Source: Inderes / Vara Research (consensus)

Translation: Original published in Finnish on 8/14/2025 at 9:37 am EEST.

Mandatum's Q2 earnings were clearly weaker than our expectations. This was due to the Group's investment result, which decreased more than our estimate due to changes in market interest rates. This is, however, of very little significance, as the item fluctuates quarterly. The company's key asset management product sales continued to perform well, even though net subscriptions fell short of the excellent figures of previous quarters.

Wealth management sales remained strong in a challenging market

For capital-light businesses, the year continued as expected, with fee result growing 26% year-on-year to 18.5 MEUR. However, the capital market movements seen during the quarter hit management fees, so the result decreased slightly compared to the start of the year, as anticipated.

New sales in the group's most important source of growth, Wealth management, were again good with net cash flows of 164 MEUR. Thus, Mandatum is on track to meet its 5% new sales target after two quarters, even though a slight slowdown in sales volumes compared to previous quarters was observed. The company explained this with the difficult market situation in April. This was also evident among other Finnish asset management peers, compared to whom Mandatum's development can still be considered strong. Assets under management grew to 14.4 BNEUR (Q1’25: 14.0 BNEUR).

Based on the comments, interest rate products sold best as usual, while among customer groups, private wealth management clients were highlighted in addition to international clients. Mandatum also reported gaining new customers in France and Norway, and establishing a sales unit in Luxembourg to grow its Continental European business. Thus, the company appears to be accelerating its international expansion, which we view positively.

Net finance result missed expectations

The result of risk life insurance was somewhat weaker than our expectations (2.0 MEUR vs. 3.6 MEUR estimate). However, this item fluctuates quarterly, especially with insurance claims, so investors should not be concerned about a single quarter.

Net finance result, however, clearly fell short of expectations. This was influenced by market interest rate movements, the earnings impact of which from changes in discount rates was significantly greater than we had anticipated. Investment portfolio returns, on the other hand, met expectations and included a 12 MEUR capital gain from the sale of Enento shares. Due to higher accrued interest expenses, net financie result fell to 21.6 MEUR, while our estimate was 40.1 MEUR.

The Group's Q2 result was significantly weaker than our expectations due to the delta in net finance income, with Mandatum's pre-tax profit being 34.2 MEUR (Inderes 55.2 MEUR, consensus 45.8 MEUR).

Earnings per share were EUR 0.06, and organic capital generation significantly exceeded this at EUR 0.17. Organic capital generation, which is key for dividend distribution, was boosted not only by the sale of Enento shares but also by the contraction of the Group's other investment portfolio.

No surprises in the outlook

Solvency decreased moderately, which was somewhat surprising considering Enento's share sale. This was due, according to the report, to a transitional provision applied to the technical interest rate basis, and adjusted for this, the solvency ratio developed as expected. The company still has excess capital on its balance sheet relative to its target level, and furthermore, its overcapitalization will increase towards the end of the year in connection with the sale of Saxo shares. 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.