Multitude Bank plc, the Malta-based subsidiary of Finnish Fintech company Multitude SE, recently shared that it registered a pre-tax profit of €11.8 million in 2023, 46.9 per cent less than the figure in the previous year (2022: €22.2 million), despite an increase in interest income.

The results were revealed in the bank’s Annual Report and Financial Statements for the year ended 31st December 2023, announced on Thursday.

In the report, Multitude Bank shared that interest and similar income for the year amounted to €173.5 million, 15 per cent higher than in 2022 (€150.8 million). Interest on loans and advances to customers made up €162.5 million of this, while those to banks and group companies amounted to €1.5 million and €2.2 million, respectively. On the other hand, interest on investments came in at €7.2 million.

However, this was also met with an increase in interest and similar expenses, with this going up from €5.1 million in 2022 to €16.1 million in 2023. The majority of the expenses were tied to interest on amounts owed to customers, with this accounting for €15.7 million of the total.

This meant that net interest income for 2023 was €157.4 million, up from 2022’s €145.8 million. Multitude Bank’s Directors stated that this is a reflection of the bank’s efforts to “increase its lending business and investment operations.”

Net fee and commission income for the year was €766,000, marginally higher than the €740,000 registered at the end of 2022.

During 2023, the bank also had a sharp rise in net trading expenses, going up by 321.9 per cent from 2022’s €652,000 to €2.8 million.

Another determining factor behind Multitude Bank’s drop in profitability was a significant increase in other operating costs, rising by 18.8 per cent to €62.1 million (2022: €52.3 million). The primary contributors to this increase were employee benefit expenses (2023: €8.6 million; 2022: €8.1 million), regulatory expenses (2023: €2.2 million; 2022: €881,000), and IT and support costs (2023: €23.3 million; 2022: €16.8 million).

Depreciation and amortisation charges were relatively stable at €1.1 million, while employee compensation and benefits increased slightly from €8.1 million in 2022 to €8.6 million in 2023. Net impairment losses amounted to €71.7 million, a substantial increase from the €62.1 million recorded in 2022.

Multitude Bank’s total assets for the year grew from €647.8 million in 2022 to €909.1 million in 2023, mainly due to the balances with central banks and investments.

During 2023, the bank did not distribute any dividends and did not receive any capital contributions from its ultimate parent company, Multitude SE.

Last month, Multitude SE announced that it will be transferring its registered office from Finland to Malta, following an Extraordinary General Meeting. The transfer, first proposed by the Board of Directors, represents the first phase of Multitude SE’s plans to relocate to Switzerland. Through the transfer to Malta, the company then aims to be converted into a public limited liability company governed by the laws of Malta. Afterwards, it will apply to be registered in Switzerland, pursuant to applicable Maltese and Swiss laws by the end of 2024.

Multitude Bank, the company’s subsidiary in Malta, is licensed by the Malta Financial Services Authority (MFSA) to provide a range of banking services to clients. Prior to 2022, Multitude SE was known as Ferratum, before a group-wide rebrand that also included Malta’s Ferratum Bank plc changing to Multitude Bank plc.