Mandatum Oyj

Good morning and welcome to Mandantum's Q3 Audiocast. I am Lotta Burström from Investor Relations and it is my pleasure to introduce you our CEO Petri Niemi-Svirta and our CFO Matti Ahokas who will guide you through today's presentation. During this audio cast, we will begin by presenting the highlights and key developments of Mandantum's third quarter of 2025. Following this, we will proceed to the Q&A session, where you will have the opportunity to dial in with any questions you may have. As a new feature, participants can also submit questions through the chat, which we will review after the dial-in Q&A. With these remarks, I will hand over to Petri, please go ahead.

Thank you Lotta. And now let me give you an overview of Mandatum's third quarter of 2025. In Q3, we saw another period of solid growth, which reflects our strong momentum. Our profit before taxes increased by 23% compared to the same time last year. The good earnings growth was supported by the fee result, which increased by 20% from the last year, in line with our guidance. On top of that, our net finance result increased significantly from last year due to the favorable interest rate movements. The capital light result before taxes, including institutional wealth management, corporate and retail businesses, was roughly at last year's level. However, the comparison period included a profit of 3.3 million euros related to portfolio transfer to IF in 2024. Since becoming a listed company, we have made operational efficiency a top priority. One clear sign of this is our cost-income ratio, which has improved to 50%, a 13 percentage point improvement from a year ago. This shows that our scalable business model is working. We are able to grow our income without a large increase in costs, which put us in a good position for continued growth. Our financial strength remains solid. In the third quarter, our solvency stayed at a high level and we have generated €0.48 per share in organic capital since the start of the year. It's worth noting that this organic capital generation is a more reliable indicator of our ability to pay dividends than just looking at earnings per share. Looking at the client activity, we achieved a net flow of 163 million euros, which is especially good given the usual slowdown during the summer holidays. Client assets under management reached a new record of 14.9 billion euros. This was driven by both strong net inflows and a favorable investment market, where the overall market development was much steadier than earlier in the year. Optimism about earnings growth helped support global stock markets and the bond market was stable. We also saw good sales activity across all our business areas. Our retail business developed as expected, helped by the successful launch of our partnership with Pohjan Tahti Insurance Company, selling our personal risk insurances. Loan insurance sales to the Danske Bank channel were active and the average coverage amount of granted loan insurances continued to increase. Turning to our corporate client business, sales of pension insurance and personal funds remained strong. Even though the Finnish economy has faced challenges, our clients have generally performed well in their businesses. Net flow from the corporate clients increased significantly year-to-date, the growth coming mainly from personal funds. The strong corporate net flow shows also the diversification of our capital-light business, highlighting the importance of corporate business to our growth story. Net flow from the institutional wealth management business year-to-date was lower than last year, the growth still being clearly above the historical average of 5% of assets under management. Also, institutional wealth management net flow in the quarter was 51% higher than last year. In our institutional wealth management segment, we focus on growing our international presence and private wealth management in line with our strategy. Our efforts are paying off. Sales in Sweden were particularly strong, supporting international institutional sales and assets from international clients grew by 45% year on year. We also made process in Central Europe with our first team members starting at the new Luxembourg sales office, bringing us closer to the European customer base. Private wealth management asset increased by 17%, mainly thanks to the clients using full mandate solutions. The largest increase in asset management was once again in credit and allocation products. Product development continues to be a cornerstone in our business. In May, we introduced the European High Yield Total Return Fund, which focuses on European high yield bonds and has been well received. It has been now already attracted over 100 million euros in investments. Our Mandat to Manage Futures Fund, which uses systematic investment strategies, also attracted significant new investment this quarter. Operational efficiency continued to improve significantly, with the cost-to-income ratio dropping by 13% to 50% over the trailing 12 months. The improved operational leverage demonstrates that the determined focus on cost efficiency is paying off, supporting sustainable profitability. Having said that, we have not sacrificed our investments to the future. During the quarter, we recruited new salespeople in order to speed up our growth in the institutional and wealth management and corporate segments. While the fee margin decreased slightly to 1.13% due to the growth in lower-margin institutional wealth management business, standalone product margins remained stable. And now let's move over to Matti and the figures.

Thank you, Petri. Let's now take a closer look at the third quarter result components. As mentioned, our fee result was up 20% year-on-year with assets under management up by 12%. And if we compare to Q2, our AUM was up by some 3% or around 500 million euros to 14.9 billion, just shy of the 15 billion mark. The client fee margins were largely unchanged in the quarter when looking on a 12-month rolling basis. We saw similar trends as before, a gradual mixed change from the growing international institutional business and a lower share of alternative assets compared to 2024. And as Petri mentioned, the product-specific margins were largely unchanged during the quarter. The cost to income ratio of our client AUM continued to decrease according to plan and was 50%. The main driver for this was a 4% higher average AUM versus Q2, which supported income and then a smaller impact from seasonally lower costs. Our net finance result came in at 39 million euros. Financial market returns were pretty close to normal during the quarter. In addition, we had some tailwind from the long IFRS discounting rates during the quarter. And I'll talk a bit more about this later on. Result related to risk policies in Q3 was down compared to 2024 and you all know that the comparison figure included around 3 million euros of one-off income from the portfolio transfer to IF. Also, the cost CSM release was a bit lower in the quarter due to timing effects, but the new business CSM continued to grow. Capital generation is a key success factor for any financial company and we still continue to consistently generate capital. Organic capital generation was 70 million euros in the third quarter. This translates to 0.14 euros per share. The main positive driver here was the increase in own funds. And one of our financial targets, return on equity, it stood at 13.6% in the quarter. One of our financial targets is to grow the capital light profit before taxes by more than 10% annually by 2028 compared to 2024. And if we look at the first nine months of 2025, the reported profit before taxes was 65 million euros or 3% below the level of 2024. And as you remember, in the first six months of the year, the result was impacted by the turbulent financial markets, FX headwinds from the weaker US dollar and lower sales altogether. But it's encouraging to see that Q3 saw a step change in quarterly profitability. All segments increased their profits sequentially. The quarter level of 25 million euros suggests a run rate in line with our financial targets. Also worth noting here again is that the comparison figure in 24 included a €11 one-off gain from the portfolio transfer to IF. Adjusted for this, the profit before tax growth in Capital Light was 16% year-on-year. Then the group net finance result up to €39 million in Q3. The with-profit investment return in the quarter at 0.9% was below last year and slightly below the expected run rate. Our fixed income portfolio had a negative impact, negative mark-to-market impact from higher rates, but this was also partly offset by positive spread movements in the quarter. The mark-to-market yield was down slightly, ever so slightly, you could say, to 4.2% due to tightening spreads, and we also did some portfolio adjustments here. But it's important to stress that this is still well above the cost of liabilities. Equities contribute positively this quarter, but as you know, our exposure here is very low. The listed equity exposure was unchanged at 4% of total during the quarter. On the alternative side, private credit had a fairly normal quarterly return again, but we had a small negative value change in our own real estate portfolio during the quarter. Private equity returns were positive, but slightly below the normal rate in the quarter. If you then look at the long swap rates, they were up by 5 to 10 basis points in the quarter. And the IFRS rates that we use for discounting in the long end of the yield curve increased in the quarter by around 15 basis points, lowering the cost of liabilities by 12 million euros. The illiquidity premium contributed positively to the IFRS discount rates by around eight basis points. And as you probably remember, in Q2, the impact was negative in the second quarter. With profit portfolio, interest rate hedging ratio increased further and was unusually high, one could say at 109 at the end of Q3. This was mainly due to technical factors as the fixed income exposure increased and mainly in the 20 plus year bucket. And as we show in our presentation, although the average hedging ratio is high, there are big differences in the different maturities. And in the third quarter, the hedging ratio was also impacted by tactical bond investments. And finally, worth noting again that the IFRS discount rate mark-to-mark changes have no impact on the actual contract cash flows, nor our dividend paying capacity. We continue to consistently generate capital. Organic capital generation, as Petri mentioned, was 70 million euros in Q3, and again, significantly higher than the reported IFRS result. In the first nine months of 25, we've generated capital organically by 242 million net of taxes, or 48 cents per share. And looking at 2024, for the first nine months, the figure was 34 euro cents. As pointed out before, we think the OCG is a more relevant measure than the reported IFRS result when assessing our performance and capital generation in particular. Own funds generation increased the solvency margin by nine percentage points in the quarter. The group solvency margin increased by four percentage points in the quarter compared to Q2, but decreased by 16 percentage points to 206 when taking into account the larger dividend deduction compared to last year. And maybe worth noting still is that the announced sale of the Saxo Bank shares is expected to increase the solvency margin quite significantly around 35 percentage points once the transaction is finalized. And now back to you, Lotta.