Translation: Original published in Finnish on 11/11/2026 at 8:04 am EET.

Mandatum's Q3 result surpassed our estimates, driven by the net finance result, but asset management sales, crucial to the group's value, remained sluggish. However, we are not particularly concerned about the sales outlook based on a single quarter, even though meeting the lofty expectations will require a faster pace from the company. We reiterate our Accumulate recommendation and EUR 6.20 target price, as our earnings estimates for the coming years remain essentially unchanged.

Earnings surpassed our forecast, yet sales remained sluggish

Mandatum's net subscriptions (55 MEUR) in Q3 fell far short of our forecast (150 MEUR) and were modest in absolute terms. According to management, the rapid interest rate rally delayed client investment decisions and led to increased redemptions of certain fixed-income products, even though international institutional sales continued to perform well, particularly in Sweden. We would also like to point out that the company has over 300 MEUR worth of investment commitments in its fixed-income funds, and these will only be reflected in sales figures as the capital is called into use. Development in capital-light businesses was otherwise quite as expected, with the fee result rising 11% year-on-year to 24.0 MEUR. Meanwhile, net finance income, which fluctuates from quarter to quarter, clearly exceeded our forecast, largely as a result of which profit before taxes (44.1 MEUR) was also higher than we had expected. The Solvency II ratio stood at 198%, still clearly above the company’s targeted level (160–180%).

Limited estimate changes

Our group-level earnings estimates for the coming years remained virtually unchanged, but our 2026 profit-before-tax forecast rose by ~7%, mainly due to a stronger-than-expected Q3 net finance result.

Overall, we expect Mandatum's group-level profit to bottom out in 2026. For 2027, we expect strong earnings growth as investment income normalizes and fee results continue their strong growth, both organically and through the Cliens acquisition. Going forward, we expect the group's earnings to continue growing, but at a more moderate rate. While we anticipate a significant increase in Mandatum's wealth and asset management earnings, the decline in the investment portfolio will impede earnings growth, maintaining a moderate earnings growth rate for the group in our forecasts. However, the earnings mix is continuously improving as the share of wealth and asset management increases.

The flip side of the reduction in the investment portfolio is that profit distribution will remain generous, as Mandatum will return the funds released from this to its shareholders. In the coming years, the focus of dividend distribution will be strongly on returning excess capital, with accumulated earnings playing a smaller role. Consequently, our estimates indicate that the DPS will exceed earnings per share by a clear margin.

Strong growth outlook justifies the valuation

We have gauged the value of Mandatum primarily using the dividend discount model, as it best reflects the company's high payout ratio and the unwinding of its overcapitalized balance sheet. According to our dividend discount model, the value is around EUR 6.2 per share (unchanged), so we believe the current share price level offers sufficient expected return for a positive recommendation. Using a sum-of-the-parts approach, the asset management valuation is certainly still demanding (P/E of 23x based 2027 earnings forecast), necessitating continued strong earnings growth in asset and wealth management. Nevertheless, the good growth outlook for international sales of fixed-income products, in particular, supports our positive investment view. At the same time, the downside of the share is limited by the high dividend yield.