United Bankers H2'25: Company is accelerating growth investments

Translation: Original published in Finnish on 2/12/2026 at 9:01 pm EET.

The H2 report offered no major surprises. We remain positive about the company's long-term outlook and expect strong earnings growth from the company in the coming years. However, earnings will stagnate this year, and, at the current valuation, it is difficult to envision any upside to the stock price without earnings growth. Thus, we reiterate our EUR 18 target price as well as our Reduce recommendation.

No major surprises in H2 report

UB's H2 revenue was generally in line with our estimates and the comparison period. Performance fees declined significantly year-on-year (6.0 vs. 8.6 MEUR), which offset the moderate growth of other product lines. Growth in recurring fees remained modest due to weak spearhead fund sales. In terms of new sales, discretionary wealth management continued to develop strongly, and the successful recruiting of recent years, combined with a viable wealth management concept, are now reflected in strong growth. Spearhead fund sales were as sluggish as expected. Overall, UB's new sales in H2 were moderate but clearly below potential.

Operational EBIT was 7.9 MEUR, which was below our expectation of 9.2 MEUR. This earnings miss is due to a slight revenue deviation and higher-than-expected costs. The company has made significant growth investments during H2 (e.g., portfolio managers and private bankers), which explains the increase in costs. Although we consider the growth investments to be justified, the profitability of the company's Asset and Wealth Management, adjusted for performance fees, was again sluggish, which is an obvious blemish on the company's figures. The EUR 1.16 dividend was in line with our estimate of EUR 1.15, and the company has now increased its dividend eight times.

Guidance is cautious

The company's guidance for 2026 is that its operating profit will be close or grow compared to 2025. This guidance was more cautious than our expectations. During the earnings call, the company emphasized its strong optimism about the wealth management market outlook and its desire to accelerate investments. In practice, this means front-loaded expenses during 2026. We consider these investments to be justified given that UB's position in the domestic asset management market has improved significantly in recent years. In addition, expanding the product and service offering remains necessary, as the sales outlook for the company's previous flagship products is rather subdued in the short term.

Forecasts revised downward, earnings growth outlook is positive

Our forecasts for the next few years have decreased by 8-10%. However, we believe the risk level associated with the estimates has decreased because earnings growth is less dependent on individual funds. We expect the company's new sales to gradually pick up in spearhead funds as well, and this, together with strong sales in wealth management, will significantly increase management fees. In 2026, the group's earnings will remain flat as a result of growth investments and gradually accelerating growth, but from 2027 onwards, the group should return to brisk earnings growth. Profitability based on recurring income will also finally begin to improve in the coming years as growth accelerates. The dividend is steadily growing in line with the company's dividend policy, and the company is on its way to becoming dividend royalty. The main risk in our forecasts relates to performance fees, which are significant and generated by only a few funds.

No hurry to convert to Buy yet

UB's valuation level is neutral for 2025-2026, in both absolute and relative terms. In the long term, we believe the expected return on the stock is highly attractive at current levels, but this requires the realization of our forecast earnings growth. In the short term, there are few drivers of share price growth in the absence of earnings growth. In the short term, the expected return is limited to a dividend yield of over 6%, which does not sufficiently compensate for bearing the forecast risks. We will continue to monitor the situation from the sidelines and wait for earnings growth to resume.