Mandatum Q1'25 preview: Good momentum continues, but the stock is expensive

Translation: Original published in Finnish on 05/06/2025 at 08:38 am EEST

Mandatum will report its Q1 results on Thursday at 8:30 am EEST. We expect the sales of investment products to continue at a good level and assets under management to continue to grow. We expect a slightly stronger-than-usual quarter for net financial income due to changes in market interest rates and a non-recurring gain from the divestment of Saxo Bank. On the earnings day, our focus is especially on the outlook for new sales, over which the trade war casts a clear shadow. The stock has continued to rise briskly and the valuation already looks expensive. Käymme Mandatumin tulosta läpi aamulla livelähetyksessä 08.20 alkaen InderesTV:ssä.

Fee result continues to grow in our forecasts

We expect Mandatum's fee result to increase to 18.4 MEUR from the comparison period. Fee result development is supported by rising AUM, which we expect to increase by good 2% from the previous quarter to 14.3 BNEUR. Sales are expected to remain focused on the company's flagship product, fixed income funds. In terms of sales, it will be interesting to see whether the company has continued its strong international sales also at the beginning of the year. We also expect cost efficiency to have improved as a result of both internal measures and revenue growth, and we forecast that fee result will grow faster than fee income.

In addition to the financial figures, as usual, we focus on management's comments on the sales outlook for investment products. Commentary is likely to remain mostly optimistic, although increased uncertainty may negatively affect sales activity, especially for the riskier product range.

We expect balance sheet investments to generate stronger-than-usual returns

The result of term life insurance mainly consists of the contractual service margin (CSM). The CSM amount to be earned is affected by actual claims experience, which fluctuates somewhat from quarter to quarter. We expect the result related to risk policies to be 3.9 MEUR in Q1, which is broadly in line with our estimate of a normal level. 

Our net finance result forecast is 43.5 MEUR. The increase in long-term market interest rates seen during the quarter should slightly support the result of the with-profit portfolio through changes in insurance liabilities. The divestment of the Saxo Bank stake announced in early 2025 will also positively impact earnings in Q1, although the transaction itself is expected to take place later in the year. For Q1, we expect the Group's profit before taxes to be 59.2 MEUR and earnings per share to be EUR 0.09.

Outlook unlikely to offer surprises

Mandatum's solvency remains above the target level, and the amount of excess capital will increase significantly towards the end of the year, when the announced divestment of Saxo Bank is completed. Therefore, there are plenty of distributable assets. However, an update to the profit distribution policy is likely to be presented at the CMD in June. The company is also likely to reiterate its rather loose guidance, which expects fee result to increase from 2024 and the with-profit portfolio to continue to decline.