Mandatum Oyj · OMXHEX:MANTA
Mandatum Oyj — Q3 2023 Earnings Presentation
36 slides from Mandatum Oyj's earnings presentation, Nov 8, 2023
Slide 1: Mandatum Group January-September 2023 result
Mandatum Group January- September 2023 result 8th November 2023
Slide 2: Disclaimer
Disclaimer This presentation may contain forward-looking statements that reflect management’s current views with respect to certain future events and potential financial performance. Although Mandatum believes that the expectations reflected in such forward-looking statements are reasonable, no assu
Slide 3: Jan-Sep 2023 Highlights
Jan-Sep 2023 Highlights Continued solid performance and successful listing of Mandatum Strong Client AuM growth due to €544 million net flows and positive market movements Stable fee result and good net finance result supported by increased discount rate Organic capital generation of €233 million Pr
Slide 4: Institutional and WM segment driving growth
Institutional and WM –segment driving growth INSTITUTIONAL AND WEALTH MANAGEMENT CUSTOMERS CORPORATE CUSTOMERS RETAIL CUSTOMERS • The segment has been the core of • The challenges in the economic • On 15th September, Mandatum and growth during the year 2023, despite environment have not significantl
Slide 5: Strong growth on comparable result
Strong growth on comparable result PROFIT BEFORE TAXES FEE RESULT NET FINANCE RESULT 164 124 39 37 67 84 19 13 13 -28 -21 -51 1-9/2022 1-9/2022*1 1-9/2023 7-9/2022 7-9/2022* 1 7-9/2023 1-9/2022 1-9/2023 7-9/2022 7-9/2023 1-9/2022 1-9/2022* 1 1-9/2023 7-9/2022* 7-9/20221 7-9/2023 Comparable profit
Slide 6: Net flow exceeding target
Net flow exceeding target Both net flow and client AuM progressed according to plan NET FLOW (€M) CLIENT ASSETS UNDER MANAGEMENT (€BN) Inflow Outflow Net flow Institutional & WM Corporate Retail 563 11.2 11.2 10.8 475 453 10.3 406 347 323 3.1 3.1 291 3.1 251 274 3.0 199 157 96 2.2 2.1 2.1 46 2.0 3 -
Slide 7: Financial performance
Financial performance
Slide 8: Overview of the 7-9/2023 results
Overview of the 7-9/2023 results Significant result improvement due to strong net finance result RESULTS 7-9 / 2023 7-9 / 2022 Change 1-9 / 2023 1-9 / 2022 Change €m 13 19 -6 39 37 2 Fee result 7 2 5 23 6 17 Insurance service result 6 17 -11 17 31 -15 Fee result from from investment and asset manage
Slide 9: Strong Q3 supported by increased discount rate
Strong Q3 supported by increased discount rate PBT BY QUARTERS Q3 COMMENTS 84 Net finance result increased by €118m from €-51m to + €67m 62 56 48 Q3 good investment result due to 32 positive asset return of 0.5% and especially due to increased discount rate. Q3 fee result in line with Q1 and Q
Slide 10: Result by segments
Result by segments Expected transfer of IF portfolio supported retail segment result by €3 million RESULTS 1-9/2023 . €m Institutional Corporate Retail With Profit Other Total 1-12/2022 Fee result 15 10 14 0 0 39 43 Insurance service result 0 11 11 0 0 23 10 Fee result from investment and asset mana
Slide 11: Capital-light segments
Capital-light segments
Slide 12: Development of total client assets under management
Development of total client assets under management Growth driven by Institutional and Wealth management customers – Stable growth in Corporate customers DEVELOPMENT OF CLIENT ASSETS UNDER MANAGEMENT (€BN) NET FLOWS DEVELOPMENT (€M) 2023 -34 -1.5% YTD Retail 0.0 11.2 2022 -38 -1.4% 0.4 0.7 3.1 YTD 1
Slide 13: Institutional & wealth management as the core of growth
Institutional & wealth management as the core of growth Net flow growth driven especially by UHNWI and International Institutional customer groups AUM BY CUSTOMER GROUP (€M) AUM BY PRODUCT (€M) COMMENTS Institution Finland Institution Int. UHNW Private WM Fixed Income Equity • Net inflows continued
Slide 14: Fee income development and composition
Fee income development and composition Stable fee margin and fee income growth in line with AuM FEE INCOME DEVELOPMENT (€M)1 STABLE FEE INCOME MARGIN (%)2 COMMENTS • Stable 1.2% fee margin. 126 • Average AuM in 1-9/2023 around 3% 1.2% 1.2% higher than in 1-9/2022 fee margin 98 101 development in l
Slide 15: 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 87 Total costs stable, but fixed type costs increased which is offset by lowering variable costs. 65 65 66% 65% IT-expenses + €3.4m driven by inflation a
Slide 16: With-profit segment
With-profit segment Assets and liabilities
Slide 17: Net finance result development
Net finance result development Strong quarter thanks to positive asset return and especially due to an increased discount rate INVESTMENT RETURNS (€M) COST OF LIABILITIES I.E. NET FINANCE RESULT (€M) Investment UNWINDING & DISCOUNT (€M) return (%) 1 -10.5% 3.6% -2.3% 0.5% 143 486 26 119 65 -129 = 78
Slide 18: With-profit investment portfolio by asset class
With-profit investment portfolio by asset class Stable allocation and higher MtoM-yield ORIGINAL PORTFOLIO €3,467M SEGREGATED PORTFOLIO, €680M COMMENTS • Original Portfolio 1% 0% • No material changes in asset 1% allocation in Q3. 7% 4% 7% • Hedging plan completed in Q3 in 3% total, 66% of liabili
Slide 19: With-profit liability run-off profile
With-profit liability run-off profile With-profit portfolio continued to decrease as planned DEVELOPMENT IN WITH-PROFIT LIABILITES (€M) IFRS 17 DISCOUNT CURVE Actual Forecast • Discount curve increased materially in Q3 which decreased with-profit liabilities by €51 million since June 3 000 2,487 2 5
Slide 20: Solvency and capital generation
Solvency and capital generation
Slide 21: 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 (7-9/2023; €M) (7-9/2023 PRO FORMA1) Solvency II ratio 317% 237% Base 237% Equity 247% markets (10)% Equity Demerger Dividend 251% ma
Slide 22: Key drivers of capital generation
Key drivers of capital generation Organic capital generation and WP investment portfolio de-risking driving Solvency II ratio development KEY DRIVERS Organic capital generation (12%) 32% • Stable growth of fee result and strong net 31% finance result (80%) • Predictable, continuous run-off of with-p
Slide 23: Overview of organic capital generation
Overview of organic capital generation Strong generation on own funds due to good net finance result and SCR reduction in line with expectations COMPONENTS (1-9/2023; €M) SEGMENTAL CONTRIBUTION (1-9/2023; €M) 50 At 200% Solvency II ratio 23
Slide 24: Outlook
Outlook
Slide 25: Outlook for 2023
Outlook for 2023 Mandatum’s capital-light business related to client AuM is anticipated to achieve the targeted annual net flows of 5 per cent in 2023. The annual net flows are subject to market conditions and client behaviour. While we have been able to maintain disciplined pricing and stable fee m
Slide 26: Appendix
Appendix Supporting materials
Slide 27: One of the leading financial services provider in Finland
One of the leading financial services provider in Finland Strong growth of capital-light product offering while managing with-profit portfolio for capital release Proven foundation Financial targets Leading market position, heritage & customer relationships Multi-disciplinary asset management capabi
Slide 28: Sustainability at Mandatum
Sustainability at Mandatum Sustainability is at the core of Mandatum’s business and encompasses three key themes MONEY AS A DRIVER OF CHANGE IT ALL COMES DOWN TO PEOPLE LEADING BY EXAMPLE • Mandatum has committed to the UN’s • Through its business operations, Mandatum • Taking responsibility for per
Slide 29: With-profit investment portfolio by credit rating
With-profit investment portfolio by credit rating De-risking continued in fixed income assets in 7-9/2023 ORIGINAL PORTFOLIO SEGREGATED PORTFOLIO COMMENTS • New investments mainly made in investment grade bonds 2% 5% • Original Portfolio 12% 19% • Investment grade asset allocation 55% up 21% by 8pp
Slide 30: With-profit liabilities 1-9/2023 – Original portfolio
With-profit liabilities 1-9/2023 – Original portfolio Portfolio decreasing according to expectations DEVELOPMENT OF PRESENT VALUE OF FUTURE CASH FLOWS SENSITIVITY (IFRS LIABILITIES) Interest rate sensitivity (€m) , -100 bps 118 -101 +100 +100 bps bps -150 -100 -50 0 50 100 150 , Liabilities decrea
Slide 31: With-profit liabilities 1-9/2023 – Segregated portfolio
With-profit liabilities 1-9/2023 – Segregated portfolio IFRS 17, Segregated group pension portfolio DEVELOPMENT OF PRESENT VALUE OF FUTURE CASH FLOWS SENSITIVITY (IFRS LIABILITIES) Interest rate sensitivity (€m) -100 bps +100 bps -15 -10 -5 0 5 10 15 20 Liabilities decreased 1.5% in January- Septe
Slide 32: With-profit asset and Solvency II liability interest rate sensitivities
With-profit asset and Solvency II liability interest rate 1 sensitivities Fixed income assets and hedges covering majority of Solvency II liability risk ORIGINAL PORTFOLIO SEGREGATED PORTFOLIO Change in present value of expected cash flows (€m) for Change in present value of expected cash flows (€m)
Slide 33: Capital generation of with-profit (1-9/2023, €m)
Capital generation of with-profit (1-9/2023, €m) Positive organic capital generation driven by net finance result and SCR release • Total organic capital generation from with-profit business €183m. • Own funds generation of €93m driven by positive net finance result arising from asset return At 200%
Slide 34: Capital generation of capital-light business (1-9/2023, €m)
Capital generation of capital-light business (1-9/2023, €m) Capital generation driven by SCR release • Total organic capital generation from capital-light business €50m. • Own funds generation of €8m driven mainly by new sales. • SCR reduction of €21m as new sales requires less capital than At 200%
Slide 35: CSM development – Q3 2023
CSM development – Q3 2023 CSM development and CSM sensitivities CSM AND RA DEVELOPMENT (1-9/2023; €M) CSM SENSITIVITY (1-9/2023; €M) Discount rate (100)bps -4.4 Discount rate +100bps 7.6 Equity markets (10)% -31.0 Equity markets +10% 31.0 Credit spreads +100 bps -7.7 • Positive CSM development due t
Slide 36: CSM breakdown
CSM breakdown IFRS 17 CSM by product type, and new business CSM by segment CSM BY SEGMENT (9/2023; €M) NEW BUSINESS CSM (1-9/2023; €M) 40 142 CSM RELEASE (1-9/2023; €M) 270 Unit linked Risk With-profit 36