Mandatum Oyj

A very good morning from sunny Helsinki and welcome to Mandantum's Q1 audio cast. I am Lotta Burström from Investor Relations and I am pleased to be joined by our CEO Petri Niemisfirta and CFO Matti Ahokas, who will guide you through today's results. During this audio cast, we will begin by presenting the highlights and key developments of Mandato's first quarter of 2026. 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. Participants can also submit questions through the chat, which we will review within the given timeframe 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 walk you through our first quarter of 2026. The start of the year was good in our core businesses, even though the reported result was clearly impacted by changes in interest rates and our discount rate curve. Market sentiment was mixed in the first quarter. Geopolitical tensions, especially in the Middle East, affected the markets. Uncertainty increased towards the end of the quarter, resulting in a decline in our assets under management in March. However, market confidence has mostly recovered since then. Our capital-like business continues to develop very well. Capital-like profit before taxes increased by 35% year-on-year to €26.8 million. This shows that our strategy is working and that we continue to grow in the right areas. The fee result increased by 10% year-on-year to €20.6 million. The growth was supported by higher client assets under management and good client activity. Client assets under management increased by 10% year-on-year to 15.4 billion euros. Net flow remained strong at 248 million euros, which shows that our clients continue to trust us and invest with us also in more uncertain market environment. It also shows that our sales perform well in different market conditions. At the same time, our operational efficiency continued to improve. The cost-income ratio decreased to 49% year-on-year, which is a clear indication that our business model is scalable and that we can grow income faster than costs. The reported profit before taxes in the quarter was negative at minus 25.9 million euros. This was mainly due to a more technical change in discount rate curve, which has a negative one-off impact of €36 million on the net finance result and the group profit. Excluding the impact, our underlying profit before taxes was positive at €10.3 million, which was weighted down by net finance result, mainly due to the low investment returns during the quarter. As we have said before, these items can cause volatility in our reported earnings from quarter to quarter. Our solvency position saw a strong increase to 203% during the quarter as a result of the sale of Saxo Bank shares. This gives us a solid foundation for our business and for future shareholder distributions. Overall, the first quarter shows once again that our underlying business is developing well, our operations are processing as planned, and that the quality of the result is moving in the right direction. Let me then move on to the client assets under management and net flow. Client assets under management reached 15.4 billion euros at the end of the quarter. The year-on-year growth of 10% was supported by strong net flow as well as the market. A strong net flow of 248 million euros increased asset management also from the beginning of the year, despite negative market movement. When we look at the different business areas, asset and wealth management continued to grow steadily, supported by both private wealth clients and institutions. Corporate net flow also remains strong with good sales, especially in personal funds. Retail net flow was stable and we continue to see good customer activity, especially in our Pohjan tahti distribution partnership. Overall, the development shows that we are able to generate positive net flows across all market conditions and across all our key customer segments. In asset and wealth management, we continue to see solid growth. Assets and management in this business area increased by 12% year-on-year. Growth was supported by positive net flow and good demand across our product offering. Private wealth management continued to develop well. Assets grew by 17% year-on-year, supported by strong sales of discretionary mandates. International institutional assets also increased by 12% year on year. This shows that our international growth strategy continues to work and that we are able to attract new clients outside Finland. It is good to know that international investment money moves quickly. When markets are uncertain, this usually leads to more outflows and delayed investment decisions. On the other hand, when situation improves, money often comes back quickly. When looking at products, most of the net flow was directed to allocation products. We also continue to see good demand for credit products, which remain an important part of our offering. Overall, the development in assets and wealth management supports our long-term vision of being the fastest-growing asset and wealth manager in the Nordics. Finally, a few words on profitability and efficiency. Our cost income ratio improved further year on year and is now 49% on a rolling 12-month basis. This shows that our focus on cost efficiency is delivering results. At the same time, we have made growth investments in asset management and corporate sales, such as new customer interface software and new requirements. And yet, our cost-to-income ratio has remained stable as we have improved efficiency in other areas. At the same time, the fee margin decreased slightly to 1.12%. This was mainly due to the changes in the business mix as the share of lower-margin asset and wealth management business continues to grow. It is important to note that our underlying product margins remain stable. This means that we continue to have good pricing discipline. Overall, we are seeing clear evidence that our business is scalable. We are able to grow income, improve efficiency, and maintain profitability in our core businesses. I will now hand over to Matti, who will go through the finances in more detail.

Thank you, Petri. Let's now take a closer look at the first quarter result components. The fee result was up 10% year-on-year, with assets under management up by a similar amount. The fee result is down slightly compared to Q4, as in Q1 fee expenses have increased due to the growth investment within the capital light area. Also, there's some seasonality due to the timing of sales commissions, mainly in the corporate and retail segments. And of course, as you know, the day count is lower in Q1. Compared to Q4, our AUM was up by 1% or 100 million euros to 15.4 billion. As we all know, March was a turbulent month in the financial markets with negative returns, but we're still able to go the AUM sequentially. And note that the market development has been clearly positive in April, May, so AUM has recovered nicely. As Petri mentioned, the cost-to-income ratio of our client AUM was 49% unchanged quarter-on-quarter. And although our income was up, the increased FTE and IT investments in the capitalized business meant that costs in this area increased as well. And this is very much in line with our business plan. It's worth noting that the overall cost control remains good. Our group total cost-to-income ratio continued to improve and we're very much in line with our overall annual cost growth target of around 1% until 2028 that we published at the CMD last June. The net finance result was negative in Q1, and the main driver behind this was the discount rate assumption change that we announced earlier. The mark-to-market return of our own investment portfolio was negative as well, and I'll talk a bit more about this later on. Our result related to risk policies at 6 million euros in Q1 was a significant improvement compared to last year. As you know, one of our key financial targets is to grow the capital like profit before taxes by more than 10% annually by 28 compared to 2024. Looking at the first quarter, the reported profit before tax was 26.8 million euros or 35% growth versus Q1 2025. Although we were a bit behind the target in 2025, we are now at an overall run rate well in line with our long-term growth target. If we then look at the different segments, asset and wealth management profit grew by 20% year-on-year, driven by a 16% jump in the fee result. Corporate saw a significant profitability increase as the result related to risk policies increased due to a higher CSM release and a favorable claims development. The retail segment grew as well, although the fee result was negatively impacted by the AUM development, as well as a lower insurance service result This was impacted by changes in assumption in the tax deductibility of voluntary individual pension contracts. The tax benefit will be discontinued in 2027. Then, taking a closer look at the net finance result, it was minus 47 million euros, and the earlier disclosed IFRS-related change in the discount rate assumptions had a negative one-off impact of 36 million euros. Despite the positive start of the year, March was a negative month in the financial markets. The with-profit investment to turn in the quarter at minus 0.6% was clearly below the expected level. Worth noting is that the development in Q2 has so far been more positive. Fixed income credit makes up 77% of our own investment portfolio. In Q1, the return was negatively impacted by mark-to-market adjustments from higher rates and wider spreads. At the same time, the portfolio mark-to-market yield was up by 40 basis points in the quarter to 4.9%, or significantly above the cost of liabilities. This means that the investment returns should also improve going forward. Our equity portfolio had a weak quarter in Q1. The legacy portfolio consisting mainly of Finnish illiquid small cap names was down by 9%. However, our private credit portfolio has continued a positive trend and private equity returns were positive in the quarter as well. And both are seeing continued capital distributions. The other part of the finance, net finance result or discounting and cost of liability, as you all saw, we saw market rates increase significantly in Q1. This had a 14 million euro positive discounting impact, but the impact was maybe a bit muted as the increase in the market rates was mainly in the short term end of the yield curve, where most of our fixed income assets also are. As you all know, we announced a couple of weeks ago that we'll start using a new discount rate curve for our insurance liabilities. As you can see from the graph, the new rate is clearly lower in the long end and closer to externally observable swap rates, and also more in line with industry standards. Although the change resulted in a fairly large accounting impact in the quarter, it's important to note what Petri also said, that this impact will be offset over time. It has no impact on our cash flow solvency nor dividend capacity. We believe there's other benefits, as you can see from the slide as well, compared to the very volatile old IFRS curve that we used. We consistently continue to generate capital. Organic capital generation was 50 million euros positive in Q1, despite the negative IFRS result. The strategic asset de-risking of the with-profit portfolio continues and is expected to further support the capital release going forward. Q1 was the second quarter in the history of Mandatum when the SCR from the with-profit business was smaller than the capitalite SCR. This also supports our transformation journey towards a high ROE capitalite group. The fully loaded group solvency ratio stood at 203% up from 169 in Q4 and is clearly above our target range. Main drivers behind this increase were the completion of the sale of the Saxo Bank shares, and a lower symmetrical adjustment factor. And finally, we paid back in March the 200 million euro loan that we used to finance the Saxo Bank shares. So the financial leverage decreased to 17.5 from 23.8. And now back to you, Lotta.