Translation: Original published in Finnish on 2/13/2025 at 9:25 am EET.

Mandatum published a Q4 result that was quite in line with our expectations. While there were anomalies at the segment level, the effects of these anomalies eventually offset each other. The group's key performance indicators - growth in assets under management and the cost/income ratio - showed very strong development, so at first glance the report seems to us to be clearly on the positive side. The biggest surprise was the proposal for the distribution of profits, where the company is proposing a normal dividend in line with our forecasts, plus an extra dividend of a similar amount. This is the beginning of the unwinding of the company's excessive solvency.

Asset management sales were again excellent

The capital-light businesses closed the year in style. New sales in Mandatum's most important source of growth, Institutional & wealth management, again developed very strongly with the group’s net cash flows at almost 392 MEUR (2.9% of AUM) in Q4. The vast majority of sales were to international institutional clients. The best-selling products were once again interest rate products. As an operator known for its fixed income investments, Mandatum continues to benefit from the current market situation where the popularity of fixed income investments has remained strong as interest rates have declined. We also believe that the sales figures reflect the quality and attractiveness of the company's products in the eyes of institutional clients.

Mandatum's financial targets are to achieve an annual net cash flow of 5% of assets under management at the beginning of the year. In the financial year just ended, the figure was over 8%, making it a strong first full year as a listed company. In addition to new sales, revaluations were also positive in the quarter, resulting in total client AUM increasing by just above 5% quarter-on-quarter and 17% year-on-year.

Profitability development was also impressive

Mandatum's fee and commission result in Q4 was well ahead of our expectations. In addition to assets under management, cost-efficiency developed more positively than we estimated, improving relative profitability. The report shows that the cost/income ratio has fallen by up to 8 percentage points over the past 12 months (66% -> 58%). Mandatum's Q4 fee result was 18.6 MEUR, clearly beating our forecast of 16.2 MEUR.

The result related to risk policies, on the other hand, was weaker than expected. This is not a cause for concern, however, as the result fluctuates from quarter to quarter in line with the actual claims paid.

The net finance result was, on the other hand, in line with our expectations. While the result of the with-profit portfolio was weaker than expected, this was offset by positive value changes in the group's own investments. The latter was influenced by the dividends received from Saxo Bank.

Start of balance sheet reduction efforts

The distribution of profits was the biggest surprise of the morning, as the company is proposing to pay an extra dividend of the same amount in addition to the basic dividend we had forecast. This means that Mandatum's total dividend for the last financial year will increase to EUR 0.66 per share (basic dividend EUR 0.33 + extra dividend EUR 0.33). Mandatum is thus taking the first steps to reduce its oversized balance sheet. Although the company's payout for last year is well above its distributable capital accumulation, the solvency ratio is still above the target level. The balance sheet will be further strengthened by the impending sales of the Enento and Saxo holdings.

Meanwhile, the outlook for the current year is fully in line with expectations, as Mandatum estimates that its fee result will increase from the previous year and that its with-profit portfolio will continue to decrease further.