Dividend policy will be Mandatum's Capital Markets Day's main attraction

Translation: Original published in Finnish on 6/2/2025 at 9:06 am EEST.

Mandatum will hold a Capital Markets Day on Wednesday, June 4. There are no expected changes to the company's strategy or investor story, and Mandatum will continue to focus on increasing asset management, reducing the with-profit business and returning surplus capital. However, we are awaiting an update to the dividend policy. The event will be available to view here starting at 12:30 p.m. EEST.

Update to dividend policy

Mandatum will update its dividend policy on Capital Markets Day, as the previously indicated minimum of 500 MEUR for the period 2024-2026 has already been practically achieved through generous dividends. Going forward, we expect the company to link profit distribution to organic capital generation, which will consist of solvency capital released from the balance sheet alongside earnings accruals. We also expect the company to provide details on how it will use the substantial capital released by the sale of Saxon Bank's shares at the end of the year. This could result in an extra dividend much larger than normal next year, which would also put upward pressure on consensus dividend estimates.

Another possible use for the extra capital is acquisitions, which the company has already hinted at in connection with its IPO. Of course, there will be no real news on this front at Capital Markets Day, but any changes in management's views will naturally be of interest. So far, management has remained tight-lipped on the subject, only stating that various options are under constant consideration.

Share buybacks, on the other hand, have not been used for capital allocation in the past, and we do not see now as a sensible time to start, given the current high share price.

Growth will continue to come from AUM

There may also be slight fine-tuning in the new sales target for asset management. The company is currently targeting net sales of over 5% in relation to customer capital at the end of the previous year, a level that is excellent compared to peers of a similar size. Although the track record of recent years and the outlook for the coming years do not necessitate a change, more detailed milestones may be included, for example on the level of assets under management in euros at the end of the target period. Conversely, we believe the current sales-linked model is well-justified given the company's limited ability to influence market value changes.

Additionally, we expect Mandatum to reiterate its profitability improvement targets for asset management. However, we would like the company to provide more details on how it determines its cost/income ratio, as the current rather limited reporting of costs and income makes assessing profitability potential moderately challenging.