Nordea Bank, headquartered in Helsinki, has released its second-quarter financial results, surpassing expectations and demonstrating significant growth in net interest income and corporate lending.
Impressive Profits and Margins
The bank reported a net profit attributable to shareholders of 1.34 billion euros ($1.5 billion) for the quarter, a notable increase from the previous year’s 1.06 billion euros. This was primarily driven by a 40% growth in net-interest income, which reached 1.83 billion euros. Analysts’ forecasts were exceeded, as FactSet predicted a net profit of 1.26 billion euros and net interest income of 1.8 billion euros.
Business Volume Growth and Challenges
While Nordea recognized the impact of the economic slowdown and interest rate increases on their business volume growth, specifically in mortgages, they expressed satisfaction with the continued growth in corporate lending. Notably, Norway and Sweden experienced significant growth in this area.
Positive Outlook
Nordea has revised their full-year 2023 return on equity guidance to above 15%, surpassing the previous target of above 13%. Furthermore, they maintain their financial target for full-year 2025, aiming for a return on equity above 13%. This will be supported by a cost-to-income ratio ranging between 45% and 47%, as well as an annual net loan loss ratio of around 10 basis points.
Future Targets and Evaluation
As Nordea assesses their long-term financial target for 2025, they plan to provide an update in conjunction with the release of their fourth-quarter report. The common equity Tier 1 ratio currently stands at 16.0%, compared to 16.6% in the previous year.
Nordea’s promising second-quarter results highlight their strong performance and position in the market. With continued focus on corporate lending and a positive outlook for return on equity, the bank is well-prepared to navigate future challenges.
