Mandatum Q4'24 preview: Wealth management expected to continue to grow

Translation: Original published in Finnish on 1/30/2025 at 7:37 am EET.

We expect Mandatum's sales of investment products to remain at a good level, as they were earlier in the year, and assets under management to continue to grow. However, we have lowered our Q4 net finance result forecast ahead of the earnings release, resulting in a pre-tax profit forecast for the full year of approximately 7%. As a result, we expect a year-on-year decline in Mandatum's Q4 results. On earnings day, we will again focus on the development of new sales of investment products and the growth prospects for the current year.

Fee result grows with assets under management

Mandatum will report its Q4 results on Thursday, February 13. We expect Mandatum's fee result to increase to 16.2 MEUR from the comparison period. Fee result growth will be supported by rising AUM, which we expect to increase by just above 2% from the previous quarter to 13.6 BNEUR. Sales are expected to remain focused on the company's flagship product, fixed income funds. We also expect cost efficiency to have improved as a result of both internal measures and revenue growth, and we forecast that fee result will grow faster than net flow.

In addition to earnings, our attention will be drawn to the usual developments in new sales of wealth management solutions and management comments on the demand outlook for investment products, which should be positive. AUM development plays a key role in the value of Mandatum, as the fee income from AUM is the main source of growth for the Group.

Capital market developments affect the net finance result

The result of term life insurance mainly consists of the contractual service margin (CSM). The CSM amount to be earned is affected by actual claims experience, which fluctuates somewhat from quarter to quarter. We expect the result related to risk policies to be 4.0 MEUR in Q4, which is broadly in line with our estimate of a normal level. During the comparison period, the result related to risk policies was higher than normal, as the transfer of portfolio to If P&C resulted in a positive impact on profit.

Our forecast for the net finance result (formerly "investment income") is 22.5 MEUR. The slight rise in interest rates supports the performance of the with-profit portfolio through the change in technical provisions. However, the weak equity markets had a significant negative impact on our Q4 forecast.

For Q4, we expect the Group's profit before taxes to be 36.3 MEUR and earnings per share to be EUR 0.06.

There is a chance of a payout surprise

The profit distribution proposal presented in the Q4 results is likely to attract attention on earnings day. Our dividend forecast for 2024 is EUR 0.34 per share. This would be very much in line with the company's communicated dividend target of at least 500 MEUR for the period 2023-2025. On the other hand, the company has also emphasized that the target is prudent and represents a minimum level of profit distribution. There would be room for a much more generous distribution of profits, taking into account the excess capital on the company's balance sheet. The amount of excess capital will continue to grow in the coming years as the with-profit portfolio shrinks and Mandatum exits the PE investments on its balance sheet. While we expect the company to update its dividend policy, we do not expect this to be done in connection with the Q4 report. In any case, the possible forecast deviations in the payout are tilted to the positive side.

The guidance for the current year will also be a key takeaway from the results day. However, we are not holding our breath in anticipation, and the company is likely to guide for an increase in fee result from 2024 and a further reduction in the with-profit portfolio. In this respect, the outlook would be similar to that for 2023.