Translation: Original published in Finnish on 08/13/2026 at 07:10 pm EEST

Mandatum's Q2 earnings exceeded our estimates, driven by investment income, and the fee result, the most important bottom line for the group's value, continued its impressive growth. We consider the acquisition of Swedish asset manager Cliens to be a strategically logical step, and the transaction has good preconditions to create shareholder value. We raise our target price to EUR 6.2 (was 5.5) due to our increased earnings and profit distribution estimates Mandatum’s performance is currently extremely impressive, but the current price tag sets the bar too high. Therefore, we reiterate our Reduce recommendation.

Fee result grew strongly and earnings exceeded our estimate

Mandatum's fee result rose strongly by 21% y-o-y to 22.4 MEUR, in line with our estimate. Growth was driven by both the development of AUM and improved cost efficiency. AUM grew by 8% from the previous quarter to 16.7 BEUR (estimate 16.2 BEUR), but this was primarily due to market tailwinds, as net subscriptions (164 MEUR) fell short of our estimate (290 MEUR). However, overall sales performance was good, and international sales in particular continued their impressive development. We also note that the company has investment commitments of around 400 MEUR in its current funds. The net finance result, on the other hand, clearly exceeded our estimate due to narrowed credit risk margins and well-developed equity markets, which resulted in a significantly better-than-expected profit before taxes (79.1 MEUR). The Solvency II ratio stood at a strong 195%, still clearly above the targeted level.

Cliens acquisition strengthens the foothold in Sweden

Mandatum announced in connection with its earnings report that it will acquire a 78.4% stake in the Swedish asset manager Cliens for a cash purchase price of 64 MEUR. Cliens is a specialized fund house with approximately 3.3 BEUR in assets under management almost entirely in funds, and its strong equity expertise complements Mandatum's interest-rate-weighted product offering well. We consider the expansion into Sweden logical and the transaction pricing reasonable (EV/EBIT ~7x and ~2.4% of AUM). A key risk is the strong product concentration, as two funds account for over 80% of AUM. Personnel risks are also naturally present, but the company seeks to address this by leaving a significant minority ownership to the personnel. Further, Cliens will continue under its own brand, which reduces integration risks. The transaction is small in euro terms for Mandatum and does not significantly impact profit-sharing in the coming years. Strategically, however, the deal is significant, as it clearly increases the company's footprint in Sweden and strengthens its equity offering. The transaction is expected to be completed by the end of 2026.

Our estimates increased due to the acquisition

We included the Cliens acquisition in our estimates, which significantly increased our fee result estimates from 2027 onwards. Our net finance result estimates also increased following the rise in interest rates, while we made moderate downward revisions to other earnings items. Overall, our earnings estimates for the coming years rose by 7–10%. We expect group-level earnings to bottom out in 2026 and make a strong leap in 2027. We expect the profit distribution to be more abundant than our previous estimate, as we estimate the company to decrease its solvency target as the with-profit portfolio contracts.

Expectations for the share remain demanding

We have gauged the value of Mandatum primarily using the dividend discount model, as it best reflects the high payout ratio and unwinding of the overcapitalized balance sheet. Our DDM model indicates a value of some EUR 6.2 per share (was 5.5), and the increase is mainly explained by higher long-term profit distribution estimates and, to a lesser extent, by the Cliens acquisition. From a sum-of-the-parts perspective, wealth management trades at a P/E of around 30x, which is significantly above its domestic peers and sets a high bar for performance. However, the high dividend yield limits the stock's downside.