Mandatum Oyj

Good morning, and welcome to Mandantum's Q4 2025 results order cast. My name is Lotta Vorström from Investor Relations, and I am pleased to open today's call. I am joined today by our CEO, Petri Niemisfirta, and our CFO, Matti Ahokas, who will take you through the highlights and key developments of the quarter. We'll begin with the management presentation, after which we will move on to the Q&A session. And as always, you can participate either by dialing in or by submitting your questions through the chat. We will review the chat questions once the dial-in Q&A has concluded. Before we get started, a brief reminder that the materials for today's calls are available on our website. With these remarks, I will hand things over to Petri. Please go ahead.

Thank you, Lotta. Let me now walk you through Mandatum's fourth quarter and full year performance. In the fourth quarter, Mandatum delivered another period of continued process across our core businesses and operational efficiency. The results demonstrate the strength of our capital-like model, our operational discipline, and the trust our clients place in us. For the October-December period, profit before taxes decreased by 14% to 13.3 million euros due to the lower net finance result and other result. However, our capital life profit before taxes increased by 28% to 27 million euros and its most significant income item, the fee result, rose by 18% year on year. This shows that our strategy focus is in the right areas, with profitable growth driven particularly by asset and private wealth management as well as our corporate business. The strong growth also highlights the continued improvement in the quality of the group's earnings. Client assets under management reach a new billion-euro milestone at year-end, increasing 10% from the previous year to 15.3 billion euros. Quarterly net flows was lower than the strong comparison period as a few larger client distribution and alternative investment weighed in on the total despite strong underlying sales. The net finance result decreased from the last year to 19 million euros, but it is important to keep in mind that the comparison period included a 16 million euros dividend from Saxo Bank. Matti will later walk you through the composition of the net finance result in more detail. For the full year 2025, profit before taxes decreased to €182 million, while capitalized profit before taxes for the year increased by 5% to €92 million. It is good to note that the result for the comparison period included more than 10 million euros relative to the insurance portfolio sold to IF in 2024. Once again, the fee business performance remains resilient and the underlying client activity remains strong throughout the year, which for us is a top priority. Mandatus board of directors proposed to the annual general meeting a dividend of 0.85 euros per share, reflecting our strong capital position. At our Capital Markets Day in June, we introduce our long-term financial targets, including a cumulative shareholder payout exceeding 1 billion euros over the 2025 to 2028 strategy period. We are well on our way toward this goal, and we place strong emphasis on having the capacity to pay out attractive dividends both now and the years ahead. The solvency rate at 169% was once again very strong. It is good to bear in mind that the figure includes the foreseen dividend based on the Board of Directors' proposal and that it will bounce back to higher levels after the closing of the sale of SaxoPAC. Client activity remains solid throughout the year. Assets under management reached a new billion euro milestone and increased to 15.3 billion euros, supported by both positive net flow and a favorable market environment. Net flow for the quarter was 141 million euros and for the full year of 723 million euros, which is more than 5% of the client's assets under management. The institutional wealth management flow decreased from last year. The main reason was a few large client distributions related to alternative investments, which offset the impact of otherwise very strong new sales. It is also worth noting that the comparison period was very strong. Corporate net flow, on the other hand, increased significantly from the last year. In our corporate business, we maintained our market-leading position, supplementary pensions and personal funds. Sales of risk-life insurance stayed strong, although they fell sort of ambitious targets we have set for ourselves. In the retail business area, sales of risk-life insurance is developed particularly well supported by the strong start of our cooperation with Pohjantahti Mutual Insurance Company. The role of key distribution partnership is significant in the retail customer business. One of last year's highlights was the great performance of our wealth management business. Sales of discretionary mandates were notably strong, and overall asset management in private wealth management grew by 19% from the previous year. This strong growth also expanded Mandatum's market share. It is great to see our investments in private wealth management paying off, as it is a central part of our growth strategy. During the year, we made strong progress in advancing our asset and wealth management business. The expansion of our international operations was one of the highlights of 2025, and I'm very pleased with what we have achieved. Growth remains strong, especially in Sweden, and we also gain new clients across Central Europe. Our quality investment products reserved multiple awards last year, highlighting strong investment performance across several asset classes and fund categories. This shows both the international appeal of our competitive products and Mandatum's ability to build a credible presence outside the Finnish market. Operational efficiency continued to improve, driven by rising income and lower costs. The cost-to-income ratio dropped by 9% versus points to 49% over the trading fair months. As we have said before, our business is scalable and we have made the main IT investments already, so costs should grow less than income going forward. At the same time, we have continued to invest in our future. Last year, we hired new salespeople to accelerate growth in both the institutional wealth management and the corporate business areas. Team margins stood at 1.13%, slightly lower year on year due to mixed effects as institutional wealth management volumes increase while standalone product margin remains stable. Mandatum was once again awarded the Great Place to Work certification, highlighting the strength of our culture and the commitment of our employees. Retaining good people is especially important in our industry. The certification is a clear sign that we have succeeded in creating a work environment built on trust and well-being. In November, Mandat was ranked Finland's best private banking provider in Kanta's Prospera Private Banking 2025 Finland Customer Study. Our very high customer satisfaction scores tell the same story. The net promoter score for our wealth management business was very high last year at 80. Our corporate clients were even more satisfied with the net promoter score reaching 85. Both figures are exceptionally high by any standard of comparison. The exceptional commitment of our people and our strong customer satisfaction are evident in everything we do. Finally, a quick A quick look at our financial targets, which were presented at last summer's Capital Markets Day. Although we are only eight months into the new strategy period, we are already well on track toward all of our targets. As we look ahead, our strategy direction remains clear. We continue to focus on growing in our target segments and improving operational efficiency for long-term value creation. Thank you. I will now hand over to Matti, who will go through the final sales in more detail.

Thank you, Petri. Let's now take a closer look at the fourth quarter result components. As mentioned, our fee result was up 18% year on year, with assets under management up by 10%. And if we compare it to Q3, our AUM was up by some 3% or 410 million euros to 15.3 billion. The client fee margins were unchanged in the quarter when looking on a 12-month rolling basis. And more importantly, I think the product-specific margins were largely flat during the quarter. As Petri mentioned, the cost-income ratio of our client AUM continued to decrease according to plan and was below 50 for the first time in our history. Overall, we saw a decline in our cost during 2025, mainly due to lower IT costs. At the same time, income was up, as you know. The Q4 net finance result came in at 19 million euros, and as all of you know, our investment portfolio is mainly in credit instruments, and returns were lower than normal during the quarter as rates increased. In addition, the movements of the IFRS discounting rate component impacted our net finance result during the quarter. I'll talk a bit more about this later on. The result related to risk policies at 4 million euros in Q4 was back to more normalized levels and up significantly compared to the previous year. On the other result line, there was a negative impact by some 5 million euros due to updated actuarial assumptions mainly with profit portfolios. Capital generation is a key success factor to any financial company and we still continue to consistently generate capital. Organic capital generation was 60 million euros in Q4 or 0.12 euros per share. And the main positive driver here again was the increase in owned funds. Return on equity was 8.6% in the quarter. As you know, and as Petri mentioned, one of our key financial targets is to grow the capital like profit before taxes by more than 10% annually by 2028 compared to 2024. And if we look at 2025, the reported profit before taxes were 92 million euros up 5% compared to 24. I think it's important to note that in the first six months of 25, the result was impacted by the turbulent financial markets, the US dollar FX headwinds and lower sales. But the second half was definitely a step change in profitability in the capital light business. All segments within capital light increased their profit sequentially in Q4. The quarter level of 27 million euros is up by 28% compared to a year ago. and suggest the overall run rate in line with our long-term growth target. Also worth noting again is that the 24 comparison figure included the 11 million euro gain from the transfer of the IF portfolios. So then let's take a closer look at the Group Net Finance result. As mentioned, it was 19 million euros in Q4 and somewhat lower than the historical average. The with-profit investment return in the quarter at 0.7% was above last year, but slightly below the expected return of our portfolio. Fixed income credit makes up 76% of our own investment portfolio. And in Q4, the return was negatively impacted by mark-to-market adjustments from higher rates and spreads. At the same time, the portfolio mark-to-market yield was upped by 30 basis points in the quarter up to 4.5%, and this is naturally significantly above the cost of liabilities. Our private credit portfolio has continued a positive trend and had a very good quarterly return in Q4. Also, private equity returns were good at 3% in the quarter. The real estate returns were impacted by the Morgan Stanley joint venture transaction write-down. If we then turn to the other parts of the net finance result, or discounting and the cost of liabilities, as you all who follow the market saw, that swap rate increased significantly in Q4. However, the IFRS rates that we used for discounting increased clearly less in the quarter, and this was the result of a 15 to 25 basis point lower in liquidity premium in the long IFRS rates that we used. The lower liquidity premium had a 15 million euro negative P&L impact in the quarter, and this largely offset the positive discounting gains from higher swap rates. The with-profit portfolio interest rate hedging ratio remained at the high level in Q4. However, you shouldn't read too much into this figure as it varies depending on the tactical view of the fixed income market. Also, remember that the hedging ratio is a relative figure and the interest rate risk is low in absolute euros, only a few millions as you can see from our material. And of course, the main target is naturally to generate financial profit on this line as well. Finally, it's 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 was 60 million euros, as I mentioned, and again, significantly higher than the reported IFRS net result. In 2025, we generated capital organically by 301 million euros net of taxes or 60 cents per share. This figure was 44 cents in 24 and also supports the higher dividend proposal from the board. Our own funds generation increased the solvency margin by five percentage points in the quarter and 31 percentage points during the full year. Actually, Q4 was the first quarter in the history of mandatum when the SCR from the with-profit business was smaller than the capitalized SCR. And I think this is also yet another indication of our transformation journey towards a high ROE Capital Light Group. The fully loaded solvency ratios stood at 169% for the group. And although this number is down, remember that now we take away the impact of the transitional measures of around 15 percentage points. The decrease from Q3 is also due to the larger dividend deduction based on the actual dividend proposal. and this reduced the solvency ratio by 18 percentage points. Worth noting is that the comparable like-for-like solvency ratio was unchanged in the quarter. However, also worth noting here is that the announced sale of the Saxo Bank shares is expected to increase the solvency margin by around 28 percentage points once the transaction is finalized, as you can see from our material. In addition, the strategic asset de-risking we announced in the June capital market day of the with profit portfolio is expected to further support the capital release going forward in the coming years. And then briefly on the outlook for 26, not too much to mention here. Our fee result is expected to grow and the with profit portfolio is expected to decrease compared to 25. There is one extra thing worth noting that the unwinding rate for 26 is 2.0%, down from 2.4% in 2025, which means around 40 million annual unwinding costs compared to over 50 million in 2025. All from me, back to you, Lotta.