 136%. Key drivers are partnership-driven fee income. Secondly, services to external fintech partners. Number three, payment business. And finally, the acquisition of Sorter, reflected from the acquisition date and consolidation date, 20th of May, 2026. So four independent strong drivers for our fee income business. In addition to strong fee income development, net operating income was also supported by positive fair value effects of 2.2 million. This is related to positive earn-out revaluation effects from sold non-core businesses. So we're creating a lighter organization, but still benefiting via earn-out from sold businesses. Also, other income increased significantly to 2.6 million, which is a positive effect related to the sort of acquisition. And finally, on another positive note, results from Associate doubled to €2 million in the first half of this year compared to €1 million last year. As a result, net operating income was €108 million, already very close to H1-25 level, despite the deliberate portfolio optimization. Again, comparing like for like, net operating income would be significantly above 25 level. Let's take a short look. We will go into more detail on credit loss performance. This remains to be a key positive driver when it comes to net profit development. Impairment losses decreased to 35 million, an improvement of 7.5 million, almost 18%. We've touched upon this in the last couple of earnings calls. We can stay on the message of further improvements in the first half of 26, especially in the second quarter. This is extremely important for us because it was not only achieved on the basis of a stable portfolio, but achieved while net loans and investments continue to grow. On cost, personal expenses and general and admin expenses increased moderately, reflecting continued investment in our growth strategy. Selling and marketing expenses increased most visibly, some 2.5 million. 1.4 million out of that reflects the impact of the Sorter acquisition, which is money wisely spent, given Sorter's excellent net profit contribution. This all adds up to profit before tax of 15.1 million compared to 16.3 in H1 2025, net profit 13.1 compared to 14.2 million last year. Important to us is the dynamics. Q2 showed a clear acceleration. Net operating income increased from 51 million to 56 million. Profit before tax from 5.1 million to 10 million. Net profit increased from 4.4 million to 8.7 million in the second quarter. So the factor doubling and this dynamic is in the end what gives us a lot of confidence for our full year net profit guidance. Let me very briefly talk about assets. There are two main messages I want to bring across. Number one, net loans and investments. This is super important to understand as it is also going to be one of the profit drivers for the remainder of the year. All businesses are growing compared with end 2025. Net loans and investments increased by 40 million from 940 to 980 million compared to last year, plus 70 million. Also important, diversification. It's not a business or growth that is driven by one business unit. All business units' portfolios are on a clear growth path. Cash and cash equivalent, that's in the end the engine. We hold a little bit more than 420 million cash on the books. This represents sufficient resources to continue growing our business portfolios for the second half of this year and beyond. The increase, for those who are more interested in details, intangible assets and goodwill is related to the investment in SORTA. Again, a fast-growing, capitalized, fee-income-oriented fintech platform, so exactly what we have been wanting to add to our portfolio for quite some time. Very strong financial investment. In summary, the asset side shows continued customer portfolio growth, a strong liquidity position, and the positive impact of the most recent acquisition. Liability and equity. On liability and equity side, the key message remains unchanged. You're familiar with that. Customer deposits are the cornerstone of our funding model, complemented by capital market instruments and regulatory capital, apparently on the level of the bank. Deposits up to 1.2 billion. Equity increased to 243 million compared to 208 end of year. This increase was mainly driven by the successful placement of a 70 million perpetual bond instrument in the first half of 26. That in turn results in a very strong net equity ratio, including regulatory capital of 24% each one. Let's take a little bit of a closer look to the respective businesses, to the segments and talk about their performance. Consumer banking remains highly profitable while moving to a better revenue and risk profile and super important for us, it's back on growth track. SME banking continues to invest into portfolio growth and scalability and wholesale banking continues to deliver strong growth and very convincing profitability dynamics. Talking about consumer banking in more detail, interest income decreased by some 19% to 82 million compared to last year. But as pointed out, this is a temporary reduction and it's intentional. It's driven by us exiting from non-core businesses, short-term businesses that we sold, and by temporary effect related to product adjustments in a number of markets where we already see a positive turnaround trend. Like for like, business is on a growth path. Q2 revenue in consumer exceeds Q1 revenue by close to €3 million. Fee and commission income in the consumer business increased by almost 166% to €11.3 million, supported by both organic contribution, organic fee income stream and the consolidation of SORTA. But it's important to understand whilst the SORTA contribution is meaningful with some 2.9 million, also excluding SORTA, the organic growth of fee income would be equivalent to almost doubling the fee income in the consumer business. So really top performance. Extremely positive impairment loss development decreased by more than 20%, 36 million to less than 29 million, so top performance. And all that results in profit before tax, 15.1 million compared with 17.4 million last year. And again, while H1 ABT is technically in a way lower year on year, Q2 was meaningfully stronger than Q1, with consumer banking profit before tax increasing from 5.2 million to 9.8 million in Q2. So really extraordinary performance of the team. In SME banking, net loans sent to customers increased by 15.5% compared to last year, 171 million. Interest income picking up a bit, 2.5% growth, and net operating income also increasing by close to 2%. The revenue contribution from new volumes is expected to materialize progressively over time. Credit losses remained pretty much stable in its totality, profit before tax, still negative 3.5 million, but as Antti pointed out, This reflects investment in growth, in automation, in data and risk innovation. And our focus, and especially the SME team's management focus, is to turn this business into profitability. And we are very well on track, pretty close to a break-even, and super confident that for the full year 27, we will deliver positive results. Wholesale banking, very strong. H1, a little bit repetitive, but I need to stay on the message. Interest income increased by 70% to 14.5 million. Net operating income increased by 87% to almost 10 million. And profit before tax, still it's an early stage business, but already three and a half million positive in the first half of 26 compared to 0.4 growth factor in terms of profitability, more than seven, actually more than eight. Also compared with Q1, wholesale banking improved massively with profit before tax increasing by one third from one and a half million to two million in the second quarter only. Asset quality, long-term trend continues. You see on this slide impairment losses relative to our total portfolio, so net loans and investments. And we see a significant decrease, which is equivalent to an increase in asset quality. Group level credit losses down 7.7% year-on-year. to 35 million. This is a strong result, again, particularly because net loans and investments are increasing. So credit loss is down 18%, portfolios increasing 15%. What that means is we're not only growing the portfolio, we're doing so with a much, much better risk profile. Quarterly impairment loss is also improving from Q1 26, 1.8% ratio down to 1.6. So really top trend. And the key drivers, you are familiar with that in case you joined recent earnings calls. They remain the same, enhancing scoring and underwriting, continuous model upgrades, stronger operational processes, and of course, the focus on better asset classes. We can go a little bit more into detail, but I will speed up a bit on the credit loss development on a segment level. Key message is basically simple. This improvement in asset quality is visible in all businesses. In consumer banking, massive improvement, 28.7 million compared to 36 million, so 20.5 million reduction. This is really massive improvement. And this improvement continued during the second quarter. 15 million credit losses in Q1, 13.8 million in Q2. So again, really strong performance in the second quarter. SME banking, 5.5 million compared to 4.9. So technically in absolute numbers, a slight increase, but that is in the end, the investment in the portfolio growth, quite significant portfolio growth. growth already and with a time lag we now expect also revenues to come and in the end help us turn around the business to profitability so absolutely well on track and performance metrics in SME are absolutely stable and in wholesale banking very low impairment losses 0.7 million 50% less Then last year, in this business, apparently, it's a less granular business. Movements are more driven by IFRS requirements and reserves. But the full, and that's the key message here, the full portfolio remains collateralized. There are no unsecured exposures at all in the wholesale banking loan and investment book. Funding and capital structure, as pointed out, our funding base remains diversified and scalable with customer deposits as the cornerstone. H1, we successfully issued this bond I made reference to. This is important as it strengthens equity. This is an IFRS equity instrument and is an excellent addition to deposits and the tier two instrument that we issued on the level of the banks. A very solid funding and capitalization mix. An important aspect of the last couple of quotas is also that we managed to reduce funding cost, weighted cost of debt funding decreased to 3.34 in Q2 from 3.4 and around 4% last year, so quite a significant decrease. And that apparently is also quite important when it comes to net profit performance. In short, funding stable, diversified and cost effective. There's one final statement I would like to make as regards funding. We are evaluating the issuance of an additional tier one instrument at the level of the bank in order to further strengthen the capital base and hence the growth potential on the level of our regulated entities. Finally, capital market guidance and indicative targets. For 26, we confirm our net profit guidance, 30 million. H1 profit amounted to 13.1. And the sequential development from Q1 to Q2 supports our confidence. Q2 net profit, 8.7 million. So again, almost doubling from 4.4 million in Q1. So the direction is clearly positive. Expected drivers to get us to 30 million net profit are number one, growth dynamics in all businesses, including consumer banking. So we are in a positive growth trajectory mode already and expect that to continue for all businesses. Secondly, significant improvement in Capitalbox financial result. So if we manage to reduce negative contribution and we will manage, completely in the second half of the year, then this would have a seven-digit impact on net profit, apparently, and we're super confident to achieve that. Sort of the net profit contribution is one of the drivers. And finally, our excellent, I really have to use this term as it actually is even better than we had budgeted, our excellent credit risk performance development. That means for 27 and 28, we, of course, stick to the guidance to improve, increase our net profit levels by 20% respectively. I would like to go back to the key takeaways and conclude our presentation with these key takeaways that Antti used and referred to as an opener. Net profit 13.1 million, absolutely in line with the expected phasing throughout 2020. SE, so we're very optimistic to get the $30 million. Asset quality better than ever. Impairment loss is down 17.7%. Fee and commission income on all-time high, more than doubled to $12.6 million. Sorter acquisition supports revenue, but also profitability nicely. Strong strategic investment performance, doubling associate contribution to 2 million. And finally, as just pointed out, I would like to reiterate 30 million guidance remains valid for this year. With this, I hand back to you, Adam, and happy to move on.

Thank you. Yes, we will now continue with a question session, and we have the opportunity to ask questions over voice. We will shortly hear an instruction on how this works.

if you wish to ask a question please dial pound key 5 on your telephone keypad to enter the queue if you wish to withdraw your question please dial pound key 6 on your telephone keypad

Meanwhile, we can start with some questions that we have received over text. Starting with questions from Harald Hoff, MWB. How has the customer sentiment and credit demand developed in Q2? And what are you seeing into H2? Is borrowing appetite picking up? And are there differences across markets? Yes.

Yeah, the result tells already that the portfolio is growing, which means that obviously the demand is there. And this goes around all of our segments. We have to understand now that, for instance, when we work within wholesale banking business, there's also underlying assets in consumer and SME lending there as well. And we can see that there's need for our wholesale banking solutions. So Competitors are also growing or the other players in the market when we talk about consumer business We definitely can see that portfolios are are in good shape Our risk profile is getting better and better all the time and consumers still need Credits and good quick solutions which we can we can provide same goes for the SMEs 15% portfolio growth There is demand.

Mm-hmm Very good. And turning into a few questions from Roni at Inderes. First of all, Sorter. How much did Sorter support fee income growth? And what was the organic development of fee income? And how much support to earnings?

Altogether with 12.3 million fee income, essentially doubling from last year. Sort of the contribution in H1, essentially the revenue generated after May 20th is 2.9. And that means that even if you take out this 2.9 completely and compare organic development like for like, then this would get us to 8.4. So still almost doubling the contribution, the fee contribution compared to last year. So it's super important for a number of reasons, even more strategically, I think. But from an organic growth development perspective, we are absolutely happy with almost doubling the fee income. And by the way, fee income is something that is quite meaningful already, both in the wholesale banking slash payment and in the consumer banking business.

Staying on Sorter a bit, a question from Peter Iblad. You said you acquired a majority stake in Sorter. How big exactly, how big are the minority interest and how will it impact the P&L in 2026? And I assume the Sorter revenues will go into fee income.

Yes, absolutely. Sorter income or revenue will be reflected in fee income. With regard to the percentage, we currently hold 100%, so a fully consolidated entity. And the contribution for the second half was the?

Yes, how much is it impacting in 2026?

Well, I mean, it's a little bit difficult to give a guidance for SALT. The way we look at it is so that we see 12.5 million SALT revenue in the first six months, a little bit more than 2, 2.3 million profit levels. So if we assume that profit remains on the same level, then this means in the end... 25 million run rate revenue and close to 5 million profit, out of which between 2 and 3 million, 2.5 million would be reflected positively in our H2 results.

Yes, thank you. Continuing with Roni's questions, any updates on the plans regarding LeaBank? Have you managed to advance any common strategic initiatives? And then we also have another question from a private investor on whether we have sold the portfolio to LeaBank in Q2.

Yes, and this is, I can start with this. So we are extremely happy with our investment in Lea Bank, and we see it as a strategic investment. It's also a really good financial investment for us, so we can see that the income from consolidated entities is obviously, sorry, associated entities is coming quite much also from Lea Bank. So We are looking all the time what different options we have and strategic cooperation possibilities. We have to remember that these are two independent companies, Multitude and LEA, which are operating fully independently. Yes, we did sell our prime lending portfolios to Lea Bank, since that's the business that Lea Bank is much more close to, and it makes more sense that they can continue operating in those portfolios, and we are then focusing more on our customer base that we already have. So yes, we sold a couple of portfolios in the Nordics to Lea Bank.

Indeed. Thank you. We have a few questions on share price development in general, and it forces our vision of a billion euro valuation in 2028. How do you see the path forward to this target?

First of all, What I can say about the targets is obviously that our net profit guidance, we can confirm that 30 million is where we really see that we are going this year, followed with 20%, 27% and 28%. So until now, what we have guided during the last five years, actually six, I believe, already, so we have kept. And We see that we are diversifying our business. We have much more fee revenue coming in, so we are expecting that to reflect, of course, in the valuation, which is then decided by you, our investors, in the market. I'm confident that we are really on the right path. We have to continue keeping our promises. We have done it so far. We are diversifying. We told you a few years ago we will diversify. We have done it, and we will continue on that path.

Thank you. Apparently, it could have a positive impact on valuation as well. I'm not giving any statements on how we look at it. But theoretically, one could assume that an increasing revenue stream that is not tied to risk income, that is not tied to a capital-intensive business, that is growing in the case of SORTA 50% plus. Without SORTA, we're growing the fee income 50% plus. So I would at least see... reasons to be optimistic about the value creation potential here.

A bit on the same topic, we have a question on how we look on buybacks over high dividends and what is our reasoning there Bernd in comparing these two options?

Well, in the end, there are pros and cons for both. We did the buyback program a while ago. I think currently the focus should rather be on generating profits and distributing profits to holders of all equity and debt instruments, which means rather dividend than buyback. One of the reasons is the practical regulatory limitation that limits the ability to buy shares back quite massively. And on top of that, we have made a commitment to distribute 25 to 50 percent of net profit as dividend. We want to honor this commitment. And thirdly, we have ambitious growth plans and do not think that we would want to decrease equity base below that.

Yes. Thank you. Continuing on to earn out. How do we look on the earn out timings for the rest of the year? How much are we still expecting in 2027?

Expectation means a little bit of an element of speculation here. I can take a look back, maybe shed a little bit more light on performance of those sold businesses and our contribution in 26. We have collected between 1 and 1.2 million from earnouts on a monthly basis. This is actually better than we expected. This also resulted in this 2.2 million revaluation, positive contribution, But economically, I think the positive impact, not reflected in the P&L, but in cash is even stronger than this 2.2, in fact, six plus million. And yeah, we are supporting the new owners of those businesses where we can and hope that they will continue performing well.

Thank you. A few questions from Julius at New Age. First of all, the H1 net profit was 13.1 against the 30 million full year guidance. So H2 mathematically needs 17 million. Could you walk us through the main operation and one of drivers for that step up and potential one of drivers?

Yeah, first of all, mathematically, absolutely correct. So we have, but I would like again to put it into perspective. So after Q1, there were some questions around net profit level back then 14.7 or whatever percent of total 30 million. So 4.4 million out of 30. Now it's halftime and we have achieved 44%. So that's a very good starting point for the full year. We have a couple of drivers. Asset quality, much, much better than even expected, and I'm super confident that this path will continue. The most important one is growth. We are on a growth path in all three businesses. That's much better. The growth dynamics are much better than compared to last year. We have an additional profit contributor with Sorta, So taking all that in combination, other than that, we don't need one-offs in that sense. We should be, at least I am, and I'm speaking on behalf of Ante as well, we are very optimistic that we get the 30.

Good. And a second question from Julius. What does it take to make SME banking profitable?

What it takes is to continue with the developments we have now seen. So I have to remind you that SME banking is growing at the moment. We grew with 15% in the portfolio. We are really, really close to having a break-even point already. And we have made lots of investments during the second quarter, especially this year. So we have automated much more of quite much automated business line already. Lots of changes in the way we operate in SME banking as well. And we can see now that these are bearing the fruit. So operational transformation, cost to income ratio have to go down. We have to keep the same good part in our credit losses, which we can see the impairments are in good shape. And it's now about... pushing a bit more on the gas pedal once we know that we can do it and I believe we can do it now. So I'm seeing SME banking as a positive sign going forward.

Good. Two questions related on the same theme. So the improvements in asset quality in consumer. We have now had a quite long run of significant improvements. Is there further room to improve still?

That's a good question. I would rather speak about we can see a long-term trend already across all our business units, across the whole company. I can say that we see the trend continuing, as Bernd said, that we see positively about this. For how long and how long does it go, it's impossible to say, but there is no reason to believe that it will change overnight now to something else. We have worked deliberately on this way that we make sure that once the portfolio grows, the credit losses are coming down even more aggressively. So the momentum is there. It has been there for a few years already. We see the trend. I see no reason that it wouldn't continue.

On the back of that question from Mark Lutti, as the impairment losses have decreased significantly, how come that the profitability hasn't increased significantly as a result of that? Is it because the impairment losses decreased mainly because of a smaller loan book or rather than a better risk profile?

It goes actually hand in hand to a certain extent that we can see also that the Yield is a bit lower in our loan book than it has been a few years ago. So this is a really natural decision that slight decrease in yield, getting much more better customers in that it also tells that the losses are coming down.

And to put it in a longer-term context, if I may, I would not necessarily agree that profit is not picking up. When we had 20 million net profit two years ago, then we have issued the 23 million guidance. elevated this, lifted this guidance up to 24.6. We've overachieved the higher end of this guidance. Now we're increasing or we are looking to achieve 30 million, which would be all-time high. 26.6 was already all-time high net profitability. So this is one of the drivers, not the only one luckily, but one of the drivers why we are on an all-time high level when it comes to net profits.

Thank you. Another question from Julius. Cost to income ratio was 55 and 52% in Q1 and Q2, which means higher than last year. And I understand this should be temporary, but what do you see as a normalized ratio levels here and also looking into versus our forward targets?

Yeah, first of all, yeah, we see a temporary development that should not necessarily be seen as conflicting with long-term ambition. The long-term ambition is to go to this 40% level if we now exclude external factors, M&A transactions and all that. The target is 40% at the end of 28, and that remains stable. VALID. IMPORTANT FOR US IS NET PROFITABILITY FIRST. SO IF WE INVEST SOMETHING THAT HAS A SHORT-TERM NEGATIVE IMPACT ON COST-INCOME RATIO BUT A POSITIVE IMPACT ON PROFITABILITY AS TECHNICALLY SORT OF ACQUISITION HAS, IT'S DRIVING UP COST-INCOME RATIO A LITTLE BIT, IT'S DRIVING UP NET PROFIT QUITE SIGNIFICANTLY. SO PROFITABILITY FIRST. BUT FROM MY PERSPECTIVE, THIS 40% TARGET REMAINS VALID. OKAY.

Thank you. And one question from Frank Lieman on wholesale banking. How do you manage concentration risk regarding counterparties?

Well, that's quite traditional way to manage it. We have a our counterparties are in multiple different jurisdictions and we also make sure that we have a different type of counterparties so different type in a sense that they come from a quite similar pool but obviously we make sure that we don't tap into the same markets as our own customers directly for instance this is important and also and geographical diversification. We make sure that loan-to-value levels are good and everything is really, really well secured. So from this perspective, we are in a really, really good position. Like Bernt already said, there is no unsecured receivables at all in our wholesale banking. Everything is secured from our side or to us, and we are confident that this book is of good quality.

Thank you. We will then take the final question for this FAQ session from Tilopas. Congratulations to the results on the reduction in impairment losses. One, could you explain in layman terms how the impairments are calculated? And two, has the parameters changed over time, let's say from a year ago, to make it simpler?

Should I start? Thank you so much. Now, first of all, we are comparing like for like. So this is not the, there are neither significant one-offs in these improvements. This is backed by substance. And also the relevant principles have not changed. So over the last couple of years, we have consistently applied our first nine principles for all our portfolios. So this is completely like black. How does it work? In the end, upon issuing a loan, the expected credit loss for 12 months needs to be reflected as a credit loss impairment. And should there be reasons to stage those loans into two or three, so significantly increase the credit risk default and so on and so forth, then probability of default loss given default parameters dictate the level of impairment requirements. that remains true, of course, collateral to be affected in for also banking business. That's the logic in one sentence.

Thank you. And then actually one final question. Could you say a word or two on how diversified our fee and commission income businesses as of today?

Yes, I mean, we have different, we have, for instance, partnerships from on consumer side. This is one big driver for us coming from a card business. Then we do have in wholesale banking payment solutions business, one driver where we are having payment solutions. service providers, electronic money institutions, and other regulated entities bringing fee income. And then we also do have the entities we are serving on the divested services, serviced entities. So those are three quite different fee income streams we are getting.

Thank you, Antti. That marks the end of our Q&A session. And I'm just going to borrow this. And I would like to thank everyone who has participated today. I would like to remind of our upcoming events during the fall and that our next earnings call will take place on the 12th of November. For any other questions, we still have a few that hasn't been answered. We will reach, feel free to reach out directly to IR. And for those of you who have sent the contact details, we will reach out to you. Thank you. Thank you.

Bye-bye.