Nordea Bank (NDA-SE) Q2 2024 earnings summary

Executive summary

• Net interest income grew 4% year-on-year, net fee and commission income up 6%, and total income up 3%, while net fair value result declined 15%; return on equity was 17.9% and EPS EUR 0.37.

• Operating profit was EUR 1,684m, down 2% year-on-year, mainly due to higher costs and increased loan losses.

• CET1 ratio at 17.5%, 4.4 percentage points above requirements, reflecting strong capital generation; ECB approved new capital models for retail exposures.

• Credit quality remained solid, with net loan losses of EUR 68m (8bp), mainly from a few corporate exposures; EUR 30m was released from management judgement buffer.

• Integration of the Norwegian Personal and Private Banking acquisition is on track for Q4 completion.

Financial highlights

• Net interest income: EUR 1,904m (+4% y/y); net fee and commission income: EUR 795m (+6% y/y); net fair value result: EUR 247m (-15% y/y); total operating income: EUR 3,030m (+3% y/y); total operating expenses: EUR 1,278m (+6% y/y).

• Operating profit: EUR 1,684m (-2% y/y); net profit: EUR 1,303m (-2% y/y); cost-to-income ratio (with amortised resolution fees): 42.6%.

• Assets under management grew 10% year-on-year to EUR 400.3bn, with positive net flows in Nordic channels.

• Deposit volumes increased: retail +1%, corporate +5%.

• Net loan losses: EUR 68m (8bp), up from EUR 32m last year.

Outlook and guidance

• 2024 outlook unchanged: return on equity expected above 15%; 2025 target: ROE above 15%, cost-to-income ratio 44–46%, annual net loan loss ratio around 10bp.

• Full-year costs expected to be slightly up versus 2023, mainly due to increased investments.

• Dividend payout policy of 60–70% of profit; share buy-backs considered for excess capital, likely to resume in early 2025.

• Deposit hedging expected to benefit as rates decline further.