Mandatum Oyj · OMXHEX:MANTA
Mandatum Oyj — FY2023 Earnings Presentation
41 slides from Mandatum Oyj's earnings presentation, Feb 13, 2024
Slide 1: Mandatum Group Result presentation FY 2023
Mandatum Group Result presentation FY 2023 13 February 2024
Slide 2: October-December 2023
October-December 2023 ▪ Solid PBT EUR 46.3 million despite the decreased discount rate ▪ Strong net flow EUR 209.9 million ▪ Stable fee result EUR 13.4 million in line with the previous quarters ▪ Sales activity at a very good level, supported by the strong product offering in this market environmen
Slide 3: January-December 2023
January-December 2023 ▪ A strong year 2023: PBT increased significantly to EUR 210.4 million. All result components contributed to the growth ▪ Client AuM up 15% y-o-y to EUR 11.9 billion due to EUR 754 million net flow and positive market movements. Both AuM and net flow at a record level ▪ Fee res
Slide 4: Mandatum's financial targets
Mandatum’s financial targets Target 1–12/2023 Annual net flows2 Netflow EUR 753.8 million, 7.3% of Client AuM (medium-term) 5% of AuM Focus on strong and profitable growth of capital-light offering1 Disciplined Fee margin 1.2 (1.2) % Pricing and fee margin Improving Cost/income ratio 66 (67) % Cost
Slide 5: Financial performance
Financial performance
Slide 6: Overview of the 10-12/2023 results
Overview of the 10-12/2023 results RESULTS 10-12 / 2023 10-12 / 2022 Change 1-12 ./ 2023 1-12 / 2022 Change €m 13 6 7 53 43 9 Fee result 9 4 4 31 10 21 Insurance service result 5 2 3 21 33 -12 Fee result from from investment and asset management services 25 78 -53 149 50 98 Net finance result1 169 8
Slide 7: Solid €46m result despite of material discount rate movement
Solid €46m result despite of material discount rate movement PROFIT BEFORE TAXES FEE RESULT NET FINANCE RESULT 250 60 160 149 53 210 140 200 50 43 120 40 150 100 78 30 80 100 76 60 50 62 20 46 13 40 50 25 10 6 20 0 0 0 1-12/2022* 1-12/2023 10-12/2022* 10-12/2023 1-12/2022 1-12/2023 10-12/2022 10-12/
Slide 8: Result by quarters since 2022
Result by quarters since 2022 PBT BY QUARTERS Q4 COMMENTS 100 ▪ Q4 lower than Q3 and Q4/2022 due 84 to lower net finance result 80 63 − Q3 was supported by material increase 60 56 in discount rate and positive investment 48 46 return 40 32 − Good investment return and slightly 20 increased discount
Slide 9: Result by segments
Result by segments RESULTS 1-12/2023 . €m Institutional Corporate Retail With Profit Other Total 1-12/2022 Fee result 20 15 18 0 0 53 43 Insurance service result 0 15 16 0 0 31 10 Fee result from investment and asset management services 20 0 2 0 0 21 33 Net finance result1 0 0 0 138 11 149 50 Invest
Slide 10: Capital-light segments
Capital-light segments
Slide 11: Full year net flow €754m exceeding clearly 5% target
Full year net flow €754m (7.3 %) exceeding clearly 5 % target Client AuM up to €11.9Bn NET FLOW (€M) CLIENT ASSETS UNDER MANAGEMENT (€BN) Inflow Outflow Net flow Institutional & WM Corporate Retail 563 475 11.9 453 450 11.2 11.2 406 10.8 347 10.3 323 3.2 291 274 251 3.1 3.1 210 3.1 199 3.0 157 96 2.
Slide 12: Q4 development of client assets under management
Q4 development of total client assets under management I&WM segment and credit products dominated the net flows Q4 DEVELOPMENT OF CLIENT ASSETS UNDER MANAGEMENT (€BN) NET FLOW DEVELOPMENT (€M) Institutional & WM Corporate Retail 2023 -42 -5.6% Q4 Retail 2022 Q4 -39 -4.1% 11.9 3.1 11.2 - 0.1 0.5 - 0.
Slide 13: FY2023 development of client assets under management
FY2023 development of total client assets under management 75% of wealth management new sales originated from the corporate cooperation FY2023 DEVELOPMENT OF CLIENT ASSETS UNDER MANAGEMENT (€BN) NET FLOW DEVELOPMENT (€M) Institutional & WM Corporate Retail 2023 -75 -1.5% YTD Retail 2022 YTD -77 -1.4
Slide 14: Institutional & wealth management as a growth driver
Institutional & wealth management as a growth driver Material AuM growth in all customer segments AUM BY CUSTOMER SEGMENT (€M) AUM BY PRODUCT (€M) COMMENTS • Strong net flows and high AuM growth Institutions Finland Institutions Int. External products Allocation products Alternative Equity in all cu
Slide 15: Fee income and fee margin development
Fee income and fee margin development FEE INCOME DEVELOPMENT (€M) 1 STABLE FEE INCOME MARGIN (%) 2 COMMENTS I&WM Corporate Retail • AuM growth originated mainly from credit products → decreased the fee 1.2% 1.2% margin by 3 bps 135 131 • Despite a slight decrease, the total fee margin remained stabl
Slide 16: Cost development and structure
Cost development and structure Stable cost development but growth on fixed costs COST DEVELOPMENT (€M) STABLE OVERALL C/I RATIO (%) 1 COMMENTS ▪ Total costs were fairly stable but 88 87 fixed costs increased, which was offset by lower variable costs 67% 66% ▪ IT expenses +€4.4m driven by inflation a
Slide 17: With-profit segment
With-profit segment Assets and liabilities
Slide 18: Net finance result
Net finance result INVESTMENT RETURNS (€M) COST OF LIABILITIES I.E. NET FINANCE RESULT (€M) Investment UNWINDING & DISCOUNT (€M) return (%) 1 -8.8% 7.8% 2.3% 4.1% 318 149 484 169 81 78 = 50 25 -3 -169 -144 -433 1-12/2022* 1-12/2023 10-12/2022* 10-12/2023 1-12/2022* 1-12/2023 10-12/2022* 10-12/2023 1
Slide 19: With-profit IFRS liability run-off profile
With-profit IFRS liability run-off profile Portfolio decreasing as expected, but lower discount rate hides the trend in IFRS liabilities DEVELOPMENT IN WITH-PROFIT IFRS LIABILITES (€M) IFRS 17 DISCOUNT CURVE • The discount curve decreased materially in Q4 Actual Forecast which increased with-profit
Slide 20: With-profit investment portfolio by asset class
With-profit investment portfolio by asset class ORIGINAL PORTFOLIO €3,340M SEGREGATED PORTFOLIO, €701M Q4 COMMENTS • Original Portfolio 1% • No material changes in asset 7% 3% allocation. 8% • Movement from high yield to 3% investment grade continued within the fixed income assets 9% • Listed and pr
Slide 21: Fixed income assets by credit rating
Fixed income assets by credit rating ORIGINAL PORTFOLIO SEGREGATED PORTFOLIO COMMENTS • New investments mainly made in 3% 5% investment grade bonds 10% 17% 22% • Original Portfolio 0% 25% • Investment grade asset allocation 59% (55% in September) 22% • High yield assets 24% (22%) 24% • Non-rated ass
Slide 22: IFRS Liability and asset sensitivity (original portfolio)
IFRS Liability and asset sensitivity (original portfolio) Asset and liabilities are managed by alignment of assets and active management actions SENSITIVITY BY MATURITY BUCKETS, RATES DOWN 100BPS COMMENTS 135% 72% • Interest rate risk related to first eight Hedging ratio 68% 75% 0% 71% years liabili
Slide 23: Fixed income assets and liability cash flow profile adjusted with swaps
Fixed income assets and liability cash flow profile adjusted with swaps ORIGINAL PORTFOLIO (€M) SEGREGATED PORTFOLIO (€M) 500 150 400 100 300 50 200 100 0 0 -50 -100 -200 -100 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 1
Slide 24: Development of policy savings (Original portfolio)
Development of policy savings1 (Original portfolio) WITH PROFIT POLICY SAVINGS 2019-2023, €M COMMENTS ▪ With-profit portfolios decreased in 3,000 line with expectations 2,500 ▪ Policy savings with highest (3.5% 422 and 4.5%) guarantees down by 400 €140m 2,000 374 360 ▪ Original portfolio 380 1,500 −
Slide 25: Solvency and capital generation
Solvency and capital generation
Slide 26: Solvency II position
Solvency II position High-quality capital position with resilient Solvency II ratio across market shock scenarios SOLVENCY II RATIO SENSITIVITY BREAKDOWN OF OWN FUNDS (12/2023; €M) Solvency II ratio 221% (12/2023) Base 221% Equity 233% markets (20)% Interest 210% rates (100)bps Interest 227% BREAKDO
Slide 27: Solvency capital requirement decomposition
Solvency capital requirement decomposition (12/2023;€m) B/S transactions impacted to the Q4 SCR development and now fully acknowledged SCR BY BUSINESS AREAS BREAKDOWN OF MARKET RISK ▪ Despite significant de-risking activities during the financial year, with- ▪ Equity risk is the most significant mar
Slide 28: Key drivers of capital generation (1-12/2023)
Key drivers of capital generation (1-12/2023) Solid organic capital generation but Sampo separation and B/S transaction dominating the total capital generation KEY DRIVERS Organic capital generation • Own funds: Stable growth of fee result and strong net finance result • SCR: Predictable, continuous
Slide 29: Overview of organic capital generation
Overview of organic capital generation Positive organic capital flows from several different sources COMPONENTS (1-12/2023; €M) SEGMENTAL CONTRIBUTION (1-12/2023; €M) - At 200% Solvency II ratio 29
Slide 30: Capital generation of with-profit
Capital generation of with-profit (1-12/2023, €m) • Total organic capital generation from with-profit business €200m (1-9/2023;€183m) • Own funds generation of €115m driven by positive net finance result arising from asset return exceeding cost of liabilities and from an increased discount rate At 2
Slide 31: Capital generation of capital-light business
Capital generation of capital-light business (1-12/2023, €m) • Total organic capital generation from capital-light business €70m (1-9/2023;€50m) • Own funds generation of €15m driven mainly by new sales • SCR reduction of €28m as new sales requires less capital than is released from existing portfol
Slide 32: Outlook
Outlook
Slide 33: Outlook for year 2024
Outlook for year 2024 ▪ The fee result is expected to increase from year 2023 provided that the market environment remains stable. While Mandatum has been able to maintain disciplined pricing and stable fee margins within capital-light customer segments during years 2022 and 2023, the fee result for
Slide 34: Appendix
Appendix Supporting materials
Slide 35: Sustainability highlights 2023
Sustainability highlights 2023 Mandatum updated its sustainability strategy, which emphasizes the three key themes of Mandatum's sustainability: responsible investment, promotion of financial security and a good working life, and sustainability in the company's own operations. Mandatum became partic
Slide 36: Sustainability in figures
Sustainability in figures Siqni index Mandatum’s GHG emissions NPS 76.8 84 Customer satisfaction in customer 1,180.7 tCO e 2 encounters on a scale of -100–100 in Employee satisfaction on a scale of 1–100. Including Scopes 1, 2 & 3 in 2023. 2023. (2022: 78.0) (2022: 83) (2022: 848.6 tCO2e)** Binary g
Slide 37: With-profit liabilities 1-12/2023 – Original portfolio
With-profit liabilities 1-12/2023 – Original portfolio DEVELOPMENT OF PRESENT VALUE OF FUTURE CASH FLOWS LIABILITY CHANGE ▪ Portfolio decreasing according to expectations but decreased discount rate during Q4 and full year blurs the trend. ▪ Liabilities decreased by 2.4% in 2023. During the Q4 liabi
Slide 38: With-profit liabilities 1-12/2023 – Segregated portfolio
With-profit liabilities 1-12/2023 – Segregated portfolio DEVELOPMENT OF PRESENT VALUE OF FUTURE CASH FLOWS LIABILITY CHANGE ▪ Liabilities increased by 4.0% in 2023. During the Q4 liabilities increased by 5.5% per cent mainly due to good investment return and significant downward movement in discount
Slide 39: CSM development – 1-12/2023
CSM development – 1-12/2023 CSM DEVELOPMENT (1-12/2023; €M) CSM SENSITIVITY (12/2023; €M) Discount rate (100)bps -9.2 Discount rate +100bps 11.2 Equity markets (20)% -55.9 Equity markets +20% 55.9 Credit spreads +50 bps -4.4 • Positive CSM development due to higher than expected AUM growth and posit
Slide 40: CSM breakdown
CSM breakdown IFRS 17 CSM by product type, and new business CSM by segment. If-portfolio excluded. CSM BY PRODUCT TYPE (12/2023; €M) NEW BUSINESS CSM (1-12/2023; €M) 0.0 2.2 9 9.8 129 7.6 Corporate Retail With-profit Total CSM RELEASE (1-12/2023; €M) 0.7 10.5 0.0 314 3.5 15.0 42.5 12.9 Corporate Ret
Slide 41: Mandatum contact details
Mandatum Bulevardi 56, 00120 Helsinki www.mandatum.fi