Mandatum Aktie

A very good morning from sunny Helsinki, and welcome to Mandatum's Q1 Audiocast. I am Lotta Borgstrom from Investor Relations. And I am pleased to be joined by our CEO, Petri Niemisvirta; and CFO, Matti Ahokas, who will guide you through today's results. During this audiocast, we will begin by presenting the highlights and key developments of Mandatum'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 time frame 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-light business continued to develop very well. Capital light profit before taxes increased by 35% year-on-year to EUR 26.8 million. This shows that our strategy is working and that we have -- that we continue to grow in the right areas.

The fee result increased by 10% year-on-year to EUR 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 EUR 15.4 billion. Net flow remained strong at EUR 248 million, 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 performed 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 EUR 25.9 million. This was mainly due to a more technical change in discount rate curve, which has a negative one-off impact of EUR 36 million on the net finance result and the group profit. Excluding the impact, our underlying profit before taxes was positive at EUR 10.3 million, which was weighed 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 EUR 15.4 billion 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 EUR 248 million increased assets under 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 remained strong with good sales, especially in personnel funds. Retail net flow was stable, and we continue to see good customer activity, especially in our Pohjantähti 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 under 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 note that international investment money moves quickly. When markets are uncertain, this usually led 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 recruitments. 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 financials 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 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 Q4 -- sorry, in Q1. Compared to Q4, our AUM was up by 1% or EUR 100 million to EUR 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 grow 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 capital-light 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-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 EUR 6 million in Q1 was a significant improvement compared to last year. As you know, one of our key financial targets is to grow the capital-light profit before taxes by more than 10% annually by '28 compared to 2024.

Looking at the first quarter, the reported profit before tax was EUR 26.8 million or 35% growth versus Q1 '25. 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 that will be -- the tax will be discontinued in -- tax benefit will be discontinued in 2027.

Then taking a closer look at the net finance result. It was minus EUR 47 million, and the earlier disclosed IFRS-related change in the discount rate assumptions had a negative one-off impact of EUR 36 million. Despite the positive start of the year, March was a negative month in the financial markets. The with-profit investment return 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 net 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 EUR 14 million positive discounting impact, but the impact was maybe a bit muted as the increase in the market rates was mainly in the shorter 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 in our 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 EUR 50 million positive in Q1 despite the negative IFRS result. The strategic asset derisking 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 capital-light SCR. This also supports our transformation journey towards a high ROE capital-light 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 the lower symmetrical adjustment factor.

And finally, we paid back, in March, the EUR 200 million 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.

Thank you, Matti. And now let's move on to the Q&A. Please dial-in or submit your questions via the chat.

[Operator Instructions] The next question comes from Vash Gosalia from Goldman Sachs.

I have potentially 3 questions. The first one, just on your investment results. And apologies if I missed this, but you have certain losses or the miss was driven by movement in listed equities. Can you just help us understand what is the composition of the portfolio there? And is it essentially something that you expect to recover relatively soon? Or is there something else going on there?

The second one, just on Saxo Bank and dividends. So just trying to understand the dividends for the year. So last year, you upstreamed somewhere between EUR 300 million and EUR 350 million combined from your life and asset management entities. But with the net EUR 100 million from Saxo, how should we think about dividends for this year? Is it a special that we can expect? Or would you prefer to then just upstream lesser this time?

And then the third one was just on your fee margins. Could you help us understand how your fee margins compare to your competitors? So what do you charge versus what competitors in the market are charging?

Great. I'll take the first 2 ones, and Petri, if you take the last one. Obviously, the equity portfolio that we still have of around EUR 100 million is very much a legacy portfolio consisting of very liquid small-cap names. I think it's important to take also a bit of a longer-term view on this when we started our journey as a listed company, we had around EUR 1.2 billion in equity. So most of the liquid names have been sold. And as you know, back in our Capital Markets Day, we've shown that we also have a clear path to have the kind of strategic asset allocation with around over 90% in fixed income instruments and the alternative part should be gone. There's nothing funny going on. The small-cap names have been hit quite badly and they're quite illiquid. So their positions that are quite difficult to get around.

That said, remember, we're talking about EUR 100 million portfolio roughly where the illiquid part is may be half of it. And in the big scheme of things, in our total, even our own investment portfolio, this is a small thing. But negative development in Q1 for sure. And the long-term solution is to get rid of this. And -- but we, of course, are not selling it at any prices.

Then regarding the dividend upstreaming, if we look at it, I think we've been very, very clear on what we expect on things. And the Saxo Bank net EUR 100 million is something that we did not pay out, obviously in -- or is not part of the dividend proposal for 2025. We have our AGM next week, obviously. And then, of course, that means that, that is additional for potential for the Board to decide on the due regarding the 2026 dividend. But that is not included in the proposal as we mentioned in conjunction with the Q4 report.

Yes. And about the fee margins compared to other players in the market, of course, in an effective market, it's hard to charge much more than any other player in the market. Having said that, once you have really good products like we have in high yield side, especially our Nordic high yields, you might get some extra fee for that. You have to continuously -- you have been the #1 in that segment, but of course, not that much. Investors are not willing to pay that much.

Having said that, why our margins are quite high compared to industry is that we are in those asset classes where you traditionally can charge higher margins than in like plain vanilla equity investments. So it's more or less the areas of asset classes where we act and we work those are traditionally with higher margin levels than, for example, investment grade or government bonds and so on.

And maybe one could also add that if we look at the net flow that we also were able to produce in Q1. If the margins were significantly different to our competitors, I don't think that would really work. So the market is what it is, and that I think is important to note.

The next question comes from Hans Rettedal Christiansen from Danske Bank.

I have 2, if I may. So the first question is on the P&L this quarter and the fee result relating to investment services where you have the step-down from Q4 to Q1. And I appreciate the comments that you have, Matti. I'm just kind of trying to dig into the growth investments into the asset-light business that you mentioned. Could you elaborate a little bit on that? And is it relating to -- I see on your employee side that you have, sort of, 4 new employees in Mandatum asset management. Is that what you're speaking about?

And then the second question is on net flows this quarter. Just looking at the personnel funds where you've established 1 new personnel fund this quarter versus you had, I think, 44 in total last year. So how should we think about the kind of growth trajectory there for the rest of the year? And is there any kind of seasonality here? And would you characterize 1 new personnel fund as sort of normal? Or could it in theory have been higher and therefore, also higher net flows? Those are my 2 questions.

Hans, if I'll take the first, kind of the fee result development, Petri can talk about what the investments in practice have been. But looking at the numbers, obviously, there is volatility between quarters in terms of especially sales commissions, which is affecting the Retail and the Corporate part, both internally paid and externally paid. Q4 was probably a bit low in the terms of sales commission and now Q1 is more on the normal side.

And then as I mentioned, we did make a change in what we believe that the individual pension insurance policies, customers will pay since the tax benefits will end now starting next year. They will continue to pay, but we expect it's going to be a bit less than what we have estimated in our actuarial assumptions. So that also had a negative impact. And this altogether was maybe around EUR 0.5 million in the Retail segment altogether. But the growth in the -- or the investments we've made in the capital-light area.

Yes. So investments we have done in the capital-light area, it's, let's say, 2 areas, people. So last 6 to 8 months, we have started like a little bit more than 10 people, both in Corporate segment and Wealth Management segment. So especially in Wealth Management segment, really high -- really high level people to support our growth in wealth and asset management side and of course, quite pricey in that sense. And it's like in any other investments. First, you do investment, and it takes a while to get the benefits of that. So we are living in some kind of transition time with those investments that we have invested, but not yet get that much back of that. Of course, new people coming to new house, new products, and so it takes for a while to really get the business going.

And another area is investments to software supporting to our sales in both Corporate and Wealth Management side. That's something we have also invested, not very heavy investment, more like support tools and not very expensive, but the investments anyway. Those are the investments we have done.

And in order to cover that because we have -- we are more or less during this strategy period, we have a plan, and we have introduced that in last June that we are keeping our cost base more or less the same, only small growth in our cost base. So what we have done in order to cover these investments, we have streamlined our operations in support functions. So all-in-all, it's not that heavy investments in a group level.

About the net flow and personnel funds, yes, there's only one personnel fund, but it's seasonality. It's the business goes so that during the Q1, Q2, especially, but also Q3, you build up the momentum for that, you have negotiation. It's building up the new personnel fund, it takes quite a while, because it's all employees in the company. There's a certain regulatory framework how you can do that. So it takes some time.

And the Q4 is where you close those deals really. So it's always -- so the Q4 is main part of the new deals during the year. And you try to close those before year-end in order to pay the bonuses in next Spring to those personnel funds. So it goes like that.

So one closed personnel fund doesn't tell anything about the activity really. There's a huge activity behind it, and there's a lot of prospects going on. And there will be a good year as well on that side. But it is -- normally, you close those in the latter part of the year.

And how would you characterize the activity on the personnel funds compared to last year? Is it sort of fair to assume that it's the same or?

It's more or less the same like it has been like last 3, 4 years. It has been more or less the same amount of personnel funds. We have a little bit changed our way of working. So we are concentrating a little bit bigger ones and not taking every personnel fund because the legislation goes so that it has been the requirement for how many employee company can be -- can established personnel fund has come down every second year. And now it's very small. I think it's 10 people only companies. And that means also that the size of the personnel fund will stay very small in a very long time. So we are a little bit concentrating more the bigger ones and to be very competitive on those cases. So it might be so that in number-wise, it might be -- will be the same or a little bit less. But money-wise, no changes compared to other years. That's our plan at least.

Got it. That's clear. And just finally, is it then fair to assume that the majority of the net flows is coming from the private wealth side? I take, sort of, your comments on the last question there.

Yes. Like it has been mainly -- it's even though corporate, especially personnel fund net flow has been really good in -- especially in H1 during the years. Of course, the fastest-growing area of our net flow and business and assets under management is coming from Asset and Wealth management side. That will be the case this year as well.

The next question comes from Ulrik Zürcher from Nordea.

I was just wondering about the unwinding rate for the year. That's unchanged at EUR 10 million per quarter. That's the first question. And then, I was just wondering about the 60 bps mark-to-market yield increase in the original portfolio. So just thinking about the unwinding rate next year, like how much of that 60% -- sorry, 60 bps increase is spreads versus base rates?

Ulrik, yes, you're correct that the unwinding rate for '26 is set and then next year, we will have a different rate. And of course, it depends on how the market rates move altogether. So it's too early to say exactly where we're going to end up. But it's true that now last year, we've seen a decrease in the mark-to-market yield as well as the discount rate.

Now with the kind of change we made it, of course, it's -- that's one structural change. But then, of course, it depends also where the rates are going to be at the end of the year. But I think it's fair to say that what we look at it is, of course, the spread between the mark-to-market yield and the discount rate and that has improved a bit, and which is, of course, cost positive, and that's what is really driving the results. But the rate is not set for next year.

I'm just wondering because like, yes, you'll get -- definitely you have a higher expectation for the result this year, but I was just wondering about like sort of the long-term spread because -- I just noticed you took a bit surprisingly big loss on the fixed income portfolio. So I'm thinking that was a lot of spreads. So I was just trying to figure out the underlying spread between your liabilities and your assets?

I think there will be a small positive, but nothing dramatic. As we've said, it's around 200 basis points of spread, but of course, that can move 10, 20 basis points to either direction from that side. If you look at the kind of portfolio, of course, one of the main things what -- if you look at in absolute terms, the -- on the original portfolio, the fixed income portfolio had a negative EUR 10 million mark-to-market impact. So there, you can see obviously what the kind of rest of the portfolio did. So actually, the discounting -- positive discounting effect was, as I mentioned, probably a bit more muted given the fact that rates in the really long end didn't change that much even though they change, they increased a lot in the short end. But there are kind of hedge ratio because most of the assets are also there. So they kind of offset each other.

And just last one, I was just wondering if you have an update on the derisking of the portfolio. Do you think it will happen this year? Or is it more likely next year?

Well, of course, the biggest thing of that, where we -- in the portfolio, as you can see, is that the alternative weight is very, very high. And there, we have kind of 3 different asset classes. We have the real estate portfolio, which has come down already. It's around -- at the moment, around EUR 70 million -- EUR 80 million. And then, of course, you have the private equity and private credit. And the private credit, as I mentioned, has been distributing capital all the time, and it's performing very well.

Private equity is a big question mark, and I think there's kind of positive signs regarding that as well if you look at the portfolio. So I think we're quite constructive, but it's out of our hands. And I think hopefully, we will start seeing things during the remainder of the year. And then, of course, continue there as well. But it's for sure, not -- no changes there, and I think we're pretty constructive on the remainder of the year.

The next question comes from Antti Saari from OP Markets.

A few questions from my side. Regarding our international sales, in this quarter, was it more from Central Europe or still from the Nordics?

Yes. Antti, it's Petri here. So it was more from the Nordics.

Okay. Okay. And then what about private credit market in U.S., it's pretty volatile, but not that much in Europe. But have you seen the U.S. development to affect your clients' appetite for private credit products in Europe?

No, not really. So let's say, so that they have a more deep conversation about this issue and the market as a whole. But once we have had those discussions and open up really how we are doing our private credit strategies. It's -- I would say that we haven't seen any loss of appetite to that asset class.

Okay. And then I would like to continue about discounting. The EUR 36 million loss that you know now booked, you will get it back. I understand that. But what about the pace? Let's say that everything else, interest rate and everything else remains the same. How much would be the positive impact of that in the coming years? Can you give any kind of hint for that?

Yes, it's a very good question, Antti. Well, first of all, if you look at it, the portfolio is very -- the maturity of the portfolio is very, very long. And that means that -- so if it's EUR 36 million, it will come back in. It won't be 10 years, it might be 20 years or something like that. So you can calculate what the impact. So it's not huge. But that, of course, is -- remember, this is a discounted figure as well. So it depends also on the interest rates. But probably a couple of million a year, if you do the math that way. But that depends also -- remember, it's not an absolute -- the EUR 36 million is a discounted figure. So it depends also on the rate development, et cetera. So it will take a long time to come back, but it means, but it will definitely come back.

The next question comes from Kasper Mellas from Inderes.

First question is, what was the new MAMCO fund included in the AUM at the end of Q1 at all? And when will this fully show in your AUM?

Yes. It was not so 0. So -- but as we have stated that we have or use some dry powder because of the market changes and that it has been a really good timing for us to collect that commitments and deploy the money. But in Q1, there is no net flow related to that. And how it will come to our net flow, it's really difficult to say, but it's -- it comes at the speed that we invest the money and we call the money from investors, but it will take a while.

All right. Yes, that's clear. I just want to know if it's based on deployment. All right.

Of course, it's clearly supporting our net flow in coming quarters.

Yes, of course. A you stated net fee profit from -- or fee profit from private clients was impacted negatively by the tax changes. So could you clarify a bit what this means in practice?

So what it means, obviously, is that in Finland, now the tax benefits for individual pension savings, and this was announced already 1.5 years ago, 2 years ago, will end starting '27. And we believe that this will impact that people will pay less premiums to their policies. And of course, that means that the CSM will be lower, and that's what we did this change now in Q1.

And that actually also meant that the insurance service result coming from the CSM release was lower as well. So nothing too dramatic, but yes, you know why? It did have an impact on our numbers. But especially on the Retail side, the sales commissions make a much bigger role. And especially in the beginning of the year, we make an assumption on how it was. And last year, it was lower than maybe normal, especially in Q4. So that kind of evened it out. But this is something which was already -- the tax change was announced a long time ago, and we believe that we still will -- people will continue to pay in these policies. But probably a bit less than or somewhat less than with the tax benefit.

All right. So the effect on your P&L is structural, not onetime expense?

Yes, that's correct. It is -- if the CSM is lower, so the CSM release will be lower in the Retail area as well. But especially, as I said, this maybe is like EUR 500,000 in the quarter. So all-in-all, and so you can kind of -- that change is fine. But now we had the kind of more normal sales commissions, and that may vary during the quarters, which is kind of impacting the fee profit there.

All right. But the fee result from investment and asset management services also decreased compared to Q4, which to me, at least, was a bit surprising given that your average AUM was higher. So could you describe the relevant drivers behind this a bit more? For example, how significant was the cost effects related to international expansion?

Well, I think in international expansion, less so. But in general, the expansion did have an obviously impact, as Petri very well described, both in terms of IT and FTEs. Remember, however, that Q4 or Q1 is a short-term month in terms of day count that has an impact quite significant actually, if you then do the math that there's 2 days less. So that had an impact as well and other items. So those are probably the kind of items I would single out on that line.

Okay. So in the income side, no, meaningful onetime items other than the day count, which, of course, is recurring year-on-year?

Correct.

The next question comes from Jaakko Tyrvainen from SEB.

It's Jaakko from SEB. Still a couple of questions left. First one on the international business. Petri, you mentioned that the money there is much more rapid in its moves. Does this imply that you probably see a bit abnormal outflows during the quarter, i.e., how strong was the kind of gross inflows overall during the quarter? And should we expect based on what you said, that the money could be returning during the second quarter already?

Yes, that's something, of course, we have noticed already during the previous quarter. Once you're -- part of the money we are getting outside of -- internationally outside of Finland is based on platforms and that kind of distribution channels, we don't have the, let's say, deep connections or any connections to end clients. So once there's a turbulence in the market, the money is not that sticky like it is like if some like pension fund has invested EUR 10 million, EUR 20 million after long decision-making process and meeting our portfolio managers and so on. So that kind of money, it's more in and out in crisis situations, and that's what we are referring to. So -- but like you mentioned, it's also when the market normalizes, it comes back quite soon as well.

Then on the strong risk result during the quarter, that you already touched on the factors behind. But could you wrap up the kind of the key drivers for this strong Q1 level? And should we continue to assume kind of a so-called normalized level a bit below what we saw now in Q1?

Yes, absolutely. If you look at it last year, and we discussed this a year ago and also in Q2 that we believe that the risk result was lower than what you should expect for a couple of reasons. And -- now I think the CSM release is kind of on a normal level. The claims development, however, was a bit more favorable. So from the EUR 6 million, you probably like EUR 1 million, EUR 1.5 million was kind of potentially recurring. We obviously don't know, it depends on the development.

I think we've kind of outlined on a run rate somewhere between EUR 15 million, EUR 17 million, could, of course, hopefully be better. But I think that's the best guess we still have at the moment. So kind of EUR 4 million, EUR 4.5 million, EUR 5 million per quarter is probably a good estimate here. But I think it's important to note that now it's -- there's no funnies here. So it's -- this is a much more stable development. And we've been still able to grow the CSM. So it's not that we are releasing much more. I think, now it's kind of more normal development than what you should expect going forward.

Excellent. And then final one, a bit technical. On the net proceeds from the Saxo exit, where is this capital sitting? Should we assume that it's in the -- I assume that it's in the parent company and invested in short papers and where should small interest on that short papers be visible in your P&L? Is it on the -- on the other row?

Yes. Well, a very technical question indeed, Jaakko. It's other, it's where it stands. And you are correct that we got the EUR 300 million, a bit more, and then we repaid the EUR 200 million loans. So that money is invested in fixed income short-term instruments.

The next question comes from Emil Immonen from DNB Carnegie.

Just one more maybe on the net flows. If we look at your net flows during the last 12 months, would you say that you're happy with the current level as it has been decelerating a little bit over the last few quarters?

Yes. I would say, of course, as a CEO, I always want to have more. But it's having in mind the circumstances, especially now in Q1 and especially in March, I'm happy with our net flow also during the last 12 months. But of course, once we have already discussed today, we have invested to our distribution in order to get more. So of course, that's our target and that we will like to see bigger net flows in coming months and coming years. Of course, it's also true that we have a bigger assets under management portfolio now, and there is a natural outflow also from your portfolio. So we have to run faster and we have to sell more in order to create the same amount of net flow. And then of course, we are targeting to -- our targets are higher than what we have seen in the past.

So if I understand correctly, you're increasing investments and recruiting more people to, in the long term, accelerate further net flow -- net flow driven growth?

Yes, exactly.

The next question comes from Michele Ballatore from KBW.

I have two questions. The first, sorry if I missed it, but can you maybe give a little bit more color on the dynamic of the capital generation, the organic capital generation in the quarter. And if you can maybe -- is there a normal run rate, quarterly run rate of capital generation maybe that you can talk about? This is the first question.

The second question is about capital management. You mentioned considering the level of solvency now, you may do more in terms of distribution. Does it mean like a higher dividend or you're also contemplating share buybacks or special dividends? How should we look at that?

Yes. Michele, regarding capital generation, of course, there's 2 parts to it. One, of course, is the capital-light profitability. So that -- and that was maybe a bit higher than what you should expect going forward. The capital-light profits were EUR 27 million, and it was EUR 50 million positive altogether. And if you look at our kind of investor presentation, there was a EUR 2 million negative impact from the with-profit portfolio. So obviously, we didn't -- the kind of capital release from the portfolio derisking was 0 to negative. And of course, the IFRS results were negative as well.

Important to note, however, that the discount rate change had -- has no impact on the OCG. So -- so that also is important to kind of, I think, single out there. But overall, the OCG is driven by 2 factors: own funds generation and SCR. And now the SCR, especially in the Retail segment went down because of the -- first of all, the symmetrical adjustment, but also the lower -- slightly lower AUM. So that helped the situation altogether. But the building blocks are capital-light profits or -- and then with-profit profits and then the own fund generation and the SCR, which typically would not be positive, but it was positive now in Q1. So a bit more positive altogether than one should expect. At the same time, as you can see, the with-profit contribution was negative, so that should be actually positive there as well.

So higher than the IFRS result typically, and then there's other moving factors altogether. But I think the EUR 50 million is probably as a run rate slightly higher than maybe one should expect. But as I mentioned also, the with-profit contribution was negative, and that's lower than what you should expect.

Yes. And then you were asking about the about the capital distributions, I think our Board has been quite explicit that the current structure of dividends is the preferred way forward. And at least I haven't heard of any changes on that point. We don't look at the dividends as extra or recurring. It's more on the fact that -- and what is driving it is the liquidity in the holding company.

Solvency is more than enough. And now, of course, as I mentioned in the previous question, we do have a lot of cash in the holding company as well. And then the rest of the dividend capacity is coming from upstream dividends from the life company and the asset management company, and those are the building blocks here altogether.

So I think the dividends, the Board will decide then for '26 sometime in the beginning of '27. And remember, our AGM is next week. So we haven't even paid the dividend for '25 out yet. And that's going to happen next week.

There are no more questions at this time. So I hand the conference back to the speakers for any closing comments.

So that concludes today's audiocast. If you have any further questions, please feel free to reach out to us at Investor Relations. Thank you for joining us today, and goodbye.

Good morning, and welcome to Mandatum's Q4 2025 Results Audiocast. My name is Lotta Borgström from Investor Relations, and I am pleased to open today's call. I am joined today by our CEO, Petri Niemisvirta; and our CFO, Matti Ahokas, who will take you through the highlights and key developments of the quarter.

We will 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 questions once the dial-in Q&A has concluded. Before we get started, a brief reminder that the materials for today's call 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-light model, our operational discipline and the trust our clients place in us.

For the October-December period, profit before taxes decreased by 14% to EUR 13.3 million due to the lower net finance result and other results. However, our capital-light profit before taxes increased by 28% to EUR 27 million, and its most significant income item, the fee result rose by 18% year-on-year.

This shows that our strategic 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 reached a new EUR 1 billion milestone at year-end, increasing 10% from the previous year to EUR 15.3 billion.

Quarterly net flows was lower than the strong comparison period as a few larger client distribution in alternative investment weighed on the total despite strong underlying sales. The net finance result decreased from the last year to EUR 19 million, but it is important to keep in mind that the comparison period included a EUR 16 million 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 EUR 182 million, while capital-light profit before taxes for the year increased by 5% to EUR 92 million. It is good to note that the result for the comparison period included more than EUR 10 million related 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.

Mandatum's Board of Directors proposed to the Annual General Meeting a dividend of EUR 0.85 per share, reflecting our strong capital position. At our Capital Markets Day in June, we introduced our long-term financial targets, including a cumulative shareholder payout exceeding EUR 1 billion over the 2025 to 2028 strategy period. We are well on our way towards this goal, and we place strong emphasis on having the capacity to pay out attractive dividends both now and the years ahead.

The solvency ratio 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 Saxo. Client activity remained solid throughout the year. Assets under management reached a new EUR 1 billion milestone and increased to EUR 15.3 billion, supported by both positive net flow and a favorable market environment.

Net flow for the quarter was EUR 141 million and for the full year of EUR 723 million, which is more than 5% of the clients' assets under management. The Institutional Wealth Management flow decreased from last year. The main reason was a few large client distribution 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 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 short 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 Pohjantähti 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 assets under management in private wealth management grew by 19% from the previous year. The 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 have -- we made strong process 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 gained 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 percentage points to 49% over the trailing 12 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. Fee margin stood at 1.13%, slightly lower year-on-year due to mix effects as institutional wealth management volumes increased, while standalone product margin remained 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 work environment built on trust and well-being. In November, Mandatum was ranked Finland's Best Private Banking Provider in Kantar'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 look at our financial targets, which were presented at last summer's Capital Markets Day. Although we are only 8 months into the new strategy period, we are already well on track towards all of our targets. As we look ahead, our strategic 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 financials in more detail.

Thank you, Petri. Let's now take a closer look at the fourth quarter result component. 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 EUR 410 million to EUR 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-to-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 EUR 19 million. 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 components 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 EUR 4 million 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 EUR 5 million due to updated actuarial assumptions, mainly in the 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 EUR 60 million in Q4 or EUR 0.12 per share. And the main positive driver here again was the increase in own 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-light profit before taxes by more than 10% annually by 2028 compared to 2024. And if we look at 2025, the reported profit before taxes was EUR 92 million, up 5% compared to '24.

I think it's important to note that in the first 6 months of '25, the result was impacted by the turbulent financial markets, the U.S. 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 EUR 27 million is up by 28% compared to a year ago and suggests the overall run rate in line with our long-term growth target.

Also worth noting again is that the '24 comparison figure included the EUR 11 million one-off 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 EUR 19 million 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 up 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 part of the net finance result, our discounting and the cost of liabilities. As you all who follow the market saw that swap rates increased significantly in Q4.

However, the IFRS rates that we use for discounting increased clearly less in the quarter, and this was the result of a 15 basis points to 25 basis points lower illiquidity premium in the long IFRS rates that we use. The lower illiquidity premium had a EUR 15 million 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-market 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 EUR 60 million, as I mentioned, and again, significantly higher than the reported IFRS net result.

In 2025, we generated capital organically by EUR 301 million net of taxes or EUR 0.60 per share. This figure was EUR 0.44 in '24 and also supports the higher dividend proposal from the Board. Our own funds generation increased the solvency margin by 5 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 capital-light 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 ratio 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 derisking 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 EUR 40 million annual unwinding costs compared to over EUR 50 million in 2025. All for me. Back to you, Lotta.

Thank you, Matti. And now let's move on to the Q&A.

The next question comes from Vash Gosalia from Goldman Sachs.

I have 2 questions, please. So one is on the net finance result. And here, I appreciate in 2025, we've had a lot of moving pieces because obviously, you no longer have Saxo, you have sold some of the real estate portfolio. And then again, you have some changes in your unwinding.

So just trying to sort of get a sense of when we look forward, what should be a normalized run rate for the net finance results that we should be basing our sort of estimates of? Any color on that would be quite helpful. And then the second question is actually on your cost/income ratio.

So I fully appreciate it has been improving. But as I believe Matti pointed out, it was related a little bit to the IT costs. But I would assume those cost benefits no longer come through in '26. So as a result, should we expect the cost/income ratio to remain thereabouts or is there further improvement that we can see over there?

Thanks. Regarding your first question on the run rate for the net finance result, it's a task impossible. But if we kind of break down the different components, obviously, we've given you very clear indication of what the structure of our investment portfolio is plus also the ambition, how it would look towards 2028.

So I think that is something that you can measure the mark-to-market yield of the credit portfolio, the fixed income portfolio is now 4.5%. And then, of course, you should assume something on the alternative part, the private equity, the private credit and the small real estate and equity portfolios.

So with that, I think you can get to a kind of reasonable expectation on how the investment return develops. Then on the other part, the discounting, we've given you the unwinding rate. And if rates don't change, that is basically the cost of the liabilities. But as we all know, the rates are very likely to change going forward.

And this, of course, means that there will be some quarterly volatility over time. But regardless of this, if we look at the overall development in the net finance result on a yearly basis and year-to-date basis, I think the moves kind of tend to smoothen out. And as I said, if rates go up, it's usually bad for the investment return, but good for the discounting. So -- but then you do have these kind of special items like the illiquidity premium.

And we fully understand that it's creating a bit of confusion, and it's not what we like either. As we've said, it comes from Moody's and -- but we're looking into it if we can kind of potentially do something about it in the future. But I think that's all I can kind of point out to. And if rates stay at constant level, it should be pretty constant. But unfortunately, they never do, but they tend to even out over time.

It's Petri here. Thank you for your question. About the cost/income ratio and IT costs related to that and overall. Yes, it's true that we have gained a lot of cost savings from IT side, but it's still room to go lower. For example, we are one of the first players who will get rid of the mainframe in May. And that's a really big thing for us.

And after that, there's no mainframe cost anymore to us. And -- but of course, we still also the license costs going up every year and so on. But we still see that there is room to be more effective in our processes, streamline our operations. And what we -- how we have forecasted is if we can keep and we are forecasting to keep our cost base in this -- during this trial period more or less the same than they were in 2025, which is really a big thing to do.

So in order to improve our cost/income ratio, I think the biggest thing will be going forward will be growing the earnings and that will improve the rate. Having said that, 49% is already quite good having in mind that we are also investing to growth, especially outside of Finland. So there might be some room to improve, but it's -- we are quite a low level, sorry now, having in mind that we are growing quite fast outside of our normal territories as well.

The next question comes from Hans Rettedal Christiansen from Danske Bank Markets.

Just quickly, first, I had a follow-up question that came up on your answer there, Petri, on the mainframe that you're getting rid of in May. Can you just quantify what sort of cost savings that will give you in 2026? That's the first one. And then I have 2 other questions. One is on the net flow development this quarter.

Could you just explain a little bit sort of financial effect or the nominal effect of the few larger client distributions, what exactly that is? And maybe a little bit also how we should think about the underlying development then in Q4? And then my second question is on the dividend proposal this -- today. Previously, you've sort of split it out into an ordinary and an extraordinary part, whereas this year, it's sort of all coupled into one.

So is there kind of an ordinary or an extraordinary portion to this one? And also relating to that, maybe, Matti, if you could just explain a little bit around sort of liquidity versus capital and how we should think about that in terms of funding the dividend into 2026? That's my three questions.

Hi Hans. If I start with the dividend and Petri will continue with the first 2 ones. Well, first of all, the extra and ordinary discussion was basically kind of concluded at the Capital Market Day where we said that we have the over EUR 1 billion target, and that is kind of including everything. So we don't look at it from an ordinary -- extraordinary perspective anymore.

The over EUR 1 billion is the number you should be kind of focusing on. And what we also said is that it's most likely going to be a bit front-loaded and now EUR 427 million is the proposal. If we look at the liquidity, it's a very relevant question and something that is definitely having an impact. Around EUR 300 million was the dividend from Mandatum Life and around EUR 35 million from the asset management company.

And then we had some gains also from the Enento sale. So this basically the proposal is almost -- or actually more than the internal dividends and pretty much the liquidity that we have available, also leaving something for working capital. And of course, since the Saxo deal hasn't closed, this represents pretty much the liquidity we have at the moment to pay out.

Okay. Thank you for your questions. About the IT cost, we don't have exact number to give you what is the benefit of that, but it's part of our budgeting and it's substantial. Of course, at the same time, we have other license costs and so on. But all-in-all, our IT costs are decreasing as we have already seen in the past 2 years.

And this getting rid of the mainframe will help us. So we will get the full benefit of getting rid of the mainframe. And when it comes to net flow, so yes, it's net flow in Q4. First, the sales was really good. It was a strong sales quarter, especially the December. But at the same time, I guess I would not say, unfortunately, there are certain -- in this business, it's good is that our customers get distribution from the private equity and private debt investments and big ones.

So they are happy customers because of that. And that happened in quarter 4. And the profit, I would say that there's no big changes. The sales at the same time, we got maybe even a little bit more higher margin products that we distributed out. So let's say so that it wasn't a big thing really for us.

Got it. And just on the new fund that you announced in January of around EUR 200 million, I guess you said it was. Is that included in sort of December figures or is that that -- would that be included in Q1 figures?

Yes. I think you are referring to Mandatum opportunistic Credit Fund II. That's not in the Q4 numbers, and it's not even -- you can't calculate as a whole to quarter 1 numbers because it's called based. So the customers pay fees once we call it, and it will come month-by-month once we call the customers' money in.

The next question comes from Antti Saari from OP Markets.

It's Antti here. Part of my question has already been answered, but I would like to ask you that do you believe that you're able to achieve your net inflow target of 5% of assets under management in 2026?

Thank you, Antti, for your question. We don't -- as in our financial targets, we don't have net flow target anymore, neither is 5% or something else. But of course, we are doing our best. And of course, as you know, the bigger you get, of course, your assets under management are growing as well. And natural outflow in every player in the market is certain percent of your assets under management.

So you have to run faster. And that's why we are hiring more salespeople. And of course, we are increasing the existing salespeople's targets for this year in order to keep the momentum what we have seen in the past 2 years. So I'm confident that we -- our sales is really going well in both in Finland and outside of Finland, especially in Sweden. And let's see.

But regarding Q4 sales, you said that it was strong, excluding these few large outflows. Was the sales -- if we talk about new sales, not net sales, was the new sales in line with the strong level of Q3?

Yes, yes.

Okay. And then one more technical question. Your tax expense was pretty close to 0 on Q4. I wonder what's behind that?

Yes, you're absolutely correct. And for the full year, the tax rate was kind of unusually low. We got some tax benefits, and we were able to utilize some previous year cash -- tax loss carryforwards. You shouldn't read too much into this item altogether.

So we're still kind of, over time, it should be around 20% or the corporate tax rate in Finland. As you all know, there's a proposal that it would be lowered in '27. But let's see. So -- but of course, we try to kind of use all ways to kind of make sure that we pay the right taxes, but this was unusually low in the fourth quarter.

The next question comes from Ulrik Zürcher from Nordea.

Just start with a clarification on the remittance or upstreaming. You said EUR 300 million from Mandatum Life. Has that been remitted already or will it be?

I'm not actually sure. Hi Ulrik, I don't know what you mean by remitted, but that money has been paid to the -- from the subsidiary to the holding company. So it's on the bank account as cash. So if that answers your question.

Yes, it does because I'm just wondering about the you reported assets in the With-profit segment. So I was just wondering if there will be a drop once you paid it or if it's already paid?

It's already taken, and we usually do it towards the end of the year.

Yes. And I also think you said that the dividend was funded that you haven't -- you don't need to use the Saxo proceeds for this. Was that correct?

That is correct. We have not got the money. And of course, it was also -- I'm pretty sure, impacted the Board's decision. This is what we have and the proposal for '25.

But could it go higher then once you get the proceeds because that will likely be before the annual meeting or?

Well, I think since we haven't -- the deal hasn't closed, I think it's -- the Board has been quite clear that this is the proposal for '25. And it's not a huge issue altogether. We still believe the deal will close during the first half, but the proposal is based on the current situation.

That's clear. And then just thinking on the general dividend level here because you have an ROE target for '28 and you measure ROE on average equity. So just like a simple calculation like roughly flattish earnings. It seems like this is actually a level you should maintain the 2 next years to reach the ROE target or is something I'm forgetting?

Well, I think you just should keep in mind that we have the over EUR 1 billion target and the 20% ROE target, and there's multiple ways to kind of achieve the 20% target, but it's -- over EUR 1 billion is the number you should be looking at. We don't -- and we cannot guide for anything more specific, but those 2 targets will be met by '28.

And just since you have ROE target, it just seems like you can also go the way to just look at what your equity base would need to be, but I get where you're.

Yes. That's one component there, definitely.

And then also -- sorry, again, just a small -- because you had actually a very, very strong development in fee versus capital-light AUM, not only this year, but last year as well. It was like the growth rate to fee to AUM was -- the ratio was quite stable, but should we expect a somewhat of a downtick the next year or can you sort of maintain this at, let's say, normal returns in the market?

Well, our target is the capital-light profit growth, and that should be over 10% and we had 5% in last year, of course, accelerating clearly above that on the second half of the year. So I think that's what we're aiming at and what we're targeting. And there's, of course, the income and the cost and fee and AUM play a role in both of those items.

And last one, just a technical one. Just on the other results. I was just wondering what the run rate would be roughly on the other results once you do the Saxo Bank deleveraging or pay back that loan.

Yes, that cost is just below EUR 10 million per annum. And then, of course, as mentioned, we had the change in actuarial assumptions, mainly due to kind of higher cost assumptions and for the next 50 years. So for a EUR 2 billion portfolio, that EUR 5 million is not a lot.

But of course, over time, that should be kind of closer to 0 if we're adequate in reserving, which we believe we are. So I think those are the items there. And then you have some of the LTI costs there as well, difficult to say how those will develop depending on our share price development, plus then the general Group overhead. So I think those are the items you should be looking, but clearly, obviously lower than what was in '25.

Maybe EUR 20 million to EUR 25 million or?

Probably closer to EUR 25 million, I think, is a good estimate.

The next question comes from Jaakko Tyrvainen from SEB.

Jaakko here from SEB. Most of my questions have already been asked. But if I may, I would like to continue on the cost-to-income topic and the scale of the capital-light business. And is it fair to assume fairly stable cost base, underlying cost base from the levels we saw in the second half of '25 going forward? Just trying to understand the upcoming leverage.

Yes. Thanks, Jaakko, it's Petri here. So yes, that's something you can assume. So our budgeting and forecast is based on that, that our cost base will increase just a little bit going forward. And why -- how we can do that is that we are streamlining our operations and processes. And at the same time, we get some room for and quite a lot of room also growth in sales side and product side. And overall, we will keep our cost base quite much the same.

Good. And then more detailed question on the AUM development during the quarter. The international AUM was rather muted during the quarter. Was the slowness there because of the outflows or was there particularly lower inflows during the quarter? And any further commentary on the current activity level in the international business would be nice.

Yes. Thank you. So the first one, it was the distribution of our profits in -- it was especially in our international side. So -- and things we have sold in the past, and they are distributing the profits now. And -- but at the same time, the sales was really strong. So that explains that assets under management remains stable, so at the same level.

And other things, I would say that Sweden is growing really strong as it has already done 2 years and still improving. And all other places like Central Europe, we are a little bit like just investing to -- in order to grow the business. We have seen the same inflows what we have seen in the past, doing that from the, let's say, from Helsinki only.

Now we have put a lot of activity to our Luxembourg sales office and my weightings are that we will -- we should see some new tickets and new, let's say, new -- some kind of jump in our business in Central Europe during this year because we have a lot of activity now. But also, we have to remember that we really started in September last year.

Maybe also worth commenting, Jaakko, is the fact that, as you know, that our international AUM is largely tilted towards the credit market and the increase in rates during the quarter, obviously meant that the market growth was lower than what could normally be assumed. So that also had an impact on the AUM.

[Operator Instructions] The next question comes from Emil Immonen from DNB Carnegie.

I just have 2 more. Maybe starting with the net flows still. How do you think about the kind of money you're paying out? Would you normally consider that, that returns to Mandatum as well or how should we think about these flows in general?

Okay. Yes. Thank you for your question, Petri here. So yes, with the large institutions, what we are here talking about is it's -- once you distribute some profits back from like PE or PD investments, they don't immediately give it back to you. But of course, the relationship is strong, and we have worked with those customers a long period of time.

So of course, we are having negotiation that at least some part of that money will come back. But that's very normal with institutions that it's not like, okay, money is coming to your account, let's put it somewhere. So it's a little bit different type of investment process in those large institutions.

Okay. That's good to hear. And then on the maybe corporate side, you mentioned that personal funds was liquidated. How is that market in general developing in your view?

It's a really strong market. There's a lot of customers demand and it's growing, and we are establishing a lot of new personal funds in the last year as well, a little bit less than 2024, but they were bigger ones last year than the year before. And there's, let's say, really, really big customer demand on that side. So I'm very confident that, that market will continue to grow.

Sounds good. And then a final question on the mainframe discussion. Maybe following up on that, is that purely an exercise in cutting IT costs or does it allow you to do something else to improve the efficiency of operations in general or do new products or is this visible outside the company somehow?

Yes, you're right. That's really [indiscernible] question. But yes, it's -- once you get rid of, let's say, more legacy type of things and you don't consume so much spending to those, it gives you room for developing new things and new software and new products and streamline your processes. So you can increase your -- in your IT budget, you can increase your development side, and that's basically what is happening with us.

There are no more questions at this time. So I hand the conference back to the speakers.

So there seems to be one question about the mainframe in the chat, but I think we have covered the topic already. And this concludes today's audiocast. Thank you for your good questions and for taking the time to join us today.

If you have any additional questions after the call, please feel free to reach out to Investor Relations at any time. We appreciate your continued interest in Mandatum. Have a great day, and goodbye.

Good morning, and welcome to Mandatum's Q3 audiocast. I am Lotta Borgström from Investor Relations. And it is my pleasure to introduce you our CEO, Petri Niemisvirta, and our CFO, Matti Ahokas, who will guide you through today's presentation.

During this audiocast, we will begin by presenting the highlights and key developments of Mandatum'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 EUR 3.3 million related to portfolio transferred 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 puts 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 EUR 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 capability to pay dividends than just looking at earnings per share.

Looking at the client activity. We achieved a net flow of EUR 163 million, which is especially good given the usual slowdown during the summer holidays. Client assets under management reached a new record of EUR 14.9 billion. This was driven by both strong net inflows and a favorable investment market where the overall market development was much steadier than early in the year. Optimism about earnings growth helps 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 Pohjantähti insurance company, selling our personal risk insurances. Loan insurance sales to the Danske Bank channel were active and average coverage amount of granted loan insurances continue to increase.

Turning to our corporate client business. Sales of pension insurance and personal funds remain 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 in 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 assets under 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 retail fund which focus on Europe and high-yield bonds and has been well received. It has been now already attracted over EUR 100 million in investments. Our mandate to Managed Futures Fund, which uses systematic investment strategies, also attracted significant new investments this quarter.

Operational efficiency continued to improve significantly with the cost-to-income ratio dropping by 13 percentage points 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 institution 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, stand-alone product margins remain 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 EUR 500 million to EUR 14.9 billion, just shy of the EUR 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 mix 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 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 EUR 39 million. 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.

Our results related risk policies in Q3 was down compared to 2024, and you all know that the comparison figure included around EUR 3 million of one-off income from the portfolio transferred 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 EUR 70 million in the third quarter. This translates to EUR 0.14 per share. The main positive driver here was the increase in own funds. And one of our financial targets, return on equity 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 9 months of 2025, the reported profit before taxes was EUR 65 million or 3% below the level of 2024. And as you remember, in the first 6 months of the year, the result was impacted by the turbulent financial markets, FX headwinds from the weaker U.S. dollar and lower sales altogether.

But it's encouraging to see that Q3 saw a step change in quarterly profitability. All segments increased their profit sequentially. The quarterly level of EUR 25 million suggests a run rate in line with our financial targets.

Also worth noting here again is that the comparison figure in '24 included a EUR 11 one-off gain from the portfolio transferred 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 EUR 39 million in Q3. 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 contributed 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 quarter 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 we 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 EUR 12 million. The illiquidity premium contributed positively to the IFRS discount rates by around 8 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 and 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-market 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 EUR 70 million in Q3 and again significantly higher than the reported IFRS result. In the first 9 months of '25, we generated capital organically by EUR 242 million net of taxes or EUR 0.48 per share. And looking at 2024, for the first 9 months, the figure was EUR 0.34.

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 9 percentage points in the quarter. Group solvency margin increased by 4 percentage points in the quarter compared to the -- 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.

Thank you, Matti. And now let's move on to the Q&A. Please dial in or submit your questions through the chat.

[Operator Instructions] The next question comes from (35)8415-289122.

It's Antti from OP. Two questions from my side. Firstly, regarding risk policies. You have guided us that 10% of CSM is a pretty good estimate for results from risk policies. But now it has been 4 quarters in a row quite significantly below that level. So should we do any conclusion about this? And do you still believe that you're going to reach the 10% level this year, meaning about EUR 13.5 million?

Yes. Antti, it's Matti here. A valid question, and your observation is exactly correct. The CSM release has been lower than one should expect. However, I think it's very important to note here that we've actually been generating the CSM. So it's not a question that we won't be kind of -- having the kind of potential release, it just has been slower due to the modeling we use.

We are looking into this so that it would not kind of be pushing the CSM too much forward, and it would be a more stable release, and you should still expect the EUR 13 million to EUR 14 million as the annual run rate, of course, in '25, it's lower.

But from the following quarters, I think it should be roughly the same. But a valid point, and we're definitely looking into that. But of course, the main thing is that the CSM is still there. The release has just been slower.

Okay. And then other question regarding your very strong fee result. It stated in the report that, yes, costs are seasonally lower in Q3, but were there anything exceptional? Or do you think that the cost base was normal for Q3, so to say?

Yes. I think the cost base was pretty normal for Q3. So -- but the main reason for the improvement in the cost-to-income ratio now in the third quarter was actually the fact that we've been able to grow our AUM. And by AUM, we've talked about the average AUM because in the beginning of the year, there was a lot of volatility in the market. So even though the end of period AUM grew, the average AUM growth was significantly lower.

So I would actually say that the bigger impact in Q3 was both in the income side. Costs were maybe EUR 1 million lower than normal. So that was probably the impact in the quarter. So a combination of both, but definitely more impact from the income side because of higher average AUM.

The next question comes from Emil Immonen from DNB Carnegie.

Maybe to continue on the cost/income ratio. So if I understood correctly, it's a lot now scale benefits that you're seeing. But has there been any cost cutting that you're doing that also is showing an effect because I think the jump Q-on-Q in the cost/income ratio was quite big.

Yes. Emil, as I mentioned previously, in this quarter, the impact from higher income was more significant. But as we pointed out several times that operational efficiency is one of our key strategic priorities. And this means then obviously, that it has had an impact. But now in the third quarter, isolated, it was more driven by income, which we are very happy about altogether.

That is good to hear. Maybe then touching on the net flow. So it was negative in both corporate and retail. Could you maybe elaborate on how that should be analyzed?

Yes. Thank you, Emil, Petri here. So yes, it's -- let's say, if I first answer to retail segment. Retail segment has been quite much flat or a little bit negative over the years or quite a long period of time. So we have very old cooperation with Danske Bank and a large portfolio, which was mainly sold in before 2010 when the Sampo Bank was still part of the Sampo Group.

And since then, the sale has been let's say, more modest than especially the savings side, not especially in loan, loan insurance side. So there's nothing special on that compared to other years before and other quarters. So of course, we try to enhance and put some speed to Danske Bank sales, but it's quite difficult to really increase a lot that sales on that side. So nothing special on that.

About the corporate side, there was some seasonal withdraws from personal funds. So it varies a little bit from quarter-to-quarter. So when the companies are paying the variable compensation payments in spring, so then we will see a lot of inflow in personal funds, which is the largest part of the inflow nowadays.

And during the summertime, that's the time when the personal fund numbers are ready, and that's the time when the people has a chance to withdraw their money, so some employees wanted to have their money and use those. So that's a little bit seasonal issues and nothing special in our business wise -- in business and business-wise.

The next question comes from Jaakko Tyrvainen from SEB.

I mean my questions regarding the profit asset allocation and continuing derisking products there. Could you remind us how far you are -- you should be able to rotate the capital from the illiquid asset classes to credit and perhaps liquid equities?

Yes, it's a good question. And unfortunately, we don't really have a good answer to that. What we've seen, obviously, in the market, as you know, private credit has been returning capital quite nicely. So that is functioning normally. The private equity side has been clearly slower, some signs of positive developments there and also some capital payouts already. But of course, the big -- it's the most important factor is how that side will develop altogether, and we still feel comfortable about the guidance that during the strategy period, we will be able to release the capital from those investments and take the derisking, as we pointed out.

Important to note out that during Q3, we didn't really have a lot of derisking going on altogether. So this was more of a kind of pause in that direction. But the trajectory is quite clear. We aim to continue there and we see no real changes to that side. And hopefully, the private equity market recovers faster than expected.

Then on the solvency and without transition rules, it was 191%. When thinking your capital guidance and planning and the capital payouts throughout the strategy period. Could you remind us which solvency we should be looking at with or without the transition rules?

It's the one without transition rules. So the 191% and there with the target is 160% to 180%. There is a bit of confusion obviously there because we report several solvency margin figures altogether. And remember that the transition rules, they expire in 2031. So that's still quite a long time ago until then. But our strategy, that is the figure you should be looking at.

Excellent. Then on the net flows, did you see -- during the strong Q3, did you see some pent-up demand coming from the perhaps moderate Q2? And looking a bit towards the ongoing quarter, last year, you had exceptionally very strong quarter in Q4. Was it very exceptional last year? And then how should we think about the net flows towards the year-end?

Thank you, Jaakko. It's Petri here. So I wouldn't say that there was some -- any pending cases from Q2. It was like Q2 was really difficult because of the -- especially April. And we all know that it is a very volatile market, especially in April and beginning of the Q2. But no pending cases. Let's say it was like -- there's a few things why the Q3, we managed to increase our net flow compared to other Q3s in previous years.

I think the one is in wealth management here in Finland, we were more active. We had a full calendars when we came back from the holidays in the beginning of August. So really, really high activity towards customers and a lot of meetings that -- that's something we can now see in the figures.

And I guess when we are growing our business outside of Finland, it's -- you have to remember that July is not a holiday season yet in Central Europe, and it looks like it's not that much in Scandinavia than it's in Finland. So it also helped us. July was really strong because normally, it has been quite weak on those time, we had only business in Finland. So international business growth is helping us in Q3, especially.

And another question, the Q4 last year, yes, you are right, it was especially really, really high level. I can't comment on Q4, which is already going on, but it's -- last Q4, we were very, very successful in getting some very large tickets and institutional tickets from Sweden and international side. So let's see.

Okay. It's helpful. And finally, perhaps few words, if you may, an update on the international expansion. You just launched the new sales office, what are your own expectations when that effort should start to bear some kind of materiality?

Yes. Yes. Of course, we are -- we are not very patient people here. So of course, we are waiting every day and week, things happen and realistic is many times once you have tenders with the large institutions, it takes some time. But of course, we have a very good pipeline already in Central Europe, where we have been before establishing the sales office there. So this is just like a boosting, boosting the business what we have already done there before like 2024 and 2023.

So I would say, to be realistic and a little bit optimistic. I guess we will start to see some improvement and a clear change in coming years. So we just established that in September. So I guess it's a little bit too early to wait, big change in our business during this year, but next year is something we hopefully see growth -- faster growth in that area.

[Operator Instructions] The next question comes from Kasper Mellas from Inderes.

My first question is about your profit distribution outlook. So if the sale of Saxo shares would happen in 2026 instead of Q4, would this have any effect on your profit and distribution potential for -- or plans for 2025?

Kasper, as we write in the report that there is a slight chance that the transaction will not be finalized by the end of the year. We still think it's possible, but it's also possible that it might be delayed slightly. There is one regulator still investigating the thing. I think there's a total of 40 different regulatory approvals already achieved. So we don't believe this is a big thing altogether. And of course, for us, the main thing is that in May '26, when we have our AGM, then we have to have the money on our bank account. So we don't expect that this would have any impact on a potential distribution.

That said, obviously, it's all up to the Board and then ultimately, to the AGM to decide what to do with the money. But we don't believe that this delay will be significant. We just wanted to flag a bit that there is a possibility since we said originally that should happen by the end of the year. It's still can happen, but it might be delayed but not materially.

Okay. That's just a matter of liquidity?

Yes.

Okay. Then my last question is more technical related to group costs. Group costs, I calculated this as the difference between other results from items not allocated to the segments and your finance expenses. And this, according to my calculations were higher in Q3 than in Q2. So have you done some cost allocations from unit-linked to other results? Or were there some onetime expenses or what was behind this development since I assume that your finance expenses were quite stable quarter-on-quarter?

Yes. The finance expenses are pretty stable quarter-on-quarter, but there is, of course, some variation from side to side. And so we haven't done any major factors. I don't think you can draw that kind of straight conclusion from our cost base by just allocating the finance costs. There was nothing clearly different or funny from that side altogether.

Remember that in the with-profit now, of course, we do include the with-profit, the Tier 2 loan interest expenses, we started that in Q2 now. So that, of course, has an impact on -- if we look at the previous quarters. But apart from that, there was nothing out of the ordinary in that item.

The next question comes from Michele Ballatore from KBW.

Yes. So my first question is about the capital generation, specifically the own fund generation. Can you help us understand to what extent, let's say, a friendly market environment help that metric in the third quarter?

Yes, it definitely did help. Of course, if you look at the generation overall, that's typically the biggest driver, apart from the -- obviously, the net profit and that generated in IFRS results. But it did have an impact in the own funds generation.

So do you have like kind of run rate for the own fund generation, like a quarterly run rate or there is a seasonality also there?

No, that, of course, depends on the market development as well. So I don't think you can put a kind of stable run rate for that. I think the one way of looking at it, what's the difference between the reported IFRS profit and then the -- then the own funds generation. So that would give you some kind of indication where it could be.

So -- but of course, if the market situation is favorable, then we continue to generate future profits or present value of future profits from higher fund growth than we have in our estimation, and that contributes positively to the own funds. But it's impossible to give a run rate. I think you should look at the difference in the previous quarter that gives you some kind of indication.

Yes, fantastic. And then the second question is about -- I mean, of course, the growth is driven by institutional and wealth management kind of segment. My question, I guess, is more related to what kind of retention. I mean based on the products that they are -- this segment, the products sold in this segment, what kind of retention you expect? I mean, are these money that can easily move to other funds? Or I mean can you help us understand what kind of behavior you expect for this kind of specific segments in terms of -- from the client?

Yes. Petri here. Thank you for your question. Let's say that if I start with our Corporate segment. In Corporate segment, we are currently have assets under management and the product we are selling are more sticky because the nature of the business like pension business, there is no transfer market in Finland. And of course, the taxation, everything is like that. So corporate segment money is really sticky money and stay longer by nature.

When it comes to Institutional Wealth Management segment, it's more or less like any other wealth management and asset management company. So customers can withdraw their money if they are not happy with us and we are not good in investments and so on.

Having said that, especially in our wealth management side, where we are selling mainly through capital redemption policies, our services and products, there's one thing which is clearly hindering that is taxation because once you have created, for example, taxable income, capital gain taxable income, inside your portfolio. If you withdraw your money, you have to pay taxes, you can't transfer to that somebody else without paying taxes. So in certain way, it's a little bit more sticky than just to sell let's say, like-for-like direct equities.

And with the funds, it is the same. And -- but -- and another thing, which I would say this is not very coming and going money is also that more or less everything we do in our sales and in our distribution is in our own hands. So we own the customer relation. So we have a very tight relations to our customers. No matter are they private individuals, high net worth, ultra high net worth or institutions, we always try to create deep connection to our customers.

So -- let's say, in times that it's -- the times are difficult, we do have still relation to our customers. It's not in someone else hands. So that helps us to keep the money, let's say better than otherwise. But of course, ultimately, it's a question of how much wealth you generate to your customers, how good your investments? And what is your NPS, which is very high with our customers currently.

And when you mentioned the tax, it's the taxes on capital gains, right?

Yes.

Okay. Because I was also thinking the -- correctly -- correct me if I'm wrong, but if the allocation is to, let's say, not plain vanilla products, normal equities and liquid bonds, but it's in like, let's say, private credit or -- I mean this kind of funds are probably stickier because there is a more longer-term view from the investor in terms of approach, right?

Yes. Yes, you are right. And we -- yes, we have a quite big part of our business is also alternative and commitment based. So -- so once you have committed to something to fund to invest to us, you have to stay with that. So no matter what you think afterwards, you have to stick with the commitment, and especially in private equity, private debt, it's a long-tail business. So it's more sticky as well.

The next question comes from Emil Immonen from DNB Carnegie.

One more question related to the Institutional and Wealth Management business. I was just wondering, seeing the net flow is pretty good. How is the fee margin developing? Is there any pressure on that? Or are you getting good net flow without having to touch fees at all?

Yes. Thank you for your question. It's -- yes, as we have stated, we haven't seen any softening and huge price pressure in stand-alone products. Why our average fee margin is going just a little bit down is because we are selling more institutional wealth management products and services. So -- and as we have said, and you all know there's a lower fee margin on that segment and has always been.

So more we grow in that segment, of course, it will come a little bit down, but it's slowly going down, but stand-alone divisions, customer segments, products, we haven't seen any big margin pressure. And we are not sacrificing our profitability and discipline in pricing in order to get growth. So this money and net flow and inflow we are getting in is right price.

Sorry, if I understand correctly, it's pretty much developing exactly as you said.

Yes, exactly. No changes in pricing and margins.

There are no more questions at this time. So I hand the conference back to the speakers.

And then I take 2 questions from the chat as well. Could you please elaborate on the lack of AUM growth for Finnish institutions in Institutional and Wealth Management business?

Yes. Thank you for the question. So I think the Finnish institution as a subsegment, which is moderate growth and our flat growth in assets under management, there are a few reasons for that. I guess one is the bigger thing, I guess, it's some kind of mirror of the Finnish economy.

So institutions underneath assets, they are not getting that much new money from -- and there are no new institutions established. And many of the Tier 2, Tier 3 institutions in Finland, they have committed a lot to illiquid assets like private equity and private debt also with us. And also the real estate market is quite a freeze in Finland. So that means that investable assets are not that high at the moment.

And at the same time, the picture is not that flat. It looks like for us -- we have also a lot of commitment based sales towards institutions in Finland, which is not shown immediately in assets under management and net flow. It will come once we call and once the funds call those commitments in. So the sale has been quite good on that segment, but it's not shown yet in those figures.

And then there was a question regarding the transfer for the internal profit transfer of EUR 1.2 million from institutional wealth management to corporate, and that was a more technical nature.

That concludes today's audiocast. Please do not hesitate to contact Investor Relations should you have any further questions. Thank you for joining us. Have a good day.

Good morning, and thank you for joining Mandatum's Q2 2025 audio cast. My name is Lotta Borgstrom, and I lead Investor Relations here at Mandatum. I am pleased to be joined by our CEO, Petri Niemisvirta; and CFO, Matti Ahokas, who will walk you through the highlights of our second quarter after which we'll take the Q&A where you have the possibility to dial in for any questions.

Without further ado, I would now like to hand over to our CEO, Petri Niemisvirta, who will take you through Mandatum's key achievements and developments for the second quarter. Petri, the floor is yours.

Thank you, Lotta. And now let's move on with the second quarter. The start for the second quarter was somewhat shaky due to planned tariffs and aggressive trade policy in the U.S. leading to a widespread market uncertainty. However, the sentiment rebounded swiftly after April and the markets stabilized. Fee result grew by 26% year-on-year, reaching EUR 18.5 million, reflecting mainly improved cost efficiency and an increase of 11% in client assets under management. Cost efficiency improved significantly with the cost-to-income ratio dropping by 11 percentage points to 53%. The result related to risk policies in the second quarter decreased to EUR 2 million. Main reason for this was the high comparison figure that included a profit of EUR 6 million related to the transferred to If during 2024.

Profit before taxes fell to EUR 34.2 million during the second quarter, impacted mostly by the decline in net finance result. The net finance results in the discounting of insurance contract liabilities. Also, the comparison figure was notably strong due to the sharp price in the long-term interest rates during the second quarter of last year. It is important to remember that fluctuations in the net financial results are part of the nature of life and pension is from recent years. Thanks to interest rate hedging measures taken. Capital-light profit before taxes was EUR 20.6 million in the quarter. The decrease from last year is primarily due to negative one-off factors and adjusting for the EUR 6 million one-off gain from the portfolio transfer to If. We have actually grown our underlying capital light profit before taxes by some 8% quarter-on-quarter and 25% year-to-date.

The Solvency II ratio adjusted for dividend accruals and without the transitional measures remained strong at 193%. Organic capital generation, one the key factors driving our ability to pay dividends was strong Capital was also released through the divestment of our Enento Holding and other big shares, which means that Mandatum continues to be a very well-capitalized company. The steady growth of client assets under management continued to a new record high level. Even though it was weighted down by a weaker U.S. dollar, especially in retail funds and lower investment product sales in April. The increase in assets under management was largest among Institutional & Wealth Management business, 16% year-over-year, followed by the Corporate business 12%.

The impact of weakened U.S. dollar was largest in retail assets under management that remained flat year-on-year. Net flow from the corporate clients increased significantly year-to-date, the growth coming mainly from personal funds. Sales to corporate clients remain strong. The unit-linked pension business continued to grow steadily, while sales of both risk life insurance and personal funds remain at good level. Eight new personal funds were established during the quarter. The strong corporate net flow shows also the diversification of our capital-light business, highlighting the import corporate business to our growth story.

Net flow from the Institutional Wealth Management business grew less than last year, mainly driven by the lower investment product sales in April. Sales of investment products declined in April due to an uncertain market environment, but picked up significantly during the May and June, increasing the net flow of the second quarter to EUR 164 million. Overall, we have managed to keep the net flow positive management increased by the positive net flow and a positive market movement of EUR 240 million. The steady growth in our Institutional Wealth Management business continued in the second quarter. In terms of assets under management, the largest growth came once again from international institutional clients 40% and amounted to EUR 1.7 billion. New client accounts were established in, among others, France and Norway.

To further accelerate growth, especially in Continental Europe, we are establishing a new sales unit in Luxembourg, bringing us closer to a potential European customer base. The largest increase in assets under management was once again in credit and allocation products followed closely by external products. Also, we launched a new European high-yield total return fund. Our award-winning credit products, such as the Nordic high-yield fund are good examples of leading industry expertise. Operational efficiency continued to improve significantly with the cost to income ratio by 11 percentage points to 53% over the trailing 12 months. To improve operational leverage demonstrates that a determined focus on cost efficiency is paying off, supporting sustainable profitability.

Filed fee margin decreased slightly to 1.14% to the growth in lower margin international institutional margin remained stable. Mandatum Capital Markets Day early in June, during which we announced our new financial targets. Setting new targets was essential to reflect our ambition to grow in capital-light business areas while also enhancing profitability. The updated financial targets for 2025 to 2028 are: Return on equity above 20%. Above 10% compound annual growth rate in capital-light profit before taxes and solvency margin of 160% to 180% with cumulative shareholder payout exceeding. We want to develop in an even more capital efficient and increasingly fee-based company, while committed to being a good dividend payer also in the future.

Our vision is to be fastest-growing Nordic asset and wealth manager with optimized growth in Finnish life and pension sectors, positioning us strongly for the future. Although our new targets are ambitious, we will achieve them by 2028 through determined actions and the dedication of all Mandatum employees. And now let's move over to Matti and the figures.

Thank you, Petri. Let's take a closer result components. As Petri mentioned, the fee result was up 26% year-on-year with assets under management up by 11%. And if we compare to Q1, our AUM was up by some 3%, but we still had quite a substantial negative of some EUR 300 million from the weaker U.S. dollar in the quarter. As we pointed out earlier, around 1/4 of our client AUM is denominated in U.S. dollars, and this is especially in emerging retail funds. Also, the weaker U.S. dollar had a negative P&L impact on the H1 fee result itself.

Client fee margins were down a bit in the second quarter. We're looking on a rolling 12-month basis, and this reflects the mix impact from the fast-growing international institutional business. The cost income ratio of our client AUM continued to decrease according to plan and was 53% in the quarter. Our net finance result was EUR 22 million. And despite the very weak investment markets in April, especially our fixed income investments were at a good level in the second quarter. The impact in Q2 was significantly negative following the decline in the long IFRS discounting rates, and I'll come back to this a bit more later on. Worth noting is that the Q2 net finance result also included a EUR 12 million capital gain from the sale of our shares in Enento in June.

Our results related to risk policies in Q2 was down compared to '24. Note that the comparison figure in '24 included some EUR 6 million one-off income from the portfolio transfer. Also, H1 has typically a seasonally higher costs in the risk insurance business, mainly due to the accrual of the previous year's reinsurance costs. Also, the CSM release in the quarter was lower, but this was only due to timing effects, not the CSM itself. Despite the turbulent markets, we consistently continue to generate capital. Organic capital generation was up to EUR 85 million from EUR 58 million in the last year. This translates to EUR 0.17 per share altogether. The main positive driver in the quarter was the faster AUM growth in the quarter.

Return on equity was 7.6% in the quarter, mainly due to the lower net finance result. As you know, one of our financial target is to grow our capital-light profit before taxes by more than 10% annually by 2028 compared to '24. And if we look at the first half of '25, the reported profit before tax was EUR 41 million, basically in line with '24 despite the very turbulent financial markets, the mentioned FX headwinds and lower sales in H1. Worth noting is that the comparison figure last year includes the same one-off gain from the portfolio transfer of If. So adjusted for this, the growth was around 25%, as Petri mentioned.

So if we then look closer at the group net finance result, it was down to EUR 22 million. And in the with-profit segment, it was down to EUR 9 million. However, the with-profit investment return in the quarter was above last year and broadly in line with a normalized quarterly run rate. Especially, our fixed income portfolio returns were good at 1.6% or over 6% annualized. The fixed income mark-to-market yield was down to 4.3% due to lower rates and tightening spreads as well as some internal portfolio adjustments. This is still well above the cost of liabilities. Although equities contributed positively this quarter, and we continue to decrease our equity exposure during the quarter. Now, the listed equity exposure was down to 4% of total assets at the end of Q2. And as you all know, this is in line what we have communicated previously. We sold equities worth some EUR 30 million during the quarter.

Private credit actually had a fairly normal quarterly return but then we had negative value change in our own real estate portfolio and also private equity returns were negative in the quarter. So these were both below normal. Although the swap rates actually were quite unchanged in the second quarter, the IFRS rates that we use for discounting in the long end of the yield curve actually decreased in the quarter. The change in the shape of the yield curve was quite unusual and had a EUR 25 million negative P&L impact in the quarter. This was mainly a result of a 20 to 30 basis point lower liquidity premium we use. The move -- unusually large in Q2 and happened mainly in the 20-year plus maturity where our hedging ratio is very low. As you can see from Page 19 in our investor presentation.

The with-profit portfolio interest rate hedging ratio increased further and was probably unusually high at 97% at the end of Q2. The reason for this was a technical asset class mix change. The overall fixed income exposure increased mainly in the 5- to 10-year bucket, while the share of [indiscernible] is decreased, as I mentioned. As we show although the average hedging ratio is high, there are big differences in the maturities. The hedging ratio is very high in the short end, but low in the very long end. And I'd like to also note that the IFRS discount rate mark-to-market changes have no impact on the actual contractual cash flows nor our dividend paying capacity.

Despite the turbulent markets, we continue to consistently generate capital. Organic capital generation was up to EUR 85 million in Q2 or significantly higher than the reported IFRS result. This measure, as you know, takes into account also, for example, the own funds generation from income booked in the CSM as well as potential capital release from a lower solvency capital requirement. As pointed out before, we think the [ OCG ] is a more relevant measure to assess our performance and capital generation. Our own fund generation increased the solvency margin by roughly 9 percentage points in the quarter. To reflect our new financial targets, we now report our solvency margin also including the transitional measure. The group solvency margin increased by 10 percentage points quarter-on-quarter but decreased by 3 percentage points when taking into account the larger dividend deduction assumption compared to last year. Last year, we had EUR 0.33 and now we use on EUR 0.50.

In addition to the announced sale of the Saxo Bank share is expected to increase the solvency margin by around 35 percentage points once the transaction is finalized, then of course, this means that we will be significantly above the target range at the end of the year.

Back to you, Lotta.

Thank you, Matti. And now let's move on to the Q&A. Please dial in for any questions.

[Operator Instructions] The next question comes from Hans Rettedal Christiansen from Danske Bank Markets.

The first question I have is on the sort of fee margin and net flow. And so thank you for the Slide 14, where you started reporting the cost income and fee margins. You say on the slide that you have strong growth in international client business, which is affecting the mix. And so what I was really wondering is, are you able to quantify how much of the EUR 100 million sort of EUR 60 million in net flows this quarter is coming from the international business in Institutional & Wealth Management versus how much is if I can sort of say local, I guess?

Okay. Yes. So the number, what we are getting from -- what is the portion of international sales, it's quite substantial during this quarter. Lotta, remind me, do you have an exact number? No, we don't publish that exact number, but I would say it's the fastest growing as you have seen the numbers, 40% growth year-on-year. So it's quite substantial among what we are getting. And another growing part is really fast growing is our private wealth management in Finland, which is growing more or less the same speed but it's a very big part of our sales nowadays.

Okay. And then I guess my second question is bit more technical in nature, but on the transitional measure that you're starting to report on this quarter, I was wondering how to kind of think about the unwinding of this measure and especially up against your target of 160% to 180% on solvency over the next 4 years. So if your solvency was at sort of 193% with that measure at the end of last year. I guess that would imply that it was EUR 170 million at Q4 and then it's EUR 155 million this quarter. So am I thinking correctly that it's down sort of EUR 15 million, EUR 14 million for half year, and that would imply sort of an unwinding of EUR 30 million each year? I guess my question is, is that the right way to think about it up against your total goal? Or am I completely off here?

No, I think that's the right way to think about it. But remember, the 193% is an all-in figure. So of course, technically, that's the figure we -- there is no unwinding there at all. But of course, in the actual figure that we report then that will be lower and gradually on 128%. So -- but that's exactly the reason why we look at the 193% is the all-in figure and there is no unwinding effect on that at all. And as you know, our new financial target is exactly for that reason that otherwise, the ratio would technically decrease every year simply because of the lower impact of the transitional measures. So 193% is comparable to the 160%, 180% and there is no kind of unwinding or transition figure impacting that at all. And just to remind you that, obviously, once the Saxo Bank transaction is finalized, the ratio will jump quite significantly, as I mentioned.

The next question comes from Antti Saari from OP Markets.

From an international growth perspective, I would like to ask whether you can mention us any blockbuster products? Or are there any like few products that are leading the sales and in a way, causing this lower margin level?

Yes. Thank you, Antti. So we have stated already before that our fee margin will go down once we -- our fastest-growing part is our wealth management, Institutional Wealth Management division. And traditionally, that business is lower margin than what we have in our retail and corporate, which less than our wealth management division. So it's not specific international all institutional business, both in Finland and outside of Finland, which are, let's say, lower margin business. But still, we are in asset classes that we have a wide reason -- decent and quite high fee levels altogether. So what we are selling in our international is our Nordic high-yield fund, which is not very low margin, but of course, it's not 1.2% over 1%.

And what we are also selling is in your secured loan fund, European high-yield fund and a little bit also we started to see some growth in our managed futures fund, which is a hedge fund, which is high-margin product. So -- but it's our wealth management division or fee level is around 0.8%. So that's something which is more we sell that, of course, the combined number will go down.

Okay. So the reason for lower margin is client mix, not product mix?

It's the client mix in yes. Yes, that's true. So more we sell to institutions. So it's not retail or corporate we traditionally in those areas, we have higher margins. And I guess most of our companies have the same things happening for them as well once they selling different customer segments.

I see. Then more technical question. Looking at with-profit business, the other result was now negative for second quarter in a row. So what should we expect about this? And is this sort of a new normal?

Antti, it's Matti here. No, it's a good question. And here again, there, we had some actually portfolio transfers related to kind of IT system renewal. So no, it's not the new normal. And of course, when you have a couple of quarters where you see negative figures, it's kind of annoying but the figure should be pretty close to 0 going forward. So in our line of business with very long tail of liabilities and hundred thousands of customers and different client segments and cohorts, what we call, there's always this kind of some movements here. But actually, this quarter, it was mainly caused by a technical move from actual corporate to with-profit other some of the portfolios that have both with-profit and unit-linked capabilities. It's not a big figure, so -- but I think the figure should be pretty close to 0 going forward.

Okay. And then 1 more question. You mentioned this distribution agreement with [indiscernible] could you remind us whether you have other distributors in insurance space? And do you expect this deal to have meaningful impact to your sales?

Yes. So we have 2 distributors in Finland. So it's Danske Bank, of course, is our main partner in Finland selling both risk insurance, which is called loan insurance, it's creditors protection loan product and of course, enrollment, the capital redemptions, so savings products as well. [indiscernible] is only concentrating due to risk policies to private people and micro companies, so very small companies. So -- and is it meaningful? We hope so, and we believe that otherwise we wouldn't have done that. So -- but of course, in our figures, if you look at the risk premium numbers, they -- of course, they are not that big. But it's a meaningful partner and they have a very substantial distribution and footfall all around to Finland. So we are waiting a good results for -- and this is a good add-on to our risk sales for retail segment.

The next question comes from Kasper from Mellas.

This is Kasper from Inderes. How many persons do you plan to recruit to boost your international sales in Luxembourg? And are the additional costs included by the 1% annual cost growth going forward?

Yes. It's, of course, it's additional cost, even though 1 person from Finland will move there to -- and do his job from there, which he is currently doing from here so heading to international business. But it's -- of course, it's extra cost, but of course, we believe that it's the investment, not just the cost to enhance our business. And let's say, we are targeting few people at this point. So not a huge amount of people. A little bit the same what we have done in Sweden. So handpicked people, which can really deliver results in a short period of time. So meaning a few people -- a couple of people at this point, like in Sweden, what we have done.

And Kasper yes, it is included in the cost guidance.

The next question comes from Jaakko from Tyrvainen.

Jaakko here from SEB. You're looking some new mandates in Norway and France. Could you elaborate a bit how is the pipeline looking in these new markets if you compare the features a year or 2 ago, i.e., what is kind of your activity level internationally versus few years back?

Yes. Thank you, Jaakko. It's far better than it was 2 years ago. Of course, we have more salespeople and sales forces also and we have more people to cover those markets. We just reputated last year on new wealth manager, salesperson to Stockholm, and he has really put lot of effort to Norway, and he has a lot of connections there and it started to get some money in as well. So it's a good process and pipeline is, of course, very promising. At the same time, it's not just the activity or more people. It's also that we have award-winning products, Nordic high yield, all our credit products are really performing well. They are top in surveys and so on.

So we are in a good position in a certain way that we have a lot of questions in various places because they have recognized our performance, our products and they want to look at more carefully, meet our teams and so on. So for example, this France case came actively from the customer side. So -- and now we see that there's a lot of demand in certain way for our products, and that's why we also made a decision to put more efforts than the resources and make investments to Luxembourg because it's a lot of ground to our products. Total different and much better situation than 2 years ago.

Then on the fee margin and the weaker USD, obviously, the U.S. deal, like Matti mentioned it impact on the absolute numbers in euro terms, but does it have impact on the reported blended fee margin as well?

Yes, a very small impact. So this is mainly a kind of product mix and client mix impact, as I said. And then there is some also variation, of course, if you look at back in 2024, especially in the Institutional & Wealth Management business, alternatives played a much bigger role than today for obvious reasons. The private equity and real estate market has been slow. So that, of course, is impacting as well. But the main impact is actually coming from the product mix impact here together. And there is some quarterly variation. We have a lot of products that we sell and the margins may vary a bit every now and then. So I guess the fall in the second quarter was a bit bigger than expected. So a small impact from the U.S. dollar, but not, of course, at all as big as to the reported figures.

If I may add, because I already answered to Antti about this issue, it's product, but it's also customers because those customers we are selling, they are buying those products which are selling very well. So I don't know which one is first in chicken or egg so -- but it's -- that's the case. So we are selling professional buyers, institutions, credit product, which, of course, is affecting the total combined fee margin. But all in all, what I haven't said yet, we haven't seen any softening or tightening inside of the customer segments or product range. So it's more or less the same than what we have seen in last quarter or a year ago.

For more kind of a technical question one regarding the dividend accrual, which was rate. Why was it raised? Did I miss something during the quarter? What is the reason behind it?

Well, if you look at what we said at the Capital Market Day, we said above EUR 1 billion of dividends. And if you kind of take that use and since we said the EUR 1 billion actually we use now that it would be disutility evenly. However, as you remember, like we said at the Capital Market Day, we believe it's probably going to be the factor a bit more front-loaded, obviously entirely up to the Board to decide what they think about it. But of course, for obvious reasons, the Saxo Bank transaction finalization, then and those shares means that we have ample liquidity here. But we use EUR 0.50 per share as the assumption for the accrual. This was EUR 0.33, as you know, last year.

Okay. Okay. I thought it would just be more technical back on the later last year, 33% plus 5%. Okay, but fair enough, very well. Understand.

The next question comes from Emil Immonen from DNB Carnegie.

Just a couple more. Maybe first, starting on the cost-to-income ratio development. I was wondering with lower fees in the international business, but maybe that being a little bit smaller right now, but growing very strongly, is there any scale benefits you can realize here so that actually, our cost income could prove even though fee margins are a little bit lower.

Emil, it's Matti here. Absolutely. And as you remember, if you then to take our cost guidance of 1%, which is including the investments, and that means that if we grow our income by more than 1%, the cost income ratio will improve. It will not improve, obviously, forever, most likely. And -- but I think we still see potential for improvement. One of the big driver is, like we mentioned, that a lot of the significant IT investments have not been amortized and have been take -- and that, of course, means that the cost growth will be fairly limited going forward. And if the income growth is bigger than the cost growth, the cost-income ratio will improve.

That's clear. And then on the net financial result in with-profit, that seems where there may be is came to estimate. I wonder, could you go into a little bit more detail on how we maybe should think about the net finance result if interest rates continue to go down, and how it compares, for example, to the average policy rate?

Yes. I guess, of course, this is one bit of a surprise because, obviously, externally, you can observe the swap side, but then the discount IFRS we use is a combination of both as we operate and illiquidity premium for BBB plus euro-denominated bonds, which we actually get from Moody's. So it's not our own invention. And that move was quite significant and as said in the portfolio or in the mature above 20 and 25 years where, for obvious reasons, we have hardly any hedge there for -- and it's part of our strategy.

So the interest rate moves, obviously, you should not kind of take, especially when it comes to anything below 10 years. We are very well hedged for that. But there is movements in the very long end that will have an impact like was the case here in the quarter altogether. And if we look then overall, as you mentioned on the kind of policyholder funds and policyholder development, first of all, are if the mark-to-market yield on the fixed income portfolio comes down. Now, of course, if we would use the -- if the unwinding rate would be the current rate, it would be also 50% -- 50 basis points roughly lower. So for us, it's not the actual level of rate we make on the policyholder liabilities.

And as said, that is roughly the 2% that we've indicated even now. So for us, the level of interest rate is not relevant, excluding the fact that if it happens in the very long end of the yield curve and especially these illiquidity premiums have an impact. But I actually had a look and for example, these moves, we haven't seen for a number of years, which happened now in the second quarter. So I would like to characterize them as quite unusual. And in the level of the interest rate in the below 10 years maturities will have very limited impact on our figures.

There are no more questions at this time. So I hand the conference back to the speakers.

So that was all for today. Thank you for joining us. And please don't hesitate to contact us at Investor Relations should you have any further questions. Goodbye.

Good afternoon, everyone, and a warm welcome to Mandatum's Capital Markets Day 2025, whether you're joining us here at our headquarters in Helsinki or are following along remotely, we're pleased to have you with us.

My name is Lotta Borgström and I lead Investor Relations here at Mandatum. It's a pleasure to host you today and to open what we hope will be an insightful afternoon. Today is an opportunity for us to share where we are where we're heading and how we plan to get there. It's been less than 2 years since our listing still early days in some respects, but we've already covered a lot of ground and built momentum for the next phase of our journey.

You'll first hear from our CEO, Petri Niemisvirta, who will outline our strategic direction until 2028. Then our CFO, Matti Ahokas, will walk you through our financial targets. Later in the afternoon, we'll take a closer look at our institutional and wealth management strategy, our corporate client approach and the evolution of our with private business. We'll have 2 dedicated Q&A sessions, 1 after the strategy and the financial section and another at the end of the day. If you're attending in person, you'll be able to submit your questions during those sessions. And for those of you joining online, feel free to send in your questions at any time throughout the event. And yes, a well deserted break is scheduled in approximately at 2:00 Finnish time at the latest.

And now to officially open today, it is my pleasure to invite to the stage the Chair of Mandatum's Board of Directors, Patrick Lapveteläinen.

Thank you, Lotta. Welcome also on my behalf to Mandatum's first Capital Markets Day. We thought that this would be a good timing for us to have our first Capital Markets Day, as we now has operated as an independent listed company for over 1.5 years. We have also reached all our financial targets that we set by the time of the listing. And we are getting a lot of questions, especially on our capital position.

The targets that we set in the fall of '23 were conservative, and we were also vocal back then on that point. Now we think that we are in the position that we can be more specific on our capital position as we are very comfortable with derisking our with profit portfolio, the excellent positive net flow in assets under management and the sale of Saxo Bank shares.

I hope that we can demonstrate today a clear path how we will meet our new financial targets that we announced this morning. And I will not go into the figures and rather let our management team to present them. I hope you will enjoy the afternoon. Thank you. Petri, the floor is yours.

Thank you, Patrick, and welcome. It's a pleasure to see you and so many of you have come to here to see Mandatum's first ever Capital Markets Day since listing. So I will, in my presentation to elaborate where we -- what is Mandatum, what we stand now, what we have seen the last 18 months. And -- what are those areas we are seeking growth going forward and why we think we will reach those targets we have set today.

And of course, later, latter part of my presentation, I will go those financial targets that you have already seen today. So let me start with what is Mandatum today. The numbers very well. Mandatum is the company, which is the leading wealth management asset management company in Finland. We have ranked the #1 institutional asset manager in Finland.

Our customers are really pleased both here in Finland, as well as in Sweden, Denmark and in growing numbers also outside of the Nordics. We are definitely one of those players who can increase its business, growth is asset under management, not only in Finland also outside Finland. And the reasoning for that is, of course, our core competence in certain asset classes like credit and fixed income.

In Finland, we see that we have a lot of things to do in corporate business, where we are by far the largest player, about 50% market share in group pension business, very big player in group risk lives and also in personal funds, we are a leading player. That also helped us to grow our wealth management business in Finland going forward. And we have seen also very high customer NPS numbers, both in corporate wealth management, asset management, all segments we are doing our business.

And of course, we need very good people in order to achieve all our demanding targets. All our employees are incentivized by variable compensation, FDIs and some of them also with LTIs. So we believe that right incentivize systems, which, by the way, we are selling to other corporates as well, is the right way to achieve the target and to be aligned with our shareholders.

So our ambitious target will be part of our people's incentivize program going forward as well. So I believe that all more than 600 people will work for those final set targets we have set today. As you might know, Mandatum has change itself a lot during the last 20 years. We stopped our with profit business more than 20 years ago. And with profit liability was many, many years around EUR 5 billion. It started to melt very fast around 5 years ago, and now we are close to EUR 2 billion with our with profit liability.

We are forecasting, and we have been quite clear on that, that our liability after 6 years will be around EUR 1 billion anymore. That means capital releases. And of course, with the investment knowledge we have, doing investments in our own balance sheet assets also will generate a lot of profit during that path. So our with profit is melting and at the same time, through our 3 divisions in our capital-light businesses, we have managed to increase our business when it comes to client assets, up to EUR 14 billion.

So our capital-light business, institutional wealth management, corporate clients, retail clients all are very profitable, growing businesses, scalable businesses. And at the same time, we have a lot of capital releases and profit generation from our old retrofit book. So profitable growth will come from our capital-light businesses.

So what we have achieved during the last 18 months, like we have already heard today, we have reached all our targets well ahead of schedule. And that has happened without sacrificing our pricing, our margins. We have been in discipline in pricing. And at the same time, we have managed to improve our cost income ratio a lot.

Since listing, we have decreased our cost income ratio from EUR 67 million to EUR 55 million, which was the last number of Q1 so that means also that we have been very disciplined in our cost side, not only in the pricing. And at the same time, our sales has worked extremely good, and we have been very good serving our customers. So very high NPS has also meant that our outflow has been very low level. And the most predictable part of our business with profit book melting has went as we have forecasted 18 months ago.

So now, of course, it's right time as we have heard to set the new targets going forward. Target markets where we are planning to grow. Nordic asset management market is EUR 1 trillion market. And we believe, and we have forecasted and we have seen in the past that it will grow around 8% per annum. That means that our business will be in a market which is growing, which is always helping your business once you're in a market which is growing itself.

Mandatum has less than 1% market share of that market. So we do believe that there's a lot of room to us to grow in that market, which is at the same time, growing 8% per year. We believe that the Nordic economies are growing next 3 years, and that helps our businesses grow in that market. In wealth management markets, what we are doing in Finland, we see similar type of growth numbers 6% that's what it has been. And that's our forecast going forward, a little bit less than asset management market, but still 6% and of course, what is driving the growth here is money comes to money. There will be more wealthy people. Finnish wealth management market is still very young. We don't do have longer tradition in wealth management and generations after generations cumulative world. So that will increase the number of wealthy people, and that's what we have seen lately the last 20 years happening in Finland. So we are forecasting 6% growth in that market. And finally, the third market, cooperaton lives and unit-linked pension market around the same and wealth management market in Finland, 5% growth. That has been the last 2 years, and that's how forecast going forward. So we see that weakening of pension and social security people like to have more individual pensions, individual risk reinsurance life. And in Finland, it goes mainly true companies and core plays the best way because of taxation and other [indiscernible] issues its best way to do those things is through corporate plans. And that's why we believe having in mind that Mandatum has a very strong position on that corporate side, we believe that we will be the one who will make most of that growth in coming years.

Even though we have very high market share in corporate side, as I mentioned, we still believe there's a lot of room to grow maybe not in market share-wise, but the market underneath is growing, and we can do better. Also, we can be more effective [indiscernible] improve our processes and make more money out of our market share and our business. History drives strategy and Mandatum and its precessor companies has always been in investments. So we are now in building, which is established 1870, and this is the oldest industrial building in Helsinki. And at the same time, we started our parting investments when have a mutual company was established.

Since then, Mandatum and those other companies in this group has been an investment business. We have had different ways to gather assets. First, with profit pensions, a lot of balance sheet investments, unit link came after '95 then we spread our business to asset and wealth management. And of course, Nordic Asset Management fund company in Luxembourg, we have just increased the number of ways to gather assets in order to do better investments to us and our customers.

So there are especially 2 things, which we have got from our history. The one is, of course, obvious one, as I already said, is investment heritage with that huge own balance sheet, we have learned how to invest our own money and later also our customers' money. So we have learned and we have core competencies, international competencies, what we have now proved in Sweden and Denmark also outside of Nordics that we can be very competitive player in certain asset classes, mainly credit and fixed income.

So that balance sheet investing and investment heritage has created a position to be now in position that we have award-winning products to serve our customers and our sales is going very well. Another thing is our with profit portfolio and the position what we have gained during the decades is the leading corporate market position. So we do have very large and tight customer network in Finland.

We know most of the best companies in Finland. We know the owners. We know the leaders. We know the Board members. Finland is a little bit like a club. So once you know right people, you are close to money and wealth. Now of course, the wealth is created in the companies, and it's created in industries. So that's the position to be once you want to increase your position in wealth management as well. And we have done that cross-selling thing very well the thing that many companies try to do what we have been extremely successful on that. We have used this corporate network in order to enhance our wealth management business very well, 65% of our new wealth management customers last year came through our connections to corporate side.

So that is the very, very core thing to us and one core thing to us is on distribution. We believe on distribution, it gives us more tight relation with our customer, and it's more predictable. It's more stable assets, what we can achieve once we have own distribution, and we can really guide our own sales forces. And of course, like I mentioned, high competent and satisfied personnel, which is incentivized, who are incentivized the way to the company's strategy is -- for us, -- it's not just what we are doing and where we are doing to whom we are selling important. It's also very crucial for us how we are doing things.

ESG is very important to us. We started to invest to ESG more than 10 years ago. And of course, the responsible investment side because we are a big investor, that's really the area we can make the difference. So we have embedded ESG all our work and processes, not just investments, also the insurance side we have sustainable insurance processes as well. And of course, the rating from outside companies is very good for us. We are low-risk companies when it comes to ESG. I'm really pleased with these ratings, what we have achieved in a short period of time where we have been a listed company in housing stock chains.

We see growth opportunities in all our capital-light business areas. With profit is not area which is which is growing. We see it's decreasing, and it's going another way, as I explained, and that's the way it should be. And of course, the [indiscernible] equity on that side is the key word why we are putting it down. The rhythm equity is not just high enough in order to -- that we are not pleased with that. So when we look at the higher return on equity businesses, we are coming to our capital-light businesses.

Let me start with our [indiscernible] life and pension retail. That is really stable, predictable but not that fast growing businesses for us. But we see it's very profitable. It gives us a reasonable high return on equity and it's very stable, and it's very operationally efficient way to do things. I'm very pleased that we have a cooperation with Danske Bank, which is the third largest bank in Finland, holding 10% market share in banking.

We have excessive to use the distribution to our life insurance products. And that is a clear advantage to us as a stand-alone life insurance company have also third largest bank only distributing our products to the retail segment. And lately, last 2 years, we have seen a nice process on Danske's businesses as well and cooperation on that side.

Optimized growth. Our corporate business, corporate pension and corporate risk. As I mentioned, we have very high market share on that side. 45% in group pension plan, 70% in the new personal funds, close to 30% market share in corporate risk life. But we do see that there's a lot of room to do better. We see that our processes are not yet there. We want them to be. We see that the market underneath, as I mentioned, 6% growth is giving us a good boost to increase our business on that side. And we see there is a momentum on that side as well. We have seen more and more corporates buying risk life policies. All the employees, the whole companies [indiscernible] all employees, the biggest case we have done lately 6,000 employees, whole company is insured by us. And so we see that there's a lot of growth possibilities in the corporate segment, even though that's 1 of -- already 1 of the most profitable businesses we have.

Our real growth engine is, of course, our asset management and wealth management businesses. So scalable growth is what we see on that side. Nordic asset management Q1, the highest growth came from Sweden, Denmark from our international institutional side. We see a very good growth also outside of Nordic and Nordic asset management in Finland, we have reached the position which is #1 position, and we are keen on to keep that position as well.

So in all countries, in Nordics, we are seeking scalable growth, and we have seen that lately very well. Finnish Wealth Management is something we are still very small, even though the Mandatum brand is very strong, very appreciated among wealthy people in Finland. We still have, in my opinion, quite small market share in Finland, even though market shares are not driving our business, the profitability is driving our business, we see that we are still too small in Finnish wealth management, and there's a lot of room to growth. And of course, the whole market is growing. And we, as a new kidding down in a certain way, we can still reach bigger number when it comes to market share and in that way, grow our business in Finland as well and non-Nordic Asset Management, even though the poll is very small yet, it's, of course one thing we are also putting resources and investments going forward.

So our strategy priorities to 2025, 2028, is expand the Nordic foothold in asset management. So now the question, of course, how we will do that. What is the reasoning behind that? We believe that we can reach the targets and why we believe that we will be the bigger in this business, why we can do better return on equity, better profit going forward.

The Nordic foothold asset management, of course, we will invest more to that business. We will put resources to salespeople, especially the front line, so we will invest the customer service, asset gathering in those markets we want to grow, meaning especially Nordics. Accelerate the growth of Finnish Wealth Management. The same thing, we will invest more people to people, salespeople. But of course, there's a lot of other things, processes. We will use a lot of things to dentate the right people, services. And of course, we will look at also the new products, new services in order to be a bigger player in this market.

Even though it's not our numbers, we will, of course, use all possible ways to enhance our business and grow in wealth management and asset management. And it also includes the whole toolbox and organic growth and organic growth. So if there is a possibility to M&A, which will enhance our business, we will look at those as well.

Leverage the leading corporate market position. Even though it's an upward to grow in wealth management, we see there's a lot of room to grow also in corporate market. Tarja will tell more about the corporate business, how we will broaden that side what are our plans. Janne will tell more about asset management and wealth management business together with Juhani. And so they will go to details how we will -- what are our plans to grow, why we believe we will be the winners in the market.

The fourth one is very crucial for us as well cost/income ratio. So focus on operational efficiency. Traditionally, that hasn't been the most the biggest thing to look at in the past, since 2023, after listing, we have concentrated a lot of our processes efficiency, and we have seen already results on that side. Like I mentioned, from 67% cost/income ratio to 55% after Q1.

So but there is still a lot of room to improve our business. We are not ready yet on that side. But of course, once we are planning to grow more in the future and fast, there will be some investments, but they are not sacrificing our cost/income ratio. We mentioned 1.5 years ago, when Mandatum went public that it's -- our business is really scalable. We have done big investments already. And we have proven that in last 1.5 years that our cost/income ratio will go down we haven't done and we -- there is no need to do very big investments to our infrastructure or products and so on. So we will see improving cost income ratio in the future as well. That's our target as well.

Our vision is to be fastest-growing Nordic asset and wealth manager with optimized growth in Finnish life and pension. To be the fastest grow means that we have to have the best salespeople, best portfolio managers. And happy to really grow and win the game. And that's what all our employees are tied to and incentivized and new financial targets. You have already seen those in the morning, return on equity above 20% and more than 10% annual growth in capital-light profit before taxes. And the last one, Solvency margin between EUR 160 million to EUR 180 million with cumulative shareholder payouts exceeding EUR 1 billion these all are tied to each other, as you know.

So in order to achieve any of these, we need all others working well as well. We are committed to this, and we have done a lot of home work, a lot of strategic thinking calculating and I believe that we can reach these targets at the end of 2028.

So thank you very much. And now it's time for Matti, our CFO, to go deeper to our financial targets and outlook for the strategy period. Thank you very much.

Thank you, Petri. My name is Matti Ahokas, and I will go through the numbers behind our new financial targets. But before that, let's take a step back and look at what's been the delivery so far. And for those wondering why we've only chosen this period '22 to '24, the answer is that we report according to IFRS only during that period. So that is not chosen intentionally to show very good figures. During this period, as Petri mentioned, we've consistently been able to grow our assets under management by 16% a year during the last 2 years, but if we take a slightly longer step back, it's been around 10% for the last 10 years.

So we can truly say that the client AUM growth has been consistent. At the same time, we've been able to keep disciplined margins. We've been able to grow our costs less than income. And that, of course, shows as an improving cost income ratio. And actually, at this time as well, we've been able to do a lot of investments. As Petri mentioned, we've done a significant ramp-up of our IT.

So basically, our platform is ready for further growth in the years to come. And the outcome has been that our capital-light PBT or profit before taxes has almost doubled during this period. Also looking at an important profit contributor during this period has been the net finance result.

Here as well, we've achieved more stable profits, reported profits from since 2022. And an important factor here has also been the fact that we've been derisking our own investment assets. We've had more focus on reducing the asset liability mismatch. And we basically increased our interest rate hedging from around 30% in 2022 to around 80% at the end of last year. And those who follow us more closely know that this figure was 88% in Q1, probably a bit higher than the normal level. But in any case, this is -- means that the hedging level is actually quite high.

At the same time, we've also lowered the share of listed equity in our own balance sheet investments, and this also means that the volatility should be lower going forward. At some stage, the share of listed equity was over 30% in our own balance sheet investments. And at the end of Q1, this stood at only 5% and all in all, this means a lower sensitivity to financial market fluctuations.

So the new financial targets for 2028. Our Board this morning has approved 3 financial targets, 2 new ones and 1 revised. And what I think is super important to keep in mind is that these targets are organic. But they have a firm timeline. So these are not midterm or long-term targets. These are '28 targets. The key target is to basically double our return on equity compared to 2024, which was around 10%. And now we expect to reach over 20% by 2028.

The key component here is basically the capital-light growth. We target a growth of above 10% annually. And we basically expect that our client AUM growth is roughly in line with the 10% historical leverage I mentioned and our net flows should also be roughly in line with the 5% target that we've had previously.

So it's more a question on continuing the growth path on income, but focusing more on the cost side, costs growing clearly less than income. We expect around 1% annual cost growth during the strategy period. Another important component is the release of excess capital. Capital management is a key priority for us. And lowering the excess capital is one factor to improve the return on equity.

As you know, our with profit business is releasing capital and capital does have a cost. So we believe it's in the interest of our shareholders to continue to use capital more efficiently. And this will be actually done to, firstly, the kind of natural runoff of our with profit liabilities which we expect to be around 10% a year, but also an important factor is to continue the path of derisking the asset and all in all, this means that our business is requiring a lot less capital to grow, and we expect to pay out in shareholder payout more than EUR 1 billion during the strategy period. The probably most important operational financial target is the growth in capital-light profits. And by capital light, we mean the combined segment profit but the institutional wealth management business, the corporate business and the retail business. And this is according to our segment reporting overall. The baseline here is 2024. And for those who are wondering what the number is and don't remember our last year's figures it is EUR 88 million is the baseline for the capital-light profit before taxes.

And obviously, it's fairly easy to do the math above 10% growth where we expect to roughly land at the end of 2028. The main driver here will be the institutional and wealth management business, which is expected to show the highest growth. But also the corporate business, which is also an important growth driver, where we are expecting further accelerating growth. The retail business is more stable, and there are some structural outflows expected over the next 10 years in this business because of payout. So the contribution from the retail segment is expected to be slightly lower.

My colleagues, Tarja, Janne and Juhani will go to the operational drivers of this business in their presentations. But I could say that overall, the guiding principle of the growth in the capital-light business is scalable growth over the period. Cost growth is expected to be lower than revenue growth, as I mentioned, resulting in an improving cost-to-income ratio. And this is mainly due to a kind of more efficient operations. But very importantly, also lower legacy IT costs. As I mentioned, we've invested in IT with a fairly low capitalization level over the years. So that cost impact will be lower. And actually, this is probably a good segue to the cost side, which, as Petri mentioned, is an ever more important factor in our -- reaching our profit goals.

We will maintain a strict cost control over the strategy period and expect roughly 100% cost growth over the strategy period. But make no mistake, we will continue and even accelerate investments in our capital-light businesses. And the number here shown, obviously, probably doesn't ring too much of a bell. This is our -- more of our management accounting factors and not visible in our operational P&L but it does give you an indication of the direction of travel we forecast in the cost side. A couple of highlights here regarding the cost drivers.

Firstly, as I mentioned, we will continue to invest in capital light, both capabilities, new product capabilities, FTEs, both in the Nordics and non-Nordic and we will continue to improve on our digital processes. Our FDA count is already down by 8% from the peak, and this will have a full P&L impact only in 2026 and as you may have seen, we have actually simplified our organization. We've trimmed our support functions. And we've also established a new Chief Operating Office structure within the company focusing on the production of things.

Finally, the more important factor on the cost development is reducing structural costs. This means the decommissioning legacy systems and legacy applications but also streamlining the product portfolio in the business. And as is an example here only in the -- probably in the next couple of weeks, we will go live with our new group pension policy management system, which will enable us to decommission some of the legacy systems here, and that is a major factor here behind this. Even though our strategy is heavily on going the capital-light business. The with profit business is has been and will continue to be an important profit contributor for the group in the strategy period, but also after that, it's important to remember that this is a long-tail business. And like Betty mentioned, liabilities are decreasing, but they will continue to provide profit support and capital release in the business.

We expect roughly 10% decrease in liabilities over the strategy period like we previously mentioned. We plan to maintain and we will maintain a roughly 2% spread over the cost of policyholder funds. And here, of course, the hedging profile, I mentioned earlier, plays an important role. Investment asset derisking will continue, resulting in lower earnings volatility and a lower solvency capital requirement. The business -- the portfolio will be largely income at the end of this period. And this will mean in our opinion, that the with profit business will be the earnings from that part of the business will be more feel like than previously and clearly of less risk.

Capital efficiency and capital management, like our share mentioned is an important factor of the strategy period and a key component of our financial plan. The group solvency capital requirement is expected to decrease by around EUR 250 million over the period. Two important factors here. Firstly, as I mentioned, the with profit solvency capital requirement is decreasing according to plan because the book is decreasing in the runoff. But also another factor is the partial exit of our PLCs noncore holdings. This actually is not as dramatic as the graph here shows.

As you know, we've already announced our sale of the shares in Saxo Bank, which has been a major contributor here -- the other 2 holdings and [indiscernible] are significantly smaller and play a much smaller role altogether. And even though the capital light SCR is increasing following the growth prospects. Remember that this business is also generating own funds. And I think it's important to focus on the on the graph here on the right side that we will and we are continuously generating capital in our business. We're generating profits, we're generating capital. And in order, obviously, to reach the target, it's important to optimize the capital and towards our solvency capital target, and this means, obviously, a significant amount of dividends.

As our business is shifting towards capital light. We require less and less capital overall also on the group. We plan to distribute more than EUR 1 billion of dividends or share buybacks during this period. One major factor here is that actually, of this more than EUR 1 billion, quite a significant amount comes from higher profits. It's not rating the piggy bank. So we are more optimizing the capital position of the group. So this is not only paying out excess capital. This is actually also paying out a significant part of the profits we're generating. Actually, if you look at the over EUR 1 billion Majority of that comes from earnings, so not from releasing the excess capital altogether.

Some of you may have wondered that why has not Mandatum introduced a payout ratio target or we talked a lot about OCG. The main reason that we thought that the absolute amount makes more sense is that this is a period of significant balance sheet transformation. And our dividends are more tied to the cash flows and the liquidity in the holding company, which is more driven by factors such as cash from Saxo Bank and especially the internal dividends of Mandatum Life, which in turn is more driven by the exit of the derisking and the cash flows from that side.

So it's not dependent on earnings during the strategy period more actually afterwards. Mandatum is transforming into a high return on equity fee-generating group. We expect the growing share of the capital-light profit to offset significantly the decline in the wood profit business in [indiscernible] strategy period. At the -- in 2024, the share was around 40%, and this should increase as shown here to somewhere around 70% by the end of the period. And our business is profitable on the capital-light side, and we can reinvest in the business with a very high marginal return. The return on equity of the capital light business is roughly 35% on average, depending a bit on the business. And even though our with profit business is -- has a return on equity above cost of capital. It is still significantly lower at around 10%.

So the key takeaways. Mandatum is transforming into a high return on equity fee-generating group towards 2028. And even though the contribution from our with profit business is lower, it will be less volatile and the earnings will be more fee like. And finally, we should expect significant shareholder payouts during this period.

With that, I think it's time for our first Q&A.

So thank you all for your attention so far. I just got the information that it's almost 300 of you following us via a live webcast, which is obviously very nice to hear. Will now begin the first Q&A. Please feel free to raise any questions you might have, both here at the venue and online. I'd also like to note that the Chairman Mandatum's Board of Directors at Patrick Lapveteläinen, and I will only be present for this session. So if you have questions specifically for him now is the time. So let's get started. Do we have any questions here at the venue.

I was just wanting to start off with the sort of the overarching targets on the ROE and the excess capital distribution or the total distribution. Specifically, I was wondering if you sort of distribute EUR 1 billion over the next 4 years, will you then -- is the minimum that you expect to reach an ROE 20% or is 20% assuming sort of above EUR 1 billion.

Well, I think it's a good question. I think you should probably do the math yourself and see where you end up. But I think those are the kind of building blocks that are clearly there. We actually say above EUR 1 billion and then thinking that this is a period of 4 years. So it's a fairly long period of time. So I think we need some flexibility there as well. But if you do the math and calculate our 10% growth in the capital-light profits and then look at how much is needed to get to over 20%, I think -- that is the way we are thinking about it, and I think I would look at it from that perspective.

The second one is...

Second question is perhaps a bit more strategic on -- on your -- you've obviously been very successful in sort of selling in-house on the corporate -- using the corporate segment now that you are expanding into the Nordics, how specifically do you expect sort of to use your own distribution network? And how kind of scalable as the Mandatum brand outside of Finland to moving forward.

Yes. Thank you for your question. Yes, it's -- of course, we don't have corporate life supporting our businesses outside of Finland. But we don't do at this point any wealth management outside of Finland. So it's asset management, and we are only concentrating selling to very large institutions, professional buyers, which are more easy to reach. So it's quite low number, any country still especially in the Nordics.

So it's not thousands. It's more like 100 of possible potential customers. In Sweden, we are just starting to marketing was institutional investors, and we are planning to do that in other markets as well in order to increase our brand awareness. But we see that we now have 3 salespeople in Sweden, and we have managed to already increase our position and our sales a lot in Sweden. So we see that our products together with our salespeople and how we incentivize them, what kind of people we have and how we combine portfolio managers and our salespeople competences together, we have achieved very good results with that combination.

In Sweden, in Stockholm, we have 1 portfolio manager, which is supporting our sales there as well. So we believe our own distribution when it comes to not that large number of buyers is really working well. But we do want us to invest more to brand awareness also in other countries than in Finland.

My last question, perhaps to the Chair is. Regarding this question, what is your sort of M&A appetite going forward?

I answered this question many times, and we always have an M&A appetite, and that is in our DNA, and we are always looking at everything. But of course, it's not so easy to find because it takes to [indiscernible] . And of course, it's very often that on those sites, you have a very strong opinions of your own valuation -- so -- but of course, we are looking at every situation and everything that we can see that it could enhance especially our distribution capacity and then, of course, also on the product side. That, of course, it has to complement Mandatum's offering and our distribution. But definitely, we'll look into everything.

And if I may just also mention, like I showed, we can reinvest in our own business at a very, very high marginal return. So then, of course, doing kind of potential acquisitions where you would have to probably pay above book value, it is difficult to find, as Patrick mentioned, targets that actually make more sense than reinvesting in the business, that we can do and grow by ourselves at the moment. But that, of course, is one that we way against this.

Yes. And if I may add, we are not asset gatherers and our market share and by the builders. It has to make sense economic for the shareholders.

Thank you, Hans. We have a follow-on question, for instance here.

Sauli Vilen from Inderes. About the distribution, you better mentioned that you -- I think the words like that you own the distribution, so to speak. Is this also true on the -- when you expand internationally or are you also exploring, for example, using so-called agent model, which some of your peers have been using with fairly good success.

Yes. Of course, we are looking at the platform as well. But what we have noticed the platforms are also the money comes easily or fast, but it also go away very -- because you don't have certain tightness to your customers and you don't have any relation to your customers.

So you have just a product provider at a little bit different valuation of that money. So we do believe as long as we are concentrating mainly to institutional investors, we can do that through our own distribution you don't need that huge amount of salespeople in order to cover quite substantial amount of customers in any country in Europe.

So -- but of course, the big thing is to find the right people. We are selling quite, let's say, a little bit more difficult products like senior loans and that type of things which need those people who are in well in selling those in our distribution they have been quite competent and work like in credit desk and so on in order to be capable to do that without needing so much portfolio management support. But it's -- the further we go and more we grow, of course, we are looking at all possible ways to distribute our products. But at this point, we mostly rely on our own distribution.

Okay. And then I guess, this might come up after the break, but I can resist to ask about the product range. You have been fairly, you could say, focused historically, but you want to be focused on the areas where we are good actually. But now your market share has been growing, obviously, and now you are stating out that you plan to expand your product offering. So how do you like you can say, balance between these staying excellent and expanding your product range?

I think it's in our DNA we have decided so that we are selling only good things to our customer, no matter what. So once we are doing our allocation products, for example, in Finland in our Wealth Management. If we don't see that we are capable to do in very well something which is part of the mix we use external products for that. If someone is much better than us in order to keep the best service and best product like in allocation to our customers, not sacrificing customers feeling and performance because of our own product range.

So allocation products are -- I have been very glad that, that business is really growing fast in Finland and those are combined of external and our own competence. But of course, Still, we are a quite reasonable big company. We can always -- and we are all the time looking in the areas. We can also be where we are not good enough or at all.

So going forward, of course, we are doing our homework in order to enhance our product [indiscernible] all the time.

Okay. And then finally from me about the possible funding of the possible M&A. On previous targets, you have the EUR 500 million dividend target and you stated that it's kind of a, you could say, sacred that it's -- that's not a bigger bank you can go to if you find M&A of lifetime. How about this EUR 1 billion? Is it also that sacred, you cannot touch it even though the M&A of the century would walk through the door, do you have to find the money somewhere else.

Of course, it's sacred. It's our target. But if you have a deal of a lifetime, then you never know. But of course, here, we have stated very clearly. It's EUR 1 billion in the next 4 years. But I can't predict what happens during these 4 years. Because obviously, if you have a turmoil financial crisis, et cetera, there, that's the environment when we have then operated.

Thank you, Sauli and let's take 2 questions from our viewers via the live webcast at this stage. The first one is from Andrew Baker at Goldman Sachs.

How do you see financial leverage developing over your planning period on both an IFRS or Solvency II leverage? And what levels of financial leverage are comfortable with going forward.

Well, actually, if you look at the leverage such in terms of financial leverage, is expected to slightly go down. So should not see this financial plan that we are increasing, we are taking debt to finance dividends. That is not the plan definitely. -- we -- our financial leverage is very low, basically, especially once the exit from Saxo Bank has been finalized it will go down. And we basically have only roughly EUR 100 million of kind of legacy debt from sample, which is gradually maturing over this period.

So actually, the financial leverage will go down slightly during this period when you look at it. That is actually a relevant point in a sense because Mandatum has the capacity to increase the leverage quite a lot if needed. There is no kind of limit as with maybe a normal company. But since our business is generating good capital, is generating good profits. There is absolutely no need to increase the leverage because of these factors.

And the next one comes from Jan Gjerland along ABG. About capital distribution, you said cash flow to PSC is crucial for the future DPS payments. How do you expect this flow of cash to be back end loaded front end or even the distributor? And which companies will be the main contributor, life or your new earnings from capital-light products.

Yes. As I mentioned, you shouldn't expect that the EUR 1 billion will be exactly evenly distributed over the strategy period. It's probably going to be a bit more front-end loaded. But as mentioned, there is especially the kind of exits from our private equity holdings, for example, the timing is a bit uncertain. So we don't know ourselves either exactly how that's going to be.

[indiscernible] is definitely going to be the most important contributor here over the period like it has been over this time as well. That contribution is decreasing or expected to decrease basically in line with the liabilities runoff but will continue to be significant. And I think it's worth noting here as well that -- there will be no cliff edge effect in terms of the dividends after '28 lever.

So we will continue to be a good dividend payer over that period. And that is when the capital light business is compensating for the decline in the with-profit business altogether, probably a good thing to also remind that even though we have 2 operating or 2 legal companies, 1 [indiscernible] Life and 1 [indiscernible] management, but most of the operations are actually under the life company, for example, the corporate business and the retail business. So the asset management is more of a product legal structure here. So life is the core of Mandatum's operation and cash flow.

Great. So do we have any other questions here at the venue Jaakko?

Could you continue on the capital and solvency, where you are targeting now 160 to 170. Could you open up a bit on the internal thinking on the software and solvency level between the segments, meaning what is kind of comfortable solvency level that you are seeing for with profits, which is now largely derisked the portfolio and interest rate hedging at close to 90%.

And the follow-up here is that what is the kind of a required IFRS equity that you need to kind of allocate for the capital-light business given that it's kind of contributing the large majority of our CSM.

Yes. Sorry, what is first question. I already forgot.

Sorry, a long one. The first one, what is the kind of...

No, I remember sorry, I think [indiscernible] Well, as you remember, back in the day, there was a kind of thinking that 100% is the kind of, of course, the legal limit. But if you go over 50%, this typically would be the S&P rating. I think that would be more thinking of the capital light. So probably capital light closer to 150 and then with profit is still above that. But that, of course, is decreasing. And [indiscernible] presentation will kind of show you a bit more on the details of the development of that business going forward. And now before you got your second question already.;

kind of required IFRS equity for the capital light business, given that it holds pretty strong CSM. That's actually a very good question and we -- internally, we calculate different kind of things about this because it's not an easy factor. The legal requirement for the asset management business, for example, is minimal. But then, of course, there's the operational side of things as well. So we believe what we've shown here with the 30% to 40% return on equity is a good description of the business. And like we've shown how much that generates that probably gives you a bit of an indication where the IFRS equity would be.

Overall, our solvency is very, very simple in a sense. We have our equity, and we have the Tier 2 capital loan, and then we have some CSM and that's basically it, so -- but that's a smaller amount altogether. So it is very low, but it's not a simple question to answer. So we've kind of decided that this 30% to 40% is probably a good way to look at how much the capital is required here.

Good. That's helpful. Then my last one, I could continue on the international expansion. You are taking some steps and continue investing in Sweden. You have some top line from there already, whereas the other countries like Norway or elsewhere in Europe, the topline is rather small still. Are you willing already to kind of invest in those countries where you don't have kind of a sufficient topline yet. So kind of before the topline comes in, are ready to make losses.

I guess in every business, 1 you start from scrap, you have to be ready in asset gathering type of business due to really it can't be like profitable in the first day or first year. And we do have quite a substantial assets under management or in Denmark. But still, we don't have yet office there. We have covered that from Helsinki, and let's see this is going to be the way going forward.

In Norway, we are -- at this moment, we are service in Norway and getting new customers try to get new customers from Norway, from Stockholm. So we have 1 person who is really concentrating the Norwegian market. So -- but going forward, I guess, once the business spreads, we will have more people in those countries.

Any other questions here at the venue. Antti.

I would like to continue regarding the potential M&A. Is there some geographic focus area that you're looking for something in Finland, something in Nordic, so maybe something international.

As I said, we are looking at everything. But of course, Finland is -- everybody knows it other -- and everybody has discussed it each other, at least for 10 or 15 years and still it's very fragmented. It's interesting, of course, that everybody is listed. That's a little bit different than in the other countries.

So definitively, Finland would be or easy. But as I said, it takes 2 to [indiscernible]. And then looking at international it's the Nordics. I had time to see that we would look for something outside of the Nordics. But of course, I think Sweden, Norway, Denmark, with, as I said, with the distributions we had -- and then also if we can find some interesting products. And maybe to add on that, that we said that we have allocation products. We are doing already all the asset classes. We have done that on our weak profit business for 25 years already.

So we've been in all the alternatives. We have all the equities globally. But then we have then chosen every now and then to take some other asset managers like the U.S. equities, where we don't see that we definitely will never have an edge on that one.

Thank you. Anything else here at the venue. If not, let's go for the questions from the webcast again. Regarding the cost/income ratio, what are the main areas and actions you have taken to achieve that significant decrease?

Well, I think Petri already alluded in his presentation that it's about the income growth and growing income faster than costs. And I think -- also in my presentation, I showed you that the different building blocks. Important factor here is that Mandatum obviously back in the days when the investment result was almost 100% of the profits, then of course, the costs were in a different position as in a business which is more based on fees and then, of course, our costs are basically coming from 2 sources.

One is staff cost and the other one is IT. And IT is probably the one where we see the kind of potential to still improve because we've taken a lot of these investments already. Like I mentioned, this pension policy management system as well. So there's a number of things that one can do, and we streamline different processes and across the organization. So when you're moving into a fee-generating company, then the cost, we could play a bigger role than previously. And our plan is to grow income faster than costs that, of course, cannot go to eternity because that will result in a 0 cost-income ratio.

But in any case, it's probably that we route that we focus on the cost side. And even though we don't have the official cost-income ratio as a financial target is very, very much internally. We will continue to report just like before, so don't worry about that, you will be able to track our performance just like before. with the same metrics, whether that's cost-to-income ratio, whether that's net flow and or any other metric?

And then let's jump back to the dividend. With the projected growth of capital light business, combined with profit decline of 10% per annum, do you see the dividends that are remaining at current levels past 2028 until with profit has diminished by around 2032, '34.

Yes. I think what the factors I would -- we don't obviously guide on that. But as I mentioned, there will be no clear hedge effect in terms of would disappear after '28, that's not the plan at all. It will become much more kind of based on the actual earnings streams, and we've given you that we expect that the capitalized business will grow by 10% in this period, and it will not kind of go to zero after that either.

So a significant part of that earnings stream can be paid out. And then, of course, as well, the with profit is not ending after '28 either. So it will continue to generate profits and release capital as well, but less than during the strategy period because like also Petri mentioned that the liabilities run off is the number -- it's gradually kind of slowing and the amount is slowing.

So I think those are the 2 building blocks I would look at. And as I said, there will be no pledge effect, in my opinion, anything to add.

Well, that this is now the 4-year period, let's see then. But of course, we have the ambition level is very high. And if we succeed in the capital-light business, so I definitely don't see any [indiscernible]

Any more questions here on site. Hans.

You had an interesting graph on the SCR development that you're expecting where you're at 950 now, and then you have [indiscernible] going out, which, I guess, is EUR 150 million then the with profits declined EUR 250 million. But then you have a capital build from the fee generating or the capital-light business -- why is that when it hasn't built any capital over the past 2 years?

Well, actually, the SCR has increased in that business over the period. But is the kind of problem with the capital business that is missing the other component, which is the own funds generation. So the actual net capital requirement is extremely low. So that only shows you the other part, the SCR part, it doesn't show the own funds generation. So in a sense, it's a bit misleading, but this is the way to kind of show that how we get to the EUR 160 million to EUR 180 development. So capital-light net capital cost -- capital requirement is very, very low.

And do we have any more questions here? If not, it looks like there are no questions. So let's take a short break. Please be back at your seats in 20 minutes that will be 5 past 2 as we continue with our program.

Welcome back, everyone. I hope you had a refreshing break. Let's continue with our program. This afternoon, we delve deeper into our institutional and wealth management strategy, our corporate client approach and the evolution of with profit business. We'll have another Q&A session at the end of the day. So please hold your questions until then if you're here in person. And for those of you joining online, please keep sending your questions at any time. Let's continue with the next part of the agenda.

I am pleased to introduce you Janne Sarvikivi the brand-new Head of our Institutional and Wealth Management segment; and Juhani Lehtonen, Mandatum's Chief Investment Officer. Gentlemen, please go ahead.

So hello, everyone, and I hope you had a refreshing break and you feel energized to take in some of the very exciting stuff we have for you this afternoon. My name is Janne Sarvikivi and I'm Head of Institutional and Wealth Management at Mandatum. And with me, I have Juhani Lehtonen, our Chief Investment Officer.

Good afternoon, everybody.

So as you heard now from Petri and Matti already earlier, the Institutional and Wealth Management segment is the growth engine of Mandatum in the future. It is the underpinning of the capital-light profit growth that you've been hearing about. So it's, of course, my great pleasure to be tasked with realizing the growth over the next couple of years together with my colleagues.

What is Mandatum currently? It is the leading Nordic credit and alternatives assets and wealth manager. We all know the product heritage that Mandatum has. We have a wide variety of products, but our expertise is especially acknowledged in the credit and alternatives business. We have many award-winning products in the credit space, but also in equities. We've received awards recently also in that space, for example, in the managed futures part.

Crucially, we have our own distribution, which, as you've been told already earlier, is the fact that will enable us to get a better grip on our customers, where we feel that we get a real connection to the clients and we can serve them better once we have that own distribution. That is key to our strategy. We have a wealth management business in Finland, where we cater towards ultra high net worth individuals and high net worth individuals, family offices all across Finland in different parts of the country.

We have an asset management business in Finland and the Nordics, where we cater to institutional investors, professional buyers and we have also started dipping our toes already outside of the Nordics, as Petri told you in Continental Europe.

Our product offering consists of credit products leveraged finance, private debt, fixed income products. We have an alternative offering with private equity, real estate that we do directly and through funds of funds. And then we have an equity and allocation product group. All of these products form the basis of our discretionary mandates that we offer to our clients.

Our assets under management are currently EUR 8 billion, almost and our profit before taxes was EUR 27 million in 2024, and it has grown really nicely during the past couple of years, as you can see on the graph.

I'll now hand over to Juhani to talk a bit about our heritage and our history before I tell you more about what we're going to do in the future.

Juhani, please go ahead.

Yes. Thanks, Janne. As Petri and Patrick already mentioned, we have a strong heritage on portfolio management. We've started investing in our life portfolio 40-plus years ago. And since we started in offering asset management services for Finnish clients back in 2008 we started with fixed income, equity and allocation products, discretionary mandates.

We were front runners in Nordic high yield, for example, in the Nordic space. We started to offer private debt, private credit solutions to our institutional clients based on our own heritage, investing in our own balance sheet, like in each of these asset classes. We build a team on leveraged finance to start offering loans, senior loans to our customers and where we are also front runners in Finland.

Private equity, we've done for a long time for our own balance sheet, we invested in teams and have now an offering also for capital light side, likewise, real estate. We are 45-plus professionals here in this building, Helsinki and also in Stockholm. And I need to say that is in every asset class, our teams work both for on balance sheet and client assets. So the deal flow goes through the same teams, then that's very important, I would say. This is an example of our, one of our core areas, our credit platform, as we call it. We built this to on our strengths in credit. We start with the investment grade. We manage money market, of course, and then an investment-grade fund for capital-light -- it's a daily liquid usage funds being our largest actually at the moment, EUR 1.5 billion.

Then on high-yield side, our Nordic high yield, the award-winning fund now around EUR 800 million. Just recently, we started a new fund called European High Yield Fund. I'm going to touch that a little bit later in this presentation.

Leverage loans, as I mentioned, is a unique asset class that we are building and leaning towards our heritage, where we have strategies, 1 in our investment wrapper and 1 in our Luxembourg rife format. In opportunistic credit and private debt, we were on a closed-end side. And in private debt, actually, we are market leaders in Finland when it comes to the usage of asset manager in institutional side. We are rigorous bottom-up credit screeners.

So it's the credit process that goes through the investment committee workflow. I'm heading these committees and the committee members are in every asset class built on other asset class seniors and also team leaves. So the bottom-up credit work is actually supported also from the top down. So in different market environments, it's also important to implement top-down strategies, if needed.

Here is one example where a recent example where we have really gained performance from the Kobe times where actually inflation started to creep heavily higher followed by rates soon after. It was a really turbulent environment for credit in overall markets. Even if I say myself, we handled this environment very well. We were heavily hedged on the interest rate sensitivity side in those products where we had fixed coupons. Many of our underlying credit products have a floating rate nature like loans and also partly our Nordic high yield.

So heavy top-down layer with a rigorous bottom up of credit screening have resulted, for example, in our flexible IG, a 13-plus percent outperformance versus the relevant market. Going further north, Nordic high-yield beating another 14% of the underlying European higher markets. So I think this just showcases one of our strengths when we truly care about our clients' assets. Opportunistic credit currently is our performance-wise leader from the COVID era. This is the team -- our credit team. Of course, we run our equity teams and private equity and real estate teams and so forth.

We've won now 3x the best European high-yield fund award for our Nordic high-yield 2x in the 5-year category and 3x in the 3 year. I need to say that I'm very confident that with this team, we are able to deliver the growth that our colleagues are leaning.

Thanks, Juhani. Juhani just gave you a great example of our deep product knowledge within a certain asset class and segment. And that's just an example of how we do things rigorously together with our clients and in conjunction with our clients. We invest alongside our clients, and that's an important thing to remember. And it's also important to remember that Credit is not the only asset class Mandatum is good at like -- but here just said, we've done equity investing for 25 years on our own balance sheet. We have exceptional knowledge in real estate and alternative assets, private equity. So we have a broad knowledge across asset classes. It's very important to have great products to have portfolio managers who do their work diligently.

But it's equally important for our wealth management business to be close to your clients and highly regarded by your clients. And I'm proud to say that if you look at the rankings made by SFR, we have been recognized as the top institutional asset manager in Finland in 2024, which is an achievement that we are really proud of. And especially the journey from 2020 has been quite remarkable. This tells us that the institutional most demanding professional customers appreciate our service very much. But not only that, because we have an important segment in the private wealth management business in Finland.

Those customers are very happy with our service. If you look at the Net Promoter Scores depicted on the graph they are at 83%, which, as you know, is a very high number in terms of client satisfaction because that number can go from plus 100 to minus 100. So it really shows you that the clients appreciate our services. So we have the products and we have the service-mindedness and that -- those are the building blocks of any great asset and wealth management business.

The growth ambitions set by the Board are very ambitious. You've seen the numbers, they are high. The growth numbers are high, and the pressure is high. But we've shown that we've been able to do that historically. We have grown by 19% CAGR since 2017 across asset classes, across different client segments, which is clearly faster than the market.

So this gives me confidence in our ability to grow in the future to meet the ambitious targets that we've been handed. And -- you can see that the growth has been very nice in all of the different asset classes and customer segments. Also in equities, even though the equities part is rather small, it's worth bearing in mind that our allocation products include a significant portion of equity investments, and that has grown extremely nicely over the years.

So that shows you that it's not just 1 asset class or 1 customer segment. We've been able to show growth in all of those different asset classes and segments. Petri already earlier discussed the growth in the market and how that underpins our growth. It's nicer to operate in an environment where the market is growing rather than shrinking. We, of course, need to do better than the market, but its always nice to have a tailwind instead of a headwind from the market conditions. We expect that the Nordic asset management market will continue growing by about 8% CAGR in the future during the strategy period and the Finnish private wealth management market to grow by about 6% CAGR during the strategy period.

These are, of course, driven by the factors that Petri already mentioned, economic growth, increasing wealth and so forth. And this is something where we feel that we can certainly outgrow the market. I'll now outline the strategic priorities for the Institutional and Wealth Management segment. Firstly, we are going to accelerate the international growth in asset management. We've already heard that we've been successful in doing that earlier on a smaller scale we will do that in the future as well, expanding into new markets while we do it.

Secondly, we intend to enhance the product offering to support growth. in particular, in the Private Wealth segment, equities, for example, is an important product segment because people tend to think about equities when they think about investing and wealth management. We are going to enhance our product offerings, both in terms of new products as well as improving on the products we already have. And thirdly, we intend to double our market share in private wealth management. That might sound ambitious but I'll show you later why I'm confident that we can reach this goal as well.

First, international growth. You've heard a lot about it today already. You asked some questions from the CEO already earlier during the Q&A session. But I'll try to tell you a bit more about how we intend to go about it. The important thing to understand is we've done this already for a couple of years. So this is not something new that we invented now. We have done this already, and we've been quite successful at it. We have our roots in Finland. We are building on those routes and the experience we have from Finland. We have 10 sales locations here all across the country in different locations. We have a sales location and we have already done nice business in both Stockholm and Denmark, and we have started dipping our toes into the Continental European markets, such as Germany, for example.

Our track record in Finland is extremely strong. We have seen 14% AUM growth since 2018 per annum. And our growth in Sweden and Denmark has been even more impressive than that's 35%, of course, from a lower level, but it really shows that we've done the right things in our expansion strategy so far. We intend to continue this -- and the way to grow, of course, in wealth management is based on great products, you need to have sales people and we are going to invest in more salespeople going forward.

We're going to make sure that we are able to serve a growing number of clients in these different. We will go about it in a measured stepwise way. We are not going to do something stupid with shareholders' money. But we are building on the building blocks and the learnings we've had from Finland and Sweden and Denmark so far. And I'm very confident we will succeed in that. But in essence, it will mean investing in people, hiring more salespeople, more capable salespeople with the right connections because as you've heard, we are keen on owning the distribution channels ourselves. You can see on the graph on the right that we expect the fastest growth to come from asset management, international, of course, partly because it's the smallest area now, but also because we intend to invest in that.

In terms of margin levels, it's quite natural that it's going to be somewhat lower than our average margin, given the nature of the buyers, the professional nature of the buyers. But it's also going to grow fast. So it's going to be a nice addition to the bottom line. The Wealth Management business, as you can see, is much higher margin, and I'll talk about that in a second. Our second strategic period -- strategic objective here and priority is to enhance our product offering to support growth.

Some of you asked about the products already earlier, and I'm quite happy to tell you that our -- we are expecting significant growth in our equity category. And as I said already earlier, in private wealth management, our allocation products contain a large part of equities already. So the growth comes from those areas in terms of product categories. We have a very strong heritage in product development in all asset classes, and we've proven to be quite resilient in different market environments. We have had extremely strong and extremely strong tracker in credit products in the recent couple of years.

And I'll just hand over to you, Juhani for a minute to talk about our most recent new product in the credit space, which is the European high-yield fund.

Thanks, Janne. Yes. So we launched just recently our new missing part of our platform so far. So European high-yield total return fund. We target the size of the fund being a usage from our usage Luxembourg usage platform to be a EUR 500 billion around. We are -- as we are not an index followers or index hugger, we are on -- it will be a concentrated portfolio of 50 to 100 positions. Also capable of the toolbox so that we are targeting to be at the relevant markets by 2.5% gross will include hedging possibilities and also CLOs, for example, as an underlying Fonicoincidence is that it's actually the launching date is my 50th birthday.

So I'm really excited about these products. Back to you, Janne.

Thanks, Juhani. And this is just an example of when we see a market opportunity when we see client demand. We use our existing knowledge, for example, in this case, the Nordic high-yield expertise to build a new product that will then provide value to us and the clients. And this -- the similar approach will be used when we launch new products in other asset classes. We have been successful in launching the managed futures product recently, which has had an extremely good performance lately. And it's a product that we're very proud of and that we expect to sell quite well in the future.

So this is just an example of how we are able to launch new products in the right environment. Our third strategic priority is to double our market share in private wealth management. As you know, this is a business we do in Finland. And -- like I said earlier, it might sound ambitious that we are about to double our market share in this business.

However, one of the reasons why we are very confident that we can do this is our current market share is very low. It's around 2% of the market. And that might sound surprising, given the name recognition and the high value of the Mandatum brand. People tend to know who we are. But the Finnish market is quite oligopolistic in that sense. It's dominated by 2 large players, 2 large banks, and the rest of the market is fairly fragmented. And we feel that there is ample room growing our market share in this business. The way we intend to do it is, first of all, I've already talked about enhancing our product offering.

Private wealth management is much about managing our clients' total wealth, total portfolio. And when we do that, we need to be good in all different asset classes. We are that, but we have to make sure that we have a product for each asset class that fits our clients. And equities, for example, is an asset class that many private individuals think about when they think about saving for their retirement, as I said earlier. So this is part of the building box that we intend to use.

The second building block is by increasing customer activity. Again, if you want to grow in wealth management, you need to have more people. Our clear advantage when compared to competitors is -- the fact that we are close to our customers. Our customers feel that we are very close to them, we are active, we contact them, we speak to them. And in order to do that, we need to hire more people. and, of course, increase the current customer activity because 1 of the things we intend to do here is, of course, also increase the share of wallet from existing customers.

So increasing activity and enhancing our product offering, we'll do just that. Thirdly, and very importantly, we intend to utilize our network from the corporate segment. Petri already mentioned that the cross-selling we've been able to do between these 2 segments has been extremely successful in the past. But I expect it to be even more successful in the future. because we intend to enhance the way we do it. We intend to make people even more aware of all the possibilities that we have for this cross-selling in different locations all across the country.

And finally, we will use our strong brand name recognition and the high customer satisfaction that we have to gain more market share to gain a larger share of the wallet and of course, to gain new customers. So that's basically the path we intend to take to double our market share by the end of the strategy period. And this part of our business is, of course, the highest margin business of our -- within our institutional and wealth management segment. So it will most certainly be good for the bottom line. All of this will be based on the concept of saleable growth that you've heard both Petri and Matti described earlier.

We have done key IT investments. We are decommissioning legacy IT systems. We will be able to invest in IT in the segments that we expect to grow, but without any major investments. We have efficient processes in place, and we have the product knowledge and the product structures in place. And of course, the talented individuals and the motivated people we have who are incentivized in the right way are the foundation of all of this, and we intend to invest into these people even more and hire more people. And there, you can see on the right-hand side, an illustrative graph of the profit before taxes of the business and the cost income ratio, which show a similar kind of trajectory than the group's trajectory as well.

What do I want you to remember when you step out of this room later in the afternoon, this business is the underpinning of the growth in capital-light profits. So this is the growth engine of the group. And I've told you about the different initiatives we have to reach those targets. Secondly, there's plenty of growth in the market. Even though we are a big player, a recognized player, a known player, our market share is still very small. It's small in Finland. It's really small in the Nordics and Europe. So there's plenty of market share to take. And the foundation for all of this, in addition to the great customer experience we provide are the excellent products we already have and that we've been able to show because especially when you sell outside of Finland, it's a lot about track record, of course, about client activity as well but we need to have the track record and get that in front of the client, and then we are able to sell our products very effectively.

Thank you very much. I'll now hand over to Tarja, who will talk about the corporate segment.

Thank you, Janne. Good afternoon, ladies and gentlemen. My name is Tarja Tyni. I'm happy to go somewhat deeper into how we leverage the leading corporate market position.

Let's start with the overview on the current status of the business and what is it what the Mandatum Corporate business actually includes and once again, how we leverage the excellent customer relations into profitable growth, be it corporate products or leading into wealth management. Let's start from our products on the bottom left of the page.

Our biggest product in corporate is the complementary pension. Then we have risk life products with insurance, personal funds and as a differentiating service, we have the advisory for incentives and remuneration. We have the same products throughout our customer segments, but the use cases and sales models are somewhat different. In labs and midsized corporates, we help the customers to motivate the management and personnel to reach the company's targets through effective incentives. Whereas with entrepreneurs and smaller companies, we solve the entrepreneurs issues and challenges first and then continue to the remuneration of the personnel, if that is applicable. The fee income can be split about evenly between the large and midsized corporates and then the smaller 2 subsegments. When it comes to financials, our share of the assets under management has been increasing steadily in recent years being EUR 2.6 billion in '24.

[indiscernible] is the biggest contributor to the AUM and to our revenues. Personal fund is growing fast and taking each share of the -- in profit terms, both pension and risk insurance play a big role. As you have heard, personal fund is kind of a start-up business but growing fast. Let's look at the markets. Our products have been growing, and we expect them to grow quite nicely also in the future.

Let's start from the pension, looking into the group pension, which is the far biggest corporate product overall in the market, we have seen some 15% growth in assets under management. That has been split about evenly in asset yields and increase of premiums. Our market share, as mentioned, is very high in this area. If we talk about the AUM, the assets, it is over 60%. In premiums, it is 45%. Clearly, you can see that this is something we have done for a long period of time very successfully. Also, the market for the risk insurance has grown nicely. Considering the premiums, the growth has been about 7% and we are one of the biggest players with 26% market share. The demand for both pension and risk insurance is healthy.

As Petri mentioned earlier, Finland is clearly underinsured if we compare to any Western countries. The background is that our trust in obligatory pension and social security has been very high but it is diminishing fast, which causes new demand for complementary arrangements and the most effective way to take those is through employee benefits. However, the market potential in risk and pension is somewhat different. You can sell the risk insurance to all company sizes from the smallest to the largest one and to all personnel groups from entrepreneurial and top management to whole personnel. Whereas group pension is more of a product to top management, key employees, partners and entrepreneurs. Also, personnel funds have been growing very fast in recent years and there is still plenty of room to grow further.

Our market share in new funds is very high almost 70%. But looking into the AUM, it is a bit over 30%. And the reason is that we have some very old, very large funds that take big, still a big share of the AUM in personal funds. Looking a bit deeper in Mandatum's role in these businesses. We have grown quite nicely in all areas, and we want to at least keep our market share in all products that we have. In propension, our AUM growth has been about 13%. So a bit lower than the market, very good growth, but a bit lower than the market. The reason for lagging a bit on the market is very positive. Also, the other players have started to make the market -- all our products are pushed products where you really need to have market makers. They are not selling by themselves. We are currently very alerted for the competition, and we want to, as mentioned, continue keeping at least our market share. In risk, our growth has also been a bit lower than the market, but we have caught up lately. And the aim is really to continue on that path. We have very high growth potential, as mentioned, and we have invested a lot in new products and tailor-made the stories for different customer needs.

Looking into pension and risk insurance, they are both very long term. The average lifetime of pension in our portfolio is about actually over 20 years. Also in risk, it is 15 years. Like pension, the pension assets are very sticky. It's not just the nature of the assets, but also in Finland, you cannot transfer the funds from one player to another. Looking into the growth in personal funds, we have outperformed the market. Clearly, our AUM growth has been almost 40%. Also the personal funds assets are sticky, but not as long term as in pension. Besides the growing market, 1 important factor in our success in the corporate business is a targeted market for it and efficient customer-centric sales. We have segmented the Finnish corporates for quite some time based on many different factors, the key factor being profitability and selected some -- a group of some 40,000 coverage as our focus groups focus group, and we have really concentrated our sales and service efforts on that group.

About 18% of that group are Mandatum clients currently. We also have a very successful and efficient sales network throughout Finland. We have specialized teams in Helsinki that are responsible for the subsegments for the concepts, for the sales models, developing them further step by step. And we have just started a new remote team to sell for the profitable small companies. In rest of Finland, we have offices in 9 locations. The people there are generalists, they are selling to all local companies together with the wealth managers. So in each office, we have at least 1 corporate account officer and 1 wealth manager. We have totally about 50 sales persons in corporate business. Thus, we are too local with well-optimized excellent people. Our sales model relies on solving the customers' challenges and following up regularly.

The outcome is seen on the Net Promoter Score, which has been well over 80% for quite many years in a row. So let's move to strategic priorities. The first one is to utilize the full potential of a growing market in all corporate products, but especially focusing on risk sales and also leverage the unique network of customers, especially the individuals making the decisions and being the beneficiaries to support post corporate and wealth management growth.

And thirdly, to increase the sales capacity and productivity. Let's take a closer look on all of these 3. Starting with the market. As mentioned, the key in our sales model is to leverage the excellent relationships with the corporates. To safeguard payments on the old policies, sell new products and widen the current ones. And obviously, we want to be hungry also for the new customers, be it competitors, customers or nonpenetrated companies.

On the left side of this page, you see our penetration in our focus group, target group in different products. We have the biggest coverage currently in pension, about 15%, the lowest in personal funds. We expect to see a step change within the strategy period -- but we don't expect to get to 100%, not in the strategy period, perhaps never because, as mentioned, all our products are still pushed products where you need to be able to tell the benefits to the customers and repeat them regularly. The new customers are important, but in euro and profitability terms, the most important factor is to take care of the old customers.

As mentioned, our products have a very long lifetime and it's very essential to take care of the annual premiums. They have a huge role in shareholder value. It is also easier to sell more to old customers than gets totally new ones. But to safeguard also the long-term growth, we need to also build on new customers. As mentioned, we see the biggest potential in risk insurance as our coverage is already lower than in other products. And it is very effective employee benefit. And most importantly, as mentioned, there is very natural demand for that product. As you see, there is a lot of potential also for new personnel funds, but that you can only sell one. There can be only 1 personal fund per corporate.

Overall, in all these areas, there is a very good growth potential. As you know, we never meet companies and the company's are never the decision makers. We always meet the decision makers within the companies. And it is not just the corporates that we have analyzed and segmented well. We want to understand who are the people, who are the right people behind the companies and meet them regularly. And -- as you know, the beneficiaries of our products are also the key decision makers within the companies, be it the top management or key employees. And as it happens, these decision-makers and beneficiaries are also among the wealthiest people in Finland or on the way to become wealthy.

Like Petri was saying earlier, also new wealth in Finland is born within corporates, be it M&A, be it dividends or management incentives. And this unique combination of our unique network has already resulted in a very high number of our new wealth management clients being from the corporate segment, having a corporate connection and also in accordance to our analysis, about 30% of the wealthiest people in Finland, they are already Mandatum clients with a product or another.

I have raised a lot of the excellency of our people to get very good customer satisfaction. And -- we obviously need to expose more customers to that for the benefit of the customers and Mandatum. We have a lot of means to increase our productivity. We want to meet the right customers at the right time with the right message and have as many meetings as possible. All productivity improvements should result in better results. We have a lot of issues like everybody else in the toolbox and want to use the different tools wisely. Be it, for example, advanced analytics, process developments, digital service or obviously, the newest 1 AI agents running there on the right places. And we are also investing in some additional salespeople.

The aim is to increase our customer meetings by 50% until the end of strategy period. Our current sales conversion is already quite high, 20% of the unique customers meet, but we want to and we can increase also that to always productivity improvements. And obviously, all that should result in higher sales and higher premiums and obviously, more happy customers.

Like in other areas as well, this additional growth will increase in additional profits. Also, our business in corporate is quite profitable already with optimize investments and would got cost control, we can have a step change in profits as well.

So finally, key takeaways from the corporate business. First, there is significant room for growth in corporate business itself. Second, we want to continue to be the key source for doubling the market share in wealth management. And we are targeting for a significant increase in sales activity and product.

Thank you. And now I welcome

Jukka Kurki to the stage. Welcome.

Thank you, Tarja. So one more to go before we have our second QA. My name is Jukka Kurki, and I'm responsible for the [indiscernible] business. Today, in the presentation, our focus on strategy and also dividend capacity related to this area. But before that short adoption to this [indiscernible] business. This business has been in runoff status now more than 20 years. And the majority of policies come from the pension policies sold in 1980s and 1990s. And the majority of interpersona which, together with our active liability management means that liabilities are decreasing quite fast.

[indiscernible] is also sticky and very predictable. Average currency rate is 3.1% and the highest funds being 4.5% and 3.5%. And when it comes to profit sharing between policy and shareholder that is based on risk return type of thinking. [indiscernible] are well secured, for example, to resolve a duregulation. And because of that limited risk, fair benchmark for policyholders' return is low-risk government bond yield.

In latest years, these guarantees, especially the highest ones has already exceeded this benchmark, which means that bonuses have been all well. And that is also what we expect to continue in coming years. In IFRS liability, best estimate bonuses and guarantees are already included into those liabilities.

Liabilities are discounted market causes yield, which means that the expected excess return over discounting that cost net finance results and no more profit sharing any more at that point. Last year result was [indiscernible] related to tire of EUR 116 million that is still a material part of Mandatum's result, but the proportion is decreasing as capital area is increasing. And also, we expect that this product are results will decrease at least in the longer term in line with the liabilities. But it's important to notice that this [indiscernible] business is profitable business. But because of these long-term guarantees, this requires quite a lot of capital. And due to that even though that our result in [indiscernible] has been good, expected return on equity is below our company target.

But that is the reason why this in [indiscernible] business, not the profitability as such. In September 2023 we had our first Investor Day. That was before we were listed. We disclosed also a strategy related to this area and 4 key elements behind that. We said that we will continue derisking of assets. And since listing net sale of listed equities and alternative has been EUR 230 million and due that listed equity allocation has decreased 5%.

We have also continued liability hedging and today, hedging ratio is close to 90%. Also, we have continued active liability management, which we actually started 15 years ago properly. And sales listing liabilities has decreased according to our expertise.

Thirdly, plan was also to generate more stable and predictable net financial result, which key driver would be excess return from fixed income assets over cost of liabilities. And since listing 6 quarters, next 6 quarters, Humate net finance result has been around EUR 150 million. And also the spread between fixed income [indiscernible] an underlying rate of liabilities that has been stable. The last one, which is more a consequence of the previous ones is was to release capital and since listing capital requirement has decreased and assuming 200 solvency ratio, capital release has been around EUR 100 million.

So putting together capital release and that one as a result, we have generated quite meaningful amount of capital since listing and strategy going forward, actually no material changes in that.

Our clear priority is to enable dividend capacity and main tools for that are net finance results derisking and capital release. We take a more close look on each of these, but let's start it the net finance result. Last year, net finance result was EUR 100 million. And first quarter this year was EUR 37 million. We started this derisking in the second half of 2022. And since that net finance is a to stabilize a lot, there is still some volatility, but all in all, now much more stable and also much more predictable net finance results as it was before derisking. The more we are moving towards fixed income asset allocation to more our result -- net finance results will rely on the spread between fixed income assets and cost of liabilities.

And on the right-hand side, you see that straight between existing marketed and unvalidated liabilities that have been stable during those years. It could notice that market conditions have been quite different has been negative rates, strongly increasing rates, stable rates and so on, but this page has been stable all the time. And when it comes to derisking, we are in a midway, 3 years ago, we had roughly 50% in listed equities and alternative assets.

Today, the allocation is roughly 25% and main movement in that debt, that is that listed EBITDA allocation has decreased to 5%. Our final target is so-called strategic asset allocation that is 90% in fixed income assets and 10% in liquid and transparent listed equities. This target allocation fixed with liability profile and also net run-off result is expected to be more stable, more predictable and also more transparent.

We have still 10% listed equity allocation in this target allocation even though that the stand-alone capital charge related stand-alone Solvency II capital charge related to listed equities is as high as 39%. But it's good to notice that when you have, despite small proportion in listed equities, actually, diversification benefits with the fixed income assets cut roughly 50% of that capital requirement. And that justifies this allocation in listed equities also in coming years. And on the right-hand side, you see that this will have a material impact on our capital requirement.

Today, stand-alone capital requirements related to this business area is EUR 430 million and if we could move overnight to this target elevation, that particles our capital requirement by 35% to EUR 280 million.

You can also see that there is no -- sorry, I come back to this capital allocation. As you see, there is no alternative assets in this target allocation and it definitely doesn't mean that we don't believe that asset class anymore, historical returns have been good or excellent in that area. But the fact is that with this kind of liability profile we have strongly decreasing liability profile we have. This kind of long-term liquid assets just don't fit with that kind of liability profile. Even though that the expected excess return would be tempting. Also, it's good to notice that capital charge related to those areas are quite high.

But anyway, because we have this 20,000 share today in those alternative assets, it means that we don't expect this path towards target allocation to be linear. It can be even so that we don't reach the capital allocation until the year-end '28, it depends, especially on the private equity exit market. But as our solvency position is strong, we can and we will wait until private equity exit market will open.

So this derisking has a material impact on our capital requirement and also our liability trend is very clear. We expect that liabilities will decrease by more than 50% and in coming 10 years period. And this alone would also have a material impact on our capital requirement, especially when we put this together, this library trend and derisking together, we expect that the capital requirements will decrease by roughly 50% on the year-end '28. There is Solvency II revenue on coin pre-regulators, which will increase capital requirements in year '27 and '28 but it will not change this big picture. As mentioned earlier today, we have roughly a stand-alone capital charge for us are a bit over EUR 400 million, so meaning that we expect that to decrease by EUR 200 million. And assuming, again, [ 200 solvency ratio ], that means that we expect that roughly EUR 400 million capital will be released until year-end '28.

But it's important to note is that it's not only about capital release when it comes to capital generation from this area. Our net finance has been good. earlier mentioned EUR 160 million since listing. And even though that liabilities are decreasing, and we expect this net finance have to decrease in the long term, in line with the liability we still expect that we could generate a meaningful amount of capital from this area also in coming years.

And together, net finance result and this capital release, we expect that capital generation from this area would be around EUR 700 million to EUR 800 million during that period. That, of course, depends on the financial mark.

So good data base was derisking towards more capital efficient at allocation is expected to enable also in the future, good and more stable net finance result. Derisking and liability trend will release capital question is how fast, but anyway, a meaningful amount of capital will be released. And following from these 2, we see substantial dividend capacity related to this business area.

Thank you and before -- let we have a second round of Q&As. So -- enters please step over here.

So actually, it just came to my knowledge that we had some technical delays in some of the slides during the 2 first presentations after the break, and we obviously apologize for that.

But we're now ready to begin our second Q&A session. This time, all of our presenters are here, so feel free to ask about the strategy, the capital-light growth or any other topics we've covered or not covered and you're welcome to submit your questions, obviously, either here or online.

But before we go into the questions, I'd just like to ask [ Yohan ], you joined Mandatum quite recently, what have been your first observations?

Well, I think the first observation is, of course, that the people are really great here. I mean it's nice to join a company with an entrepreneurial culture, especially when you enter into a phase of ambitious growth targets. The fact that we have people here, not just, of course, in the management group, but also in my team in the entire company, people are really forward-leaning and entrepreneurial. That's been great.

Okay. And then let's go for the questions. Actually, I missed 1 question by 2 seconds only in the last round, and that was for Petri, but I'm sure my colleagues here can answer on this one as well. So since the separation from the Sampo Group, Mandatum has successfully balanced growth with margins. What is your view on competition and Mandatum position in the market at the moment?

Thank you for the question. If I may answer. Since last 18 months, we haven't seen really a big change in the market environment. Of course, there's always tough competition in asset management and wealth management. But no, let's say, softening market or trends towards lower prices. I guess the price levels and competition is quite the same level that we saw already 2 years ago. It's hard, but with good salespeople with a good customer service and great products, you can survive. And in many cases, you can charge a little bit more than others if you have really great service and better products than others.

Great. And do we have any questions here on site for our presenters?

It's Sauli Vilen from Inderes. About your client segmentation in the private wealth. Some of your peers have leaned -- more leaned on the past years on the, let's say, private to premium banking segment, so to speak. I guess that's had below where you have usually or historical has been. So how do you see that clearly growing segment -- premium banking, I guess, it's the right term here.

I mean we're definitely targeting that segment as well. And I think that we have a very good chance of succeeding in that segment, in particular, because that segment is -- or it requires you to be close to the customers and to be able to give them a personalized advice, of course, at the right scale given the customer segments, but that's definitely in the cards for us as well.

Then on the same topic. Have you done any analysis regarding that? What is the key reason why private clients switch to you? Obviously, they have the portfolio on some other play, mainly, I guess, on some bank. So what are the key reasons for the change?

I think there are 2 reasons: products, we have great products. And the other, I don't know if it's more important, but at least equal importantly, it's the service level. Because we have customer services in our DNA. If you are a customer at a very large institution, you might feel overlooked in some situations. But our very strong focus is to be active towards these clients in all market conditions and in particular, when it gets difficult, and that's when it's possible to win clients also from competitors at times.

Then on the alternative side, you mentioned that you as want to grow there also. Do you see you still being in the space of private equity and real estate? Or do you also see possibility to expand beyond these sub-asset classes in the alternative side.

Well, I'll start and then give over to you, Johan. But like our chair said earlier, we're looking at all things. So look, we're definitely open to new asset classes as well. And as you pointed out, there are growth opportunities in -- outside of the alternative assets that we already offer. And for sure, if the market conditions are right and the client demand is there, we will expand into new asset classes as well. But Johan, maybe will want to expand on that?

Yes. We have teams on private equity, both in internal and then fund-to-fund program that we are at fundraising currently. And the real estate, both fund-of-fund, European-wide strategy and then our own products. Then on private debt, private credit, especially where we are market leaders. That's something we are really also trying to grow even more in Finland. And yes, it's -- many of our customer base, they do have actually quite long horizons. For example, private individuals who have their so-called third pillar pension or voluntary pensions in our wrappers. They do have long horizons where some of that illiquidity premium shoots pretty well, and also institutions, of course. So yes, that's, of course, one of our core areas is the alternatives, yes.

Thank you, Jaakko Tyrvainen from SEB. A follow-up on Sauli's topic, specify a bit. You are relatively small in real estate, given the situation that we are seeing now in the Finnish market, are you seeing opportunities in that field?

Yes. Yes. Of course, we are looking at the market all the time. And let's say so that we think that this finished real estate market, let's say, freezing or trouble troubles are not yet behind us. And we haven't seen that many case assets on the table, meaning that it will be the no-brainer to do some big moves on that side. So there is a small decrease in pricing, but I think not enough to think about to do something big.

But this comes on the table? Of course, as a big player in the market, and large customer base, we will look at those opportunities on that time because we do have people to do that and knowledge expertise, but let's see.

[indiscernible] DMD Carnegie. Maybe going to a different topic, a very good improvement on the customer satisfaction, especially in the wealth management segment in the last few years. What have you changed a lot of things. But let's start with the most important thing. I guess we have been extremely good in increasing our customers' world. And this business, this is the most important. Once you can increase your customers well, then you are better than others on that, your customers are quite happy then.

But if you are even and you are not that much better, like -- and nobody can be every month, every week, every quarter, the best one, what we have also down it is, of course, better reporting to our customers. We do have a lot of alternatives in our customers' portfolios. And many of you might know that it's calls and commitments and reporting. And so it's not that a simple thing to do. And if you're better on that, the customers understand better the assets and -- how they are really going and cash flows and so on. So that helps that makes customers more happy.

The service, we have put a lot of effort to our customer service to serve our customers better. And we tried to be more active than before, even though 2 years ago, we thought we are really active, but there's still room to improve that. So there's a lot of things we have done. A little depends on customer segment to customer segment. But if you look at the institutional investors with its like, we were ranked as #1 last year. There's a plenty of things which we have improved also named ASG reporting -- reporting itself, customer service and also like I first mentioned, a 1-year, 3-year, 5-year performance, those are the things.

But if I continue a bit on private wealth side, it's also on what are the issues that you discuss with the customer. It's not only the assets and the performance, it is also what are the targets how is the private life, how do you achieve the different targets. So it's the way you differentiate on the overall story with the customer.

And of course, added value services like legal services kind of things.

And I think it's fair to also point out here that our structure with the insurance rate is quite unique in the market. It has definitely benefits. It makes -- kind of reporting easier and none of our competitors, we have the same structure. There are some also tax benefits for booming assets within the rapport. And I think the point that also Yohan brought up earlier, and that goes for sales question as well, the Finnish wealth management market is a bit strange. There's 2 like massively big companies with huge market share. Some one could almost say naturally be market share, and that means that probably the client service hasn't been at the level that it could be. I think there's a number of reasons I think that's also a kind of market structure thing that it makes sense and pretty strange anymore compared to many other countries.

Great. And then on kind of now switching on mind to growth. You want to grow the tax profits that requires some investments into new personnel. At what -- how are you looking at the 10% CAGR? How much is going to come next year? How much is going to come in 4 years? So how backload that is that in your mind?

Well, I think it's actually pretty straightforward. Of course, the market has -- will have an impact that is clear because the AUM net flows are important drivers here, especially on the institutional side and that has an impact. So it's impossible to say the average return on equities over a long time, I guess, is around 7%, but I don't think it's ever been 7% in a single year. So I think it can be a lot depends on the market assuming kind of average returns. And as I said, the plan is based on around 10% AUM growth, which I think is achievable. And the market will have an impact there. So I can't really -- how back-end loaded or front-end load it will be -- it's hopefully linear, but the most likely not.

Hans, Danske Bank. Just on the corporate pension side. You showed some interesting sort of statistics with the 61% market share. And then I was thinking about the 17% market share, you out -- fun sort of number of corporates. It wasn't immediately obvious to me. How much of the growth is kind of coming from upselling your current customer base? How much of the growth is coming from taking a larger share of that -- the customers that you don't have today? And why is there such a big difference? Is it more because you're kind of big within large customers today and want to take a bigger share of the smaller customers?

The key is really the combination, and like I was saying, from a value perspective, it is clearly the old customers taking care of them, making sure that they continue to pay, selling more, it has much more value currently than getting customers. And also, I would expect -- I don't have numbers, but let's say, typically 20 or something to us that overall thinking about corporate premiums. But we also need to take and have new customers.

But the key is really that, for example, with the current customers where it may well be that our market share is biggest within the largest customers. So at the same time, they are quite well penetrated, but also there are a lot of potential to sell more because typically, they may have just some product with the top management or some risk insurance for the whole personnel and then the deals tend to be bigger. But also the smallest corporates, we only target the profitable ones but we haven't had too much focus there in, let's say, last 10 years. But now when starting with the remote team, we believe that we can also more effectively cover them.

So it's kind of a very [ Sinotech ] pay where we want to meet the same customers and be able to grow in whatever area is most suitable and needed for that special corporate and then the decision makers.

And my second question is on the wealth management and asset management side, you show these charts with the margins and growth, and you could sort of add another access to it and say, kind of value between those two. So my question is really in the discussion around products and geographies. How willing are you to sort of go towards growth on the expense of margins? And how much does it kind of steer your product and geographical expansion?

We are always going to be very disciplined on margins. But as I said during my presentation, it's obvious that margins will be lower in the international institutional market if you compare it to the finished private wealth management market. So we are willing to play with the rules of the markets, but that's not our competitive advantage. Our advantage are the products and then our sales capabilities.

And I guess the second part of that question is with the sort of market backdrop today, which is seemingly very good for asset management. Why not excel accelerate growth even more than your sort of current targets are indicating? Well, I guess we could always accelerate growth more. There's no prohibition of us growing faster than what we've targeted. But I think one of the key components of our strategy has always been to grow carefully in measured steps, so that we don't do things that are detrimental to shareholder value. So we want to test out stuff and once we know that we are good at it, then we will expand, and that's the way we've done the expansion so far. And I think we'll continue doing that. I don't know if you want to add something.

Yes. What is really hindering us to growing faster outside of Finland, for example, in the Nordics is we are extremely careful to who we are hiring here. So we don't want to take people in just because we suspend to grow. So we need 5 people in Denmark, 5 people in Sweden. All those people who are now working in Stockholm, for example, their hand big. They are really good ones they have experience from the area. They know the products already before they come and they have a proven track record. They can sell to institutional customers, which are really, really demanding customers. So it's not that easy to find right people. So if they would be the tons of people, we can immediately take them, but that's not the truth. So that takes time to get the right people on board. But once you get the right people on board, what we have also seen, they are performing very fast.

And if I may add on the portfolio management side, so for example, the credit platform of us, there aren't really a capacity constraint. So for us as a team doesn't really -- how big we are. So there's ample room to grow from our side as well.

And then last question on the with profits. You sort of show and you have great visibility on the decline on the liability side. And I was just wondering with regards to sort of operational leverage going both ways, how flexible is your cost base once your liabilities start to decline? And what kind of per annum decline in net financials should we be penciling in going forward?

Well, liabilities are decreasing around 8% per annum, 8% to 10% per annum. So that is best guideline for the net finance result and asset return and so on. And when it comes to cost base and as Martin mentioned, we are -- we will go live in next 2 weeks period with our biggest portfolio liability converted to new and modern IT system and next one will be converted in Spring '26. And after that, all our profit policies are administrative in a new and modern IT system, and that gives us scalability benefits and also helps us to also manage our cost base.

But that's very -- actually a very, very good point that you need to kind of be very stringent on the cost base on businesses that are structurally declining and that is something that the whole management team is paying a lot of attention thinking about different ways how to kind of achieve that in an efficient matter because Unfortunately, the liabilities, they declined in a fairly linear way, but the costs are not the same way linear. But that is one of the key priorities for the strategy period as well to make sure that we look at all options how to do it as efficiently as possible.

I'm Sauli from OP. You have ambitious yet reasonable targets now for the next 4 years. But what you see is the biggest risk, and I don't mean the full financial market meltdown, which it would be probably for asset management but something else. What would need to happen in the competitive environment or clients or anything that would cause you concern?

Yes. I think the capital market big problems on that side will affect, of course, but that's something which is not in our own hand. We have a limited amount of possibilities to really affect the capital market as such. I'm quite sure that our portfolio when we are -- it's main -- it's quite big part is the alternatives and credit and fixed income. It's a little bit more predictable and then if you have a lot of equities and so on going forward for the different market scenarios. But I would say that it's, like I say, the best thing to improve your business in this business is to be good in performance and make our customers more wealthy -- if you missed that for a long period of time. So you are born investments. So portfolio management is not doing a good job, that will affect your business. no matter how good people you have on sales, you don't have a good enough products that will really affect your business. So our port management is -- they had a crucial role in our success going forward.

And if I can add to that, just Peter touched upon this earlier, but hiring the right people is a key constraint. So we need to be able to hire the right people, in particular than in our international expansion and also the finished private wealth management expansion and we've proven that we've been able to do that in the past, but we need to be able to do that a couple of more times in the future. So that's one of the constraints, I would say.

From a corporate market perspective, so far, we have succeeded quite well also in the times of recession. So obviously, if the companies tend to decrease their personnel rather than increase that has some effect, but we have survived those quite well. But looking into Finland overall, and you all know this discussion about the missing growth in our markets. I think that we all share the same ambitious target of having the whole Finland growing, which only can come through the corporate is growing. And obviously, the biggest threat for the corporate business is to have the whole country continuing in the path where it is more perhaps stagnated or even decreasing volumes of the businesses rather than increasing. Then overall, I think that we are in trouble. But we certainly want to aim for helping for the growth rather than the viewers.

So you don't see any potential market trends that would weaken your -- we get the competitiveness of your current offering. For example, I think that if we would see very low interest rates again and your portfolio is quite leaning on credit pads?

No. We don't really say that as a threat because we have leave that through. And we were successful or on that time. So we were really good in alternatives on that time when the interest rates were negative or 0. So on that time, we sold a lot of private debt and so on. So I think it's you have to be just flexible. There's certain demands from customers. They do have same money, and they have to put it somewhere, and we just -- which has to be flexible to hear our customers and adjust our offering based on the current situation. But we have laid that through.

And many of our customers, I mean, they have a fixed income allocation. So they will be investing in fixed income no matter -- no matter what the situation is. And in those situations that you just described, even though that's on our main scenario, it becomes even more important that we are skillfully managing the clients' assets and then I think it's reasonable to expect that we will actually gain some business there.

Yes. Maybe to add on my side as well. So looking at the past 15-plus years, with the team has been investing through financial crisis, then euro crisis, 0 rate, negative rate environment, call it, water update in Europe and now trade wars and all that. So there's been plenty of volatility in the market. And I think we have handled those situations fairly good as we tend to be -- as we are not an index huggers. So we tend to be very active when there's opportunity set. And many of our clients think alongside. So they will invest in those turbulent times, and that's a really, really powerful for our performance to have a fresh incoming money when there's opportunities in the market.

Okay. And then just to compete. I guess it's like I have mentioned before and someone of you have even stated on that put it at on the paper is that -- we don't give our sales forces that chance that they can somehow explain their poor performance because of the market conditions. And that has really affected we have that kind of culture so that even in bad times and in crisis situation, we have been good in sales and net flows. So we don't give that explanation possibility to our sales forces.

Thank you, Petri. Then let's take a question from the webcast for your -- have you ever considered to divest the with profit book now after the interest rates have returned higher? Or is the book so linked to the same customers, so it's not an option considered or does your financial regulator do not like the idea to lose control of the old pension book -- perhaps for you.

Good. Yes. we have to remember all the time that the product business is a profitable business. So we are not in that sense, we are not forced to do anything with that kind of things. But yes, during these years, we have investigated all options. And actually, we did 1 transaction 10 years ago but then we acquired portfolio. And when we see that there was a good opportunity to do that. But to be honest, we haven't seen great options to divest so far.

That's all clear. Then we were talking about the recruitments and how crucial they were we have a question about what kind of people are you then recruiting? And how risky is it to grow the head count?

What kind of people we want to have here? Like in my opening slides, I said we have entrepreneurial culture here. So we want to have people who are really entrepreneurial. And we -- and people who believe themselves and people who believe the company. And also, they believe themselves so much they are willing to take, let's say, for a salary decrease, meaning fixed salary and believe the variable compensation. We really believe variable conversation. We are selling those schemes to our customers as well through our compensation business. So we very good people with experienced people, but also very attitude wise. So they really believe themselves and are willing to be online the shareholders' target as well and believe in those.

And also ambitious team players and positive people.

And then, of course, with regards to the international expansion, in addition to all of these attributes, they need to have the product knowledge and client knowledge. So they need to have existing networks that they can utilize, yes.

Then a question about the asset classes. When it comes to products and product mix, would you like to move more into equities or stay more with your excellent alternative product range.

Well, like I said during my presentation, there's plenty of room to expand with our current product offering, but we also want to explore options within, for example, equities, how we can grow our business there. And there, as Petri mentioned, at some stage, we also need to look at what we can do ourselves in an excellent way and where we need outside partners. So we need to package a product to our customers that will provide the best possible returns, and we will for sure include equities in that portfolio as well.

And then back with profit business. What is the with-profit business doing to maximize profits from that segment to complement the freeing up of capital?

Sorry, please repeat, sorry.

Yes. What is the with profit business doing to maximize profits from that segment to complement the freeing up of capital.

To maximize, of course, what is Johan doing daily that comes from the net finance result. But of course, we are -- I see that we are now more than maximizing results, we are optimizing capital position and optimizing expected return. So we are not in that sense, maximizing the results as such, then they should take different kind of steps.

That's all clear. Thank you. Do we still have a final question among the audience here at the venue anyone?

If not, would you, Petri, join me in for the closing remarks.

So, Mandatum Investments, thank you for your attention today. It has been a long day. Some takeaways from all our sites. We have very ambitious targets going forward. And hopefully, we have managed to explain what are the ways to really fulfill those targets. I see that we have very good momentum in the company. We have extremely happy customers NBS in a wide range of all our customer segments is very high. We have very satisfied employees as well, which are incentivized in line with the shareholders' target as well. We are very attractive when it comes to dividends. [ EUR 1 billion ], at least is a big number. And we see there's a lot of ways to grow. And it's a lot of ways to do better profit, not just increasing our business and growth. Also, we see there is a lot of to do in order to improve our cost income ratio still, so make this company more efficient, at the same time, it's growing in markets we have just shown to you.

This is my conclusion and...

Well, that was a very good conclusion. Thank you. Thank you, Petri, and thank you all for joining us, both here at the venue and of course, online. We hope positions have give you a clear view of our strategy, our performance and the opportunities that lie ahead. We appreciate your time, your questions and your continued interest in Mandatum.

And if you have any follow-up questions, we at Investor Relations are, of course, happy to continue the conversation. So on behalf of the entire Mandatum team, thank you, again, and we look forward to seeing you soon.

Thank you.