Translation: Original published in Finnish on 6/4/2025 at 9:19 am EEST.

Mandatum announced its new financial targets right before its Capital Markets Day. As expected, the main target was related to increasing asset and wealth management, but there was also a new target for return on equity that takes the balance sheet structure into account. These early signs therefore suggest a more disciplined approach to optimizing the balance sheet through profit distribution. The Capital Markets Day presentations will be available to view here starting at 12:30 pm EEST.

Boosting the outlook for profit distribution

The new targets provided an update on the outlook for profit distribution. First, Mandatum lowered its solvency margin range to 160-180% (previously 170-200%), with a lower mid-point (170% vs. 185%). This naturally slightly supports the profit distribution potential. The company increased its target dividend amount to exceed 1.0 BNEUR between 2025 and 2028. We interpreted this to mean that funds from Saxo Bank will be distributed as dividends. Somewhat surprisingly, the company did not link its formal payout policy to organic capital creation. However, this is likely a key underlying assumption for the company and the target of exceeding 1.0 BNEUR.

More rigorous balance sheet optimization ahead

In the process, the company gave up its previous asset management sales target and replaced it with a target linked to profit growth. Going forward, Mandatum aims to achieve an average annual CAGR of more than 10% before taxes in its capital-light business between 2025 and 2028. This is very much in line with the objectives of its main peers. A key factor behind the profit growth will be an increase in client assets under management.

The company also dropped its cost/income ratio target, replacing it with a return on equity target that takes into account not only earnings growth, but also balance sheet structure. In terms of return on equity, Mandatum aims to achieve a level of above 20%. This will not be possible with the current balance sheet structure, which underscores the need to bring the company's solvency within the new target range. Nevertheless, we consider the target to be very realistic.

The release made no mention of the with-profit business, but it goes without saying that the ramp-down will continue as previously planned. This is also required by the group's return on equity target. We will revisit the main content of the Capital Markets Day following the event, after hearing more detailed comments from management regarding the strategy and outlook for the target period.