Release Date: April 16, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Nordea Bank Abp (NRDBY, Financial) reported a strong return on equity of 15.7%, consistent with its financial target.
- The bank's diversified business model across four Nordic markets reduces exposure to any single economy, enhancing stability.
- Net fee and commission income grew by 4% year on year, driven by higher income from savings, payments, and cards.
- Asset under management increased by 9% year on year to EUR425 billion, with positive net flows in both Nordic and international channels.
- The CET1 ratio stood at 15.7%, 2 percentage points above the regulatory requirement, indicating a strong capital position.
Negative Points
- Total income was down 4% year on year, impacted by lower interest rates.
- Operating profit decreased by 9% from a year ago, although it was up 10% quarter on quarter.
- Net interest income decreased by 6% year on year, affected by policy rate reductions.
- The cost-to-income ratio was 44.6%, which, while within the target range, reflects increased costs driven by strategic investments.
- The bank faces high uncertainty and volatility in the global economic outlook, which could impact future growth.
Q & A Highlights
Q: Could you explain the drivers behind the net interest income (NII) changes in Sweden and Denmark, particularly why Sweden's NII is down 8% while Denmark's is holding up?
A: Ian Smith, CFO, explained that in Sweden, the decline is due to the dissipation of advanced funding benefits as rates come down, while Denmark's NII is supported by strong deposit volumes and debt pricing management.
Q: How are trade tensions and tariffs impacting your business, particularly in your core markets?
A: Ian Smith noted that while trade tensions pose challenges, the Nordic economies are relatively resilient compared to other regions. Finland and Sweden might be more affected due to their focus on goods exports, but overall, the Nordic region is well-positioned to adapt.
Q: With a strong capital position, is there potential for an interim dividend this year?
A: Ian Smith stated that while there are no plans for an interim dividend this year, the bank regularly reviews its dividend strategy and listens to shareholder opinions.
Q: Given the current uncertainty, what levers do you have to manage costs and maintain your cost-to-income ratio target?
A: Ian Smith mentioned that while they are sticking to their cost growth guidance of 2% to 2.5%, they are scrutinizing all aspects of the cost base and have the ability to reduce discretionary spending if necessary.
Q: How are you addressing the potential impact of tariffs on asset quality and risk costs?
A: Frank Vang-Jensen emphasized that Nordea's credit portfolio is strong and diversified, which helps mitigate risks. Ian Smith added that they have weighted their collective provision models towards adverse scenarios to account for potential impacts.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
