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%, despite a slow Nordic lending market; return on equity at 17.9% and EPS at EUR 0.37.

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

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

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

• Strategic focus on Norway with acquisition of a sizable Personal and Private Banking business, integration 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); 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); cost-to-income ratio (with amortised resolution fees): 42.6%.

• Net loan losses: EUR 68m (8bp), up from EUR 32m last year, still below long-term expectations.

• Assets under management up 10% year-on-year to EUR 400bn.

• Net interest margin at 1.83%, up 14bp year-on-year and stable for the third consecutive quarter.

Outlook and guidance

• 2024 outlook unchanged: return on equity expected above 15% for 2024 and 2025.

• Full-year costs expected to be slightly up versus 2023, mainly due to increased investments in technology, digital, AI, and risk management.

• Cost-to-income ratio target for 2025 is 44–46%, with normalised loan losses around 10bp annually.

• Dividend payout policy of 60–70% of profit; excess capital to be distributed via buy-backs.

• Deposit hedging expected to benefit as rates decline further.