Nordea's share – which has faced some headwinds this year – is taking off upwards with over 5 percent and is thus back in the plus since the turn of the year.
A higher return forecast for 2024 and the announcement of an extra distribution of almost three billion in the form of share buybacks contribute to the price increase.
Exceeding expectations
In the report, the bank exceeds expectations on most lines. Loan growth is stable, but has not quite taken off yet. However, Frank Vang-Jensen takes note of the positive signals he sees.
Slowly, confidence in the future is starting to increase. When that happens, people start to dream and buy new homes and cars. Companies start investing, and so on, he says.
We receive very many calls and many loan applications from households. But we don't quite see yet that large purchases, investments, or acquisitions are being made on the corporate side. But it's coming, he adds.
Nordea continues to take market shares on the Swedish mortgage market, according to Vang-Jensen. However, the margins there have been at historically low levels for some time. This is due to the fact that we are coming from a period with very low activity in the wake of the inflation and interest rate shock.
Then there is competition that drives down margins until they reach a level where it is no longer profitable, he says.
But when activity increases again, it becomes profitable. And it has to be profitable in the long run, he adds.
"Uncertainty lies in geopolitics"
Vang-Jensen says that the bank also sees increased activity in terms of savings, investments, deposits, and managed capital.
And we have a corporate bond market that is very active right now, he says.
So there are very many things now that point in the direction that activity in Sweden – and the Nordic region – is starting to pick up, he adds.
However, there is still plenty of uncertainty.
Uncertainty lies in geopolitics. There is a great deal of uncertainty in the world right now.
It's clear that what's happening now is worrying. We have a very large polarization and we have two wars and we have a relationship between the US and China that looks like it's developing negatively. It's not good.
Nordea reports an operating profit before credit losses of 1,685 million euros (corresponding to 19.2 billion kronor) for the third quarter of the year. This can be compared to 1,758 million euros during the same quarter a year earlier.
The net interest income, which the bank earns on the difference between lending and deposit rates, fell 1 percent to 1,882 million euros. However, the so-called fee and commission net income increased 4 percent to 774 million euros.
The bank's operating expenses increased simultaneously by 11 percent to 1,329 million euros, and credit losses increased to 51 million euros, up from 33 million a year earlier.
The result was slightly better than expected. Analysts had expected a profit before credit losses of 1,594 million euros and a net interest income of 1,877 million euros, according to a compilation of forecasts made by Bloomberg.
The bank is also raising its forecast for return on equity in 2024 to over 16 percent, from previously over 15 percent.
A few minutes before the interim report, Nordea announced that the bank is launching a new program for share buybacks, a form of distribution, for 250 million euros (approximately 2.86 billion kronor). The announcement comes after approval from the European Central Bank (ECB).
