United Bankers H2’24 preview: Wrapping up the best year in history

Translation: Original published in Finnish on 2/11/2025 at 7:00 am EET.

United Bankers will report its results on Thursday at 9:00 am EET. The company's result will be good, even though the end of the year did not quite hit the mark in terms of new sales. However, the huge performance fees compensated for the slowdown in sales. In terms of the outlook, we expect the company to give guidance for a decline in the result due to the staggering numbers in the comparison period.

H2 new sales left much to be desired

We have made some revisions to our forecasts ahead of the H2 report. For recurring income, our forecasts have been lowered due to weaker than expected new sales in the spearhead funds. As regards performance fees, the outlook seems to be even brighter than before, with the strong development of performance fees offsetting declines in other areas. At the group level, our forecasts have been raised by around 5%.

We predict that UB's H2 revenue will be at approximately the same level as in the comparison period at 28 MEUR. Recurring management fees, which are critical for the company's value, will increase by around 5%, driven by new sales. In our assessment, the company's new sales in the second half of the year did not develop as well as hoped, and net subscriptions to spearhead funds (forest and real estate funds) in particular were modest. We expect assets under management to increase slightly from the level at the end of H1 to around 4.9 BNEUR. Performance fees will again be at a high level as certain funds (Timberland and Renewable Energy) performed particularly well towards the end of the year. The second half of the year appears to have been quiet again for capital markets services.

Result at a strong level

We forecast UB's EBIT to be slightly down year-on-year at 9 MEUR. The decrease from the comparison period is explained by higher cost levels. The EBIT margin remains strong at +30%. As is typical of UB, the blemish of the result is its significant reliance on performance fees, which represent a considerable share of the group’s total result. In terms of profitability, it would be essential to increase profitability in terms of recurring fees as well. A key factor in this would be growth in key funds, and the company's comments on the outlook for new sales are one of the main highlights of the report. Naturally, we are also interested in how the company's client base has reacted to the heightened media coverage around real estate and forestry funds.

On the dividend front, UB has emphasized the importance of steady dividend growth in recent years. Therefore, we expect the company to increase the dividend by only a modest EUR 0.10 and our dividend forecast is EUR 1.10 per share. While the company's result and balance sheet would allow it to distribute much more, we believe that steady growth will tip the scales more strongly, especially as the earnings trend is likely to be downward in 2025.

We expect company to provide guidance for declining results after robust 2024 results

In recent years, UB has provided fairly bold guidance despite challenging market conditions, and we expect the company to continue along the same good lines. The company's 2024 result is by far the best in its history due to the huge performance fees, and we do not see the company improving its performance without the massive performance fees. For 2025, we forecast a significant decline in performance fees, which will lead to a significant decline in the rest of the group's results. We note that despite a significant reduction in earnings of around 20%, our 2025 forecast still includes almost 10 MEUR of performance fees. Thus, we expect the company to provide downward guidance and a higher guidance would be a definite positive surprise.