Translation: Original published in Finnish on 5/15/2026 at 8:40 am EEST.

We have updated our target price for Mandatum to account for the dividend payout. Our estimates and view of the company remain unchanged. Despite the strong growth outlook, we still consider the stock highly priced, so we reiterate the Reduce recommendation. Our updated target price is EUR 5.5 per share (was EUR 6.4).

Profit distribution to remain abundant for a long time

We have not made any changes to the estimates we updated in connection with the Q1 earnings or to our view of the company. The latest company update can be read here. However, we have factored in the dividend of EUR 0.85 per share, which was distributed on May 13, 2026, and was significantly higher than the earnings accrual of EUR 0.31 per share for the last financial year. The significantly higher profit distribution than earnings per share is explained by the unwinding of the balance sheet, as Mandatum has sold several significant investments from its balance sheet in recent years (the largest being Saxo Bank and Enento), which it inherited from Sampo in connection with the demerger. In addition, the contraction of the with-profit insurance portfolio increases the amount of distributable assets. We therefore expect Mandatum’s profit distribution to exceed its earnings accruals for several years to come. Additionally, it should be noted that the funds from the sale of Saxo Bank have not yet been distributed, so we anticipate an above-average dividend for 2026 as well (estimated at EUR 0.85).

Asset management is the group's long-term earnings driver

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 income continues its robust growth. 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 dividend per share will exceed earnings per share by a significant margin.

Expectations for the stock are too demanding

Mandatum’s expected return relies heavily on high dividend returns. We have gauged the value of Mandatum first and foremost by using the dividend discount model as it best reflects the company's high payout ratio and the unwinding of its overcapitalized balance sheet. Our DDM model indicates a value of some EUR 5.5 for Mandatum (was EUR 6.4). This decrease from our previous update is solely due to the dividend payment (EUR 0.85). According to our dividend model, the value is below the share price, so we consider the share to be fully priced. Also, when looking at the sum-of-the-parts, Mandatum's asset management is priced at a significant premium relative to its domestic peers, which sets an extremely high bar for performance. However, the high dividend yield also limits the share's downside, and, with excellent operational performance continuing, there are no clear downward drivers for the share.