Mandatum Oyj: Mandatum plc's interim report 1 January-30 September 2024: Fee result and client assets under management increased significantly

Mandatum plc, Stock exchange release, 12 November 2024 at 8.30 a.m. EET

July-September 2024 in brief

• Client assets under management (AuM) increased by 18% from the previous year and amounted to EUR 13.3 (11.2) billion. Net flow increased by 19% to EUR 113.8 (95.9) million.
• Fee result increased by 42% to EUR 18.1 (12.7) million due to growth in client assets under management and improved cost-efficiency.
• Net finance result was EUR 26.9 (67.2) million. The return on investments was good but the net finance result was negatively impacted by the finance expense of with-profit insurance contract liabilities, which increased due to the decreasing interest rates.
• Result related to risk policies was EUR 9.1 (7.4) million.
• Profit before taxes decreased by 46% to EUR 45.2 (83.9) million. The Group's result was weakened by the decrease in net finance result.
• Earnings per share (EPS) was EUR 0.07 (0.14) and organic capital generation (OCG) per share was EUR 0.11.

January-September 2024 in brief

• Fee result increased by 23% to EUR 48.0 (39.2) million. Net flow increased to EUR 591.6 (543.9) million.
• Net finance result decreased to EUR 111.9 (123.7) million.
• Result related to risk policies was EUR 23.2 (9.9) million.
• Profit before taxes increased by 2% to EUR 167.8 (164.1) million.
• Earnings per share (EPS) was EUR 0.26 (0.26) and organic capital generation (OCG) per share was EUR 0.34.
• Cost/income ratio related to client AuM2 decreased by 4 p.p. and thus improved to 63 (67)%.
• Solvency II ratio adjusted for dividend accrual was 224.3 (31 Dec 2023: 221.4)%.

Outlook 2024 (unchanged)

• The fee result is expected to increase from year 2023 provided that the market environment remains stable. While Mandatum has been able to maintain disciplined pricing and stable fee margins within capital-light customer segments during years 2022 and 2023, the fee result for year 2024 is dependent on several factors, such as client behaviour and client asset allocation, competition, and capital market conditions.
  
• The with-profit portfolio is expected to decrease further. Value changes of the investments in the with-profit portfolio can create relatively high volatility in the net finance result due to changes in the market environment.
  
• In addition, and as typical for the industry, the overall results of Mandatum will be impacted by actuarial assumptions that are updated from time to time.
  
• The strong solvency gives the company a sound basis to operate in different market conditions.

Key figures

EUR million	7-9/2024	7-9/2023	Change, %	1-9/2024	1-9/2023	Change, %	1-12/2023
Fee result	18.1	12.7	42%	48.0	39.2	23%	52.6
Net finance result	26.9	67.2	-60%	111.9	123.7	-10%	148.6
Result related to risk policies	9.1	7.4	24%	23.2	9.9	133%	17.9
Other result	-9.0	-3.3	-169%	-15.3	-8.7	-76%	-8.7
Profit before taxes for the period	45.2	83.9	-46%	167.8	164.1	2%	210.4
Earnings per share, EUR	0.07	0.14	-47%	0.26	0.26	0%	0.32
Equity per share, EUR				3.12	3.33	-6%	3.19
Net flow	113.8	95.9	19%	591.6	543.9	9%	753.8
Organic capital generation per share, EUR	0.11	n.a.	n.a.	0.34	n.a.	n.a.	0.54
Return on equity-%1	9.4%	16.7%	-7.3 p.p.	11.1%	10.4%	0.7 p.p.	9.8%
Cost/income ratio related to client AuM, %2				63%	67%	-4 p.p.	66%
EUR million				30 Sep 2024	30 Sep 2023	Change, %	31 Dec 2023
Client assets under management (AuM)				13,282	11,237	18%	11,892
Solvency ratio, adjusted for dividend accrual %3				224.3%	236.6%	-12.3 p.p.	221.4%

1) Annualised.

2) Trailing twelve months.

3) Figure 30 Sep 2023 is a pro-forma figure, where the effects of demerger are taken into account.

CEO's review

Mandatum's business continued to grow in several areas during the third quarter. Assets under management grew steadily, and the fee result from our capital-light business increased significantly. Return on our investments was good, but the net finance result was negatively impacted by the finance expense of with-profit insurance contract liabilities, which increased due to the decreasing interest rates. Third quarter profit before taxes thus declined year-on-year and was EUR 45 million. However, the active investment and hedging strategies of our own balance sheet have diminished the earnings volatility and thus proven their effectiveness also in this market environment of decreasing interest rates.

The key goal of our strategy is to grow our capital-light business i.e. institutional and wealth management as well as corporate and retail businesses. The fee result, an indicator of these businesses, increased by 42 per cent from the previous year to EUR 18 million. The main reasons for this favourable development were robust growth in client assets under management and improved cost-efficiency. As in previous years, the Group's net flow in the third quarter was lower than in the first two quarters of the year because of the summer season, but it increased from the previous year by 19 per cent to EUR 114 million. Net flow from the beginning of the year was EUR 592 million, which, with the fourth quarter yet to come, is very close to our annual net flow target of 5 per cent.

Our client assets under management grew by 18 per cent from the previous year to EUR 13.3 billion, driven by positive net flow along with a favourable investment market. Client assets under management grew steadily in all client segments. Still, a major portion of the inflow came to allocation and fixed income products, such as the Nordic High Yield Fund, which mainly invests in higher-risk Nordic bonds. Furthermore, Mandatum's Growth Equity II private equity fund raised EUR 140 million this autumn and became Finland's largest active growth fund. These examples illustrate the outcomes of the determined and consistent efforts made daily by our team of more than 180 people in the Mandatum asset management organisation.

Mandatum's solvency continued to improve during the quarter, and the dividend-adjusted solvency ratio was 224 per cent, boosted by growth in our own funds.

Stable capital generation continued

Mandatum is well positioned to pay out substantial dividends, as we continued to steadily generate capital in the third quarter. We are introducing organic capital generation (OCG) as a new indicator for the Group in this interim report. This indicator illustrates the change in own funds resulting from our business operations and solvency capital requirement; in practice, this shows how the company's capacity to pay out dividends has changed during the quarter. In the third quarter, the company's OCG per share was EUR 0.11, which clearly exceeds earnings per share at EUR 0.07. OCG per share from the beginning of the year was EUR 0.34.

In early autumn, we announced Mandatum's personnel offering. The personnel offering was significantly oversubscribed, with more than half of our employees subscribing to company shares. I believe this reflects our employees' strong commitment to the company and to its strategy and goals.

We celebrated our first anniversary as a publicly traded company at the beginning of October. At the time when the company was listed, I said that our goals are to maintain a stable balance sheet and solvency position while aiming to pay out steady dividends and achieve profitable growth. During our first year as a public company, we have attained these goals. We will continue Mandatum's well-begun journey on the stock exchange with confidence, keeping the interests of shareholders and customers clearly in mind.

Petri Niemisvirta
Chief Executive Officer

Conference call on 12 November at 11.00 a.m. EET, Finnish time

A conference call in English for analysts and investors is scheduled for 12 November 2024 at 11.00 a.m. (EET, Finnish time). You can register for the conference call using the link provided below. The phone numbers for the conference call and the associated code will be provided upon registration.

Registration for the event: https://palvelu.flik.fi/teleconference/?id=50050367

The conference call can be followed live on the internet at www.mandatum.fi/en/result. A recording of the call will be made available for later access at the same web address.

Additional information:

Investors
Matti Ahokas

CFO

Tel. [phone]
matti.ahokas(a)mandatum.fi

Lotta Borgström
VP, Investor Relations
Tel. [phone]
lotta.borgstrom(a)mandatum.fi

Media
Niina Riihelä
SVP, Communications, Brand and Sustainability
Tel. [phone]
niina.riihela(a)mandatum.fi

The interim report can be found as an attachment to this stock exchange release. The supplementary presentation material for investors accompanying the Mandatum interim report is available at www.mandatum.fi/en/result.

Mandatum plc will publish its Financial Statements Release for 2024 on 13 February 2025.

Mandatum in brief
Mandatum is a major financial services provider that combines expertise in wealth management and life insurance. Mandatum offers clients a wide array of services covering asset and wealth management, savings and investment, compensation and rewards as well as pension plans and personal risk insurance. Mandatum offers services to corporate, retail, institutional and wealth management clients. At the centre of Mandatum's success are highly skilled personnel, a strong brand as well as a proven investment track record
mandatum.fi/en/group

Distribution:
Nasdaq Helsinki
Financial Supervisory Authority
The principal media
www.mandatum.fi