Good morning, everyone, and welcome to Mandatum's Q3 2026 audiocast. My name is Lotta Borgström from Investor Relations, and joining me today are our CEO, Petri Niemisvirta, and our CFO, Matti Ahokas. We have plenty to cover today. Petri and Matti will first take you through the highlights of the quarter and the key developments during Q3. After the presentation, we will open the line for questions. As usual, you can either dial in or submit your questions through a chat. We will take the chat questions after the dial-in in Q&A. So without further ado, Petri, over to you.
Thank you, Lotta, and thank you all for joining us today. The third quarter was another good quarter for our capital-light business, despite the exceptional interest rate environment. Let me start with the key highlights. Our capital-light business continued its strong development in the third quarter. Capital-light profit before taxes increased by 18% year-on-year, and fee result increased by 11%, supported by higher client assets under management. Group profit before taxes was EUR 44 million, with the lower year-on-year result mainly reflecting the net finance result. The sharp increase in interest rates during the quarter had a negative impact on the mark-to-market value of our fixed- income investments. Finally, we completed the acquisition of Cliens in October. This is an i mportant strategy step for Mandatum, and I will come back to this later in the presentation. Let me then move on to client assets under management and net flow.
Client assets under management grew 13% year-on-year and reached EUR 16.8 billion at the end of September. Once again, growth was broad-based across all our business areas. Net flow remained positive during the first nine months of the year. In the third quarter, however, net flow was clearly lower than in the previous year and amounted to EUR 55 million. The third quarter is typically seasonally weaker due to the holiday period, but this year, the rapid increase in interest rates also affected client behavior. Investment decisions were delayed, and we saw increased redemption in some fixed- income products. We are, of course, not satisfied with the level of net flow in the quarter. We can do better. At the same time, I remain confident in our sales-driven culture and our ability to grow.
Also, it is important to remember that over the longer term, higher interest rates are positive for Mandatum. They make fixed- income products more attractive to our clients, which plays well to one of our key areas of investment expertise. Asset and wealth management continued to perform well. We saw positive development again in our international business. International institutional assets increased by 16% year-on-year, with strong sales, especially in Sweden. We also continued to expand our international distribution network in Central Europe. Private wealth management also continued its strong development as we continued to gain market share. Client assets grew by 15%, supported particularly by strong sales of discretionary mandates. This was also reflected in the product mix, with allocation products up 31% year-on-year. Credit products were affected by rising interest rates during the quarter, but across the business, the overall trend in client assets remained positive.
Moving on to profitability and efficiency. Our cost- income ratio continued to improve and was 48% on a rolling 12-month basis. The improvement was supported by growing client assets combined with good cost development. At the same time, our fee margin was 1.11% compared with 1.13% a year ago. The slight decline is mainly a business mix effect. Asset and wealth management, which has lower average margins than our other business areas, has increased its share of total client assets. Importantly, this does not change the overall picture. We continue to see clear evidence that our business model is scalable. Client assets are growing, earnings are increasing, and efficiency is improving, while we continue to invest in areas where we see future growth opportunities. Finally, a few words on our capital-light business. Capital-light profit before taxes increased by 18% year-on-year in the third quarter.
During the first nine months of the year, capital-light profit increased by 27%. This means that we are well on track to achieve our targets in our core business, driven by profitable growth in our fee-based business. As already stated, asset and wealth management delivered another strong quarter with continued growth in both client assets and earnings. In corporate, sales of unit-linked pensions remained at a good level, while risk product sales increased from last year. In retail, sales of both risk and investment products increased. Our cooperation with Pohjantähti also supported risk product sales. In addition, the acquisition of Cliens further strengthens our position in international asset management. We signed the transaction in August and completed it in October. Cliens will be included in our reporting from the fourth quarter onwards.
Most importantly, the acquisition supports our ambition to grow our international institutional asset management business and accelerate the growth of our capital-light business. To sum up, the third quarter saw continued progress in the areas that are central to our strategy: increasing capital-light earnings, growing client assets, and improving operational efficiency. With that, let me hand over to Matti to take a closer look at our financial performance.
All right. Thanks, Petri. Let's now take a closer look at the third quarter result components. Firstly, our fee result increased by 11% year-on-year to EUR 24 million, while client assets under management increased by 13% to EUR 16.8 billion. If we compare to Q2, the fee result was up by 7%, primarily driven by higher average AUM and lower expenses. Compared with Q2, client AUM grew by 1% or EUR 160 million. The increase was driven by a favorable market return of EUR 105 million and a net flow of EUR 55 million. As Petri pointed out, we continue to grow our income faster than costs, so the business is scaling. The cost-income ratio related to client AUM continued to improve and was 48%, and sequentially improving on a rolling 12-month basis.
The net finance result was EUR 27 million, down from EUR 39 million a year ago, and I will discuss the key drivers in a moment. The result related to risk policies increased to EUR 4.4 million from EUR 2.6 million, mainly due to a higher CSM release. The other result line decreased to EUR -11 million, but note that this includes a EUR 4 million negative one-off accounting impact due to a change in actuarial assumptions in our with-profit portfolio. Taking a closer look at the group net finance result, or the result from our own balance sheet, it came in at EUR 27 million. We had a negative quarterly investment return of 1.0% for the original with-profit portfolio. In euro terms, group investment return was EUR -42 million compared with EUR +40 million a year ago. As you all know, September was a clearly exceptional month for fixed- income markets.
Higher energy prices, increasing inflation, and more rate hikes resulted in a global bond market sell-off, and this meant our fixed- income assets returned - 1.6% in Q3. The negative mark-to-market impact reflects mainly the higher rates and wider credit spreads. It is important to note, however, at the same time, higher yields improved our expected future returns. The mark-to-market yield increased by 60 basis points from Q2 to 5.3%. The current environment also creates attractive new reinvestment opportunities for us, and this is especially true in some government bonds, which have a very favorable solvency treatment. Alternative investments continued to perform well. Private equity returned 3.7%, private credit 2.8%, and real estate 1.1%. Both private equity and private credit also continued capital distributions during the quarter. These positive returns partly offset the decline in the fixed- income values.
Turning to unwinding and discounting of liabilities, higher interest rates had a positive EUR +78 million impact on insurance finance expenses, while the unwinding expense was EUR 9 million. In total, unwinding and discounting contributed to EUR 69 million compared to around zero a year ago. It is important to note that we continue to generate capital consistently. Organic capital generation, and remember this is net of taxes, was EUR 74 million, or EUR 0.15 per share in Q3, 7% higher than a year ago, and exceeded our earnings per share of EUR 0.06. This was driven by higher own fund generation as well as capital release and lower SCR in the with-profit segment. The Solvency II ratio without the transitional measure stood at 216% before dividend accrual and 198% after dividend accrual. The dividend-adjusted ratio increased by 9 percentage points quarter-on-quarter.
Our solvency position therefore remains clearly above the 160%-180% target range, providing a strong foundation for growth and shareholder distribution in line with our targets. Over to you, Lotta.
Thank you, Petri and Matti. Let's now move on to questions. Please dial in or submit your questions through the chat.
If you wish to ask a question, please dial pound key five on your telephone keypad to enter the queue. If you wish to withdraw your question, please dial pound key six on your telephone keypad. The next question comes from Antti Saari from OP Markets. Please go ahead.
Hi, it's Antti here. Looking at Q3, it was indeed an exceptional interest rate and bond market, but since that, we have seen that interest rate has calmed down quite significantly in Q4 so far. Could you tell us something about your client behavior in Q4 so far?
Thank you. Petri here. Of course, we can't comment very deeply and detailed Q4 situation, but let's put it this way. We don't see any changing demand on our products. Our performance in our products, it doesn't matter is it the credit products or our Mandatum, for example. We don't see any
Let's say bad performance on those. Let's say that what happens in the market in September was quite unusual and it really affected, especially in the latter part of September, the activity in the customers' behavior. Let's put it this way, the world is a little bit better after that in market-wise.
I see. Okay, that's clear. Then another question from me. The other result for with-profit business was very clearly negative. Could you tell us a little bit more about what's behind that?
Yeah. Hi, Antti. You're absolutely correct. As I mentioned, there was a EUR 4 million negative one-off accounting impact actually related to some conversion of with-profit to unit-linked, and this actually created a corresponding amount of CSM. It's kind of more of an accounting thing, so you see the kind of negative impact in the P&L and the positive impact in the balance sheet. But if you look at kind of from a financial economical impact, it was actually fairly close to zero, so that's why we kind of single it out as a one-off item. I don't think you will see this going forward.
Okay, very clear. Thanks. That's all from my side.
The next question comes from Ulrik Zürcher from Nordea. Please go ahead.
Yeah, thank you for taking my questions. Just had a small follow-up on the other result, because is it a good baseline there still, like between EUR 20 million- EUR 25 million negative per year, or has anything changed there?
Ulrik, no, nothing has changed there, and if you kind of strip off the one-off, I think you are pretty close to those levels.
Yeah, you are. Also, I guess the risk result this quarter is more normalized than what we saw last year?
Yes.
Okay, awesome. Then just on the tax, why was it high this quarter?
Yeah, that's correct as well, and as you've seen, we've had a fairly kind of volatile tax line altogether. The main reason is that we get the kind of actual kind of taxation for 2025 in the latter part of the year, and there's always some true-ups from especially some of the kind of general partnerships that we own. But I think overall, you should expect a tax rate of slightly below 20% going forward. Of course, if the Finnish government or the proposals go through that the tax rate would be lowered to 18% next year, then of course that would bring it even further. But I think it's up to the politicians to decide whether that's going to go through or not.
All right. Great. Thank you.
The next question comes from Vash Gosalia from Goldman Sachs. Please go ahead.
Hi. Thank you for the opportunity. I have two questions, please. One, I just wanted to understand from you, what would be the impact of the Solvency II reforms on your solvency position, the ones that come in 2027? The second one, I just wanted to understand the impact of the higher interest rate environment on your cash generation for the with-profit book. Could you give us some color or understanding on whether it's economically beneficial, or is it immaterial given your asset-liability matching? Thank you.
Thanks. Hi, Vash. Overall, if you look at the Solvency II reforms, we're looking at very, very small impact altogether. A small increase in the SCR could be expected, but we're talking about very, very small impacts based on our initial findings on this. Regarding the interest rate environment, I think that's a very good point because, as I mentioned in my presentation, especially the increase in government bonds, which carry a 0% risk weight, is creating interesting opportunities, as well as in other parts of the segment, also in the credit markets. We are definitely looking into this, and I think it's overall a positive thing, and especially for the with-profit business, the higher the expected returns obviously are, the relative weakness of the with-profit business is decreasing, and it's becoming more attractive.
That doesn't say that we're changing our strategy in any way, but I think the investment opportunities are clearly offering new ways to invest more capital efficiently and still maintain a reasonable profit generation for the P&L. We are optimistic, and this has been a big change, as you know, in the markets. I think the U.S. 10-year Treasury yield was the highest after the financial crisis now, and that, of course, is the negative impact to mark-to-market, but also creating opportunities in investing.
I just want to clarify on that point. Is it another way of saying that you expect the cash generation from the book to just come quicker? Or are you saying you expect the total cash generation to be higher, and as a result, we can expect probably more capital return than we did before?
Well, I think it is maybe the first one. It is more of a timing issue because the situation, we have outlined our strategic asset allocation quite well. As I said, these things are changing very rapidly, and we also kind of want to take advantage of the market opportunities here. It does not change the kind of overall picture. Let us see, and of course, things can change quite rapidly, like we have seen. I do not think any one of us was expecting these kind of movements in the markets. In general, net-net, these are positive from our perspective, in our opinion.
Got it. Thank you.
The next question comes from Emil Immonen from DNB Carnegie. Please go ahead.
Hi, good morning. Thanks for taking my questions. Could you maybe talk a little bit more in detail about the issues with the Mandatum Trader and kind of what the deal with Saxo Bank on that looks like?
What do you mean the deal with Saxo Bank means?
What are your responsibilities? What are Saxo Bank's responsibilities?
Yeah. Saxo Bank is the one who owns the platform. So, our customers are Saxo Bank's trading platform customers. Mandatum is taking care of, in Finland, the customer service and onboarding. That is how we have split our duties. That is the legal structure of the service.
Yeah. Would that then mean that any adverse impact would mainly be on reputation or something like that? There shouldn't really be any financial impact going forward for Mandatum?
Mandatum Trader represents a very small part of our business. Based on our current assessment, we do not expect it to materially affect our company's financial performance.
Okay, good to hear. Thanks for that. That is all from me today.
The next question comes from Jaakko Tyrväinen from SEB. Please go ahead.
Good morning. Jaakko from SEB. On Cliens, you have now received the keys to Cliens. Could you talk a bit on the sales momentum and trends since the announcement of your acquisition? What have you seen in Cliens' performance?
Yeah, we closed the deal around three weeks ago, so we have had one board meeting in place. As we know, Cliens is especially expertise in small mid-cap equities in Sweden. The market is, let's say, not that much changed since our board and press release. Of course, we think that the current environment is maybe there's some rotation going on also in the market, and that area will come back. It's a little bit early to say now once we have closed the deal, only few weeks ago.
But one can maybe also say that we've kind of started the cooperation on different levels and really looking forward to working together. As Petri Niemisvirta mentioned, there's been some outflows in the Swedish small-cap market still. The AUM of Cliens is roughly at the same level it has been since at the end of Q2. But overall, I think we're very optimistic and looking forward to working together.
Yeah, there's a lot of initiatives. There's a lot of things we are planning to do in order to enhance both side businesses, but it's very early stage. We just started after closing, but I guess we will see in some process, especially in the Q1, in the beginning of the year, once we are starting just now.
Okay, good. Thanks. Then on the outflows during the quarter, can the outflows be kind of isolated to certain type of Cliens, and how would you comment the development of the kind of overall stickiness of your AUM?
I am not worried about the outflow in Q3. It was certain reasonings for especially the very, very fast increase in fixed- income side. They are, like you mentioned, more isolated. No broad outflow change in any means in our assets.
Good, thanks. My final one, a bit of a technical. Based on the current interest rate levels, what do you foresee for 2027 unwinding costs? Will that come materially up?
Yeah, the unwinding cost is most likely going to increase, but then again, the reinvestment side is increasing as well. I do not have the exact figure here, but let us see how that develops. The important thing is the spread between the kind of investment yield and the discounting rate. That is the most important thing.
Yes, absolutely. Thank you. That is all from my side.
The next question comes from Kasper Mellas from Inderes. Please go ahead.
Hi, all. My first question is, how much of the around EUR 400 million of debt product commitment that you had undeployed in Q2 were deployed during Q3?
Sorry, we don't have special number for that, but we have, t here's still a lot of room to call the commitments. It wasn't very high number during the Q3.
The average has been probably around—
All right.
—EUR 30 million in quarter. I don't have the exact figure for Q3 how it was.
Yeah. Most of the commitments are not called.
All right. Clear. About Cliens, how has the EBIT level of Cliens developed in 2026 compared to previous year? Any material changes there?
Well, of course, as the AUM has come down, you can quite directly translate it to the EBIT side. Let's see how the figures for Q4 end up. But of course, if the AUM is down, it's directly related to the EBIT side. Nothing dramatic. I think it's a fairly linear development in terms of that. The cost side is actually doing quite well altogether, so we have. It's more of a market phenomenon, as we mentioned earlier on.
Okay. Have you booked any transaction costs from this deal in Q3 already, or will that be visible in Q4 figures?
Something small in Q3, but the biggest part, we closed the deal in October, so it's a Q4 thing altogether.
Yeah, right. Then last question about your international sales. What do you think is currently your biggest obstacle with scaling your international sales from current levels? As you have said, there is massive potential since you're still a very small player in Europe or in the Nordics.
Yeah. There is a lot of potential, and what we have done during this year, we have opened new partnerships, established platforms, and made new deals in new markets, and with the new placement agents and so on. We have had a lot of meetings with the customers through those placement agents and other players. During this year, we have signed agreements. I would say we are a little bit, let's say, behind of my wish what would have been seen already in Q3, but we are doing the right things, and we are on the right path. I am sure that we will see increasing businesses also outside of Nordics in our international institutional business.
All right. No major changes in the demand or amount of—
No
—discussions and client meetings?
No.
Okay.
Our product side, especially those product which are tilt to Nordics, like Nordic High Yield, they are really something that our customers are really willing to hear, and they are very interested about those products.
All right. That was all from my side. Thank you very much.
The next question comes from Michele Ballatore from KBW. Please go ahead.
Yes, good morning. Thank you for taking my turn. Two questions from me. The first is on the capital generation. I mean, the third quarter figure was, I think, a pretty good figure. But can you maybe give us more details about what structure of development in terms of capital generation and what was, let's say, dictated by the recent market volatility or headwinds or tailwinds on this metric? Then the second question is about the fee margin. I mean, I know you're working a lot on the reaching scale and certain segments and improve the cost- income ratio. But in terms of the fee margin, and there is also product mix, business mix effect, can you maybe I mean, do you see any opportunity to improve the fee margin in the future? I mean, give us some, let's say, details about the outlook on this metric. Thank you.
If I take the first question, then Petri, if you can take the second one. The organic capital generation, as I mentioned, was quite strong, and it was especially strong in the quarter in the with-profit segment, mainly resulting from the SCR reduction. But then also, as said, we had some of these conversions from with-profit to unit-linked that helped somewhat as well, so increasing the CSM. Then, of course, it's important to note that the big difference, of course, on the kind of own fund side is that it's not only the reported profits, it's also the CSM increase and the surplus value of future profit in the pension products altogether. So those are all items that are there. So those are the three kind of different components, and they worked quite well in this quarter altogether. So we're very happy with the figure. It's actually, if you annualize it, we're at EUR 0.60, which was the same level as last year.
So, sorry, can you repeat the second question? I missed part of that, so I'm answering—
It's about the fee margin.
—Yeah.
Yeah, it's about the fee margin, what is the outlook there? I know there is a business mix effect.
Yeah.
But if you can give us
Yeah, of course. Let's put it this way. I guess we are acting quite high margin levels in our businesses already now. The thing which is putting it down is only the mix of the products, product mix, and especially the customer segment mix, which is changing over the years. So, I would say that we are in asset classes and offering a product which are quite reasonable price for customers, and customers are still willing to pay those fees and margins because once you get something which is really good, you're willing to pay a little bit extra compared to those providers which are not that good in that area. I guess if we manage to keep in all our products this margin level, I think it's a good work.
It's quite difficult to see that we can increase our margin levels from this point, especially in all our business areas. There might be some products and offerings we can create which might increase certain areas, like in Mandatum, our earnings, but it's quite a much this level, which is, I think, is fair to say, quite good level of margin already now.
Thank you. Thank you a lot.
The next question comes from Jaakko Tyrväinen from SEB. Please go ahead.
Thank you. One additional question. The dividend season is a few months ahead of us again, and could you remind us about the Cliens solvency impact and what factors we should take into account when considering the next spring dividend? The organic capital generation has been now, I guess, some EUR 0.43 for the first nine months. On top of that, should we still consider Saxo proceeds to be distributed to shareholders next spring?
Well, I think it's fairly early days to talk about the dividend issues altogether. We have a very clear target of what we've announced regarding the payouts. Cliens impact, we expect around 7- 8 percentage points, obviously mainly related to the goodwill of the transaction. But I think, like we've said before many times, there are a number of other factors apart from the solvency ratio that one should consider. That's the distributable funds, how much we pay in internal dividends. There's a lot of moving parts, and as you say as well, Saxo is part of the equation. But this is something obviously for the board to decide on how things are. We paid the EUR 64 million now in October in cash to Cliens, so that's less liquidity.
But I think we've been very firm and clear on the kind of outlook on our dividends, and then let's see what the board decides on the exact figure.
Okay, very good. Thanks.
Yes. Then we have some questions from the chat as well. Let's start with Sauli Vilén at Inderes, who is asking, "With Cliens, you are first time using minority ownership stake as a remuneration tool. How do you make sure that you don't break something regarding your remuneration policies in Finland when one team now gets to own a share of their own business while others cannot?
Yeah, I'm not worried about that. We have very good incentive programs here in Finland, which are based on fixed salary, short-term incentives, STI, and the long-term incentive, LTI. We just announced our new LTI program for our key employees, and that's something we don't use in Cliens' situation. So, they have different type of incentivization system, and we just have to take care, and we are doing that all our key employees are feeling that their work is appreciated and they get fair share of the profit what company is getting.
Thank you. Sauli continues. Other question, "How do you avoid micro-optimization between Cliens and Mandatum due to the different ownership structure? This is something several of your peers are struggling with.
Well, if I take the question, I think it is a very relevant point altogether that is raised here. We believe that, especially in the Cliens acquisition, we have created a very aligned incentive structure with both parties, and I think that was one of the key reasons also behind the acquisition. In this case, I think we are very well mitigated, but you are raising a fair point that you always have to be sure that the interests are aligned, and this is what the Mandatum remuneration is very much altogether, and that there are different moving parts there. But in this case, I think they are very well aligned.
Thank you. Lastly, we touch upon the Trader incident here earlier, and you mentioned, Petri, that the investigation is partly still ongoing. We have a question here about how these processes can take so long. What would you comment on that?
Yeah. First, I would say that information security threats targeting the finance sector are, as we all know, growing challenge for all of us, and it is just highlighting the need to stay prepared. We are working systematically to further strengthen our information security and ways of working. When it comes to this Trader case, yes, it has took a long time, but we have, as much as we have been possible to inform the market and our customers with the direct communication, of course, through our web pages. There are two parties here, Saxo and us, and we have to do this together, and we have tried to communicate as much as we know at every point. Of course, all the information to authorities has been made in proper way.
Thank you, Petri. That seems to be all we have time for today. Thank you for joining us this morning, and as always, if you have any follow-up questions, please do not hesitate to reach out to us at Investor Relations. Have a great day.