2024-04-18 06:30:00 CEST
2024-04-18 06:30:14 CEST
REGULATED INFORMATION
Nordea Bank Oyj - Interim report (Q1 and Q3)
First-quarter results 2024
Nordea Bank Abp Interim report (Q1 and Q3) 18 April 2024 at 7:30 EET Summary of the quarter Continued high-quality income growth. Total income was up 6%, driven by an 11% increase in net interest income. Net fee and commission income was stable year on year and net insurance result increased by 33%. Net fair value result was solid following a strong first quarter last year. Costs decreased by 9%, driven by lower resolution fees. Costs excluding regulatory fees increased by 5%, driven by inflation and continued investments in risk management and technology in line with Nordea's plan. Operating profit was up 19%. Return on equity 18.1% - earnings per share up 23%. Nordea's return on equity was 18.1% in the first quarter, compared with 17.1% a year ago. The cost-to -income ratio excluding regulatory fees was stable at 40%. Earnings per share increased to EUR 0.38 from EUR 0.31. Volumes stable in a slow market. Nordea's corporate lending increased by 2% year on year. Mortgage lending volumes were unchanged as mortgage markets remained slow. Retail deposit volumes were up 1%. Corporate deposits decreased by 6% year on year. Assets under management increased by 8% and Nordic net flows amounted to EUR 1.1bn in the quarter. Strong credit quality, continued low net loan losses. Net loan losses and similar net result amounted to EUR 33m or 4bp. Overall provisioning levels and coverage were maintained, and the total management judgement buffer remained unchanged in local currencies (translating to EUR 505m). Continued strong capital position. Nordea's CET1 ratio increased to 17.2%, 5.1 percentage points above the current regulatory requirement, which demonstrates the bank's continued strong underlying capital generation and capacity to support its customers. Nordea's Annual General Meeting of 21 March approved the dividend of EUR 0.92 per share for 2023. Nordea continues to target an efficient capital structure and completed its fourth share buy-back programme in March. Outlook for 2024 unchanged: return on equity above 15%. Nordea has a strong and resilient business model with a very well-diversified loan portfolio across the Nordic region. This enables the bank to support its customers and deliver high -quality earnings, with high profitability and low volatility, through the economic cycle. (For further viewpoints, see the CEO comment on page 2. For definitions, see page 54 in the Q1 2024 report.) Group quarterly results and key ratios +---------------------------+-------+-------+-----+-------+-----+ | EURm |Q1 2024|Q1 2023|Chg %|Q4 2023|Chg %| +---------------------------+-------+-------+-----+-------+-----+ |Net interest income |1,954 |1,765 |11 |1,946 |0 | +---------------------------+-------+-------+-----+-------+-----+ |Net fee and commission |763 |765 |0 |763 |0 | |income | | | | | | +---------------------------+-------+-------+-----+-------+-----+ |Net insurance result |61 |46 |33 |40 |53 | +---------------------------+-------+-------+-----+-------+-----+ |Net fair value result |291 |345 |-16 |154 |89 | +---------------------------+-------+-------+-----+-------+-----+ |Other income |16 |0 | |12 |33 | +---------------------------+-------+-------+-----+-------+-----+ |Total operating income |3,085 |2,921 |6 |2,915 |6 | +---------------------------+-------+-------+-----+-------+-----+ |Total operating expenses |-1,226 |-1,167 |5 |-1,397 |-12 | |excluding regulatory fees | | | | | | +---------------------------+-------+-------+-----+-------+-----+ |Total operating expenses |-1,289 |-1,422 |-9 |-1,417 |-9 | +---------------------------+-------+-------+-----+-------+-----+ |Profit before loan losses |1,796 |1,499 |20 |1,498 |20 | +---------------------------+-------+-------+-----+-------+-----+ |Net loan losses and similar|-33 |-19 | |-83 | | |net result | | | | | | +---------------------------+-------+-------+-----+-------+-----+ |Operating profit |1,763 |1,480 |19 |1,415 |25 | +---------------------------+-------+-------+-----+-------+-----+ | | | | | | | +---------------------------+-------+-------+-----+-------+-----+ |Cost-to-income ratio |39.7 |39.9 | |47.9 | | |excluding regulatory fees, | | | | | | |% | | | | | | +---------------------------+-------+-------+-----+-------+-----+ |Cost-to-income ratio with |40.7 |42.7 | |50.6 | | |amortised resolution fees, | | | | | | |% | | | | | | +---------------------------+-------+-------+-----+-------+-----+ |Return on equity with |18.1 |17.1 | |14.1 | | |amortised resolution fees, | | | | | | |% | | | | | | +---------------------------+-------+-------+-----+-------+-----+ |Diluted earnings per share,|0.38 |0.31 |23 |0.31 |23 | |EUR | | | | | | +---------------------------+-------+-------+-----+-------+-----+ CEO comment We had a strong start to the year. Despite the subdued economic environment, we maintained solid business momentum. Our competitive range of services and proactive approach continue to be valued by our customers. Profitability was again at a very good level, with return on equity reaching 18.1% for the quarter, up from 17.1% a year ago. Price inflation continued to ease across the Nordics, providing some relief to households and businesses. However, macroeconomic and geopolitical uncertainty remains high. Russia's war in Ukraine and the conflict in the Middle East are constant reminders of the fragile state of the world today. At Nordea, we are well equipped to navigate uncertainty and support our customers. Our business franchise is strong, supported by a resilient and well -diversified business model. We have leading positions in all our markets and business areas. And, as our first-quarter results demonstrate, we continue to be one of the best-performing banks in Europe. Total income for the quarter increased by 6% year on year to EUR 3.1bn, driven by 11% higher net interest income. Total costs decreased by 9% due to substantially lower regulatory fees. Our cost-to-income ratio excluding regulatory fees remained stable at 40%. Operating profit increased by 19% year on year to EUR 1.8bn. Alongside the constant development of our digital offering, we continued to be highly proactive towards our customers, holding more customer meetings than a year ago. Our approach is working. Although Nordic housing market activity remained slow, our first-quarter mortgage lending volumes were stable and we maintained our overall market share. We strengthened our position in corporate lending, increasing volumes by 2% year on year. Many of our household customers increased their savings and investment activity, with deposit volumes up 1% year on year. We have been strengthening our offering, and during the quarter we introduced new savings deposit products. In Sweden, for example, Nordea's new high-interest savings account comes with a built-in fraud prevention feature to help customers safeguard their savings. Corporate deposit volumes decreased by 6% year on year, although more stable quarter on quarter. Nordea's credit quality remains strong. Our loan portfolio is diversified across sectors and markets and supported by a prudent risk profile. Net loan losses and similar net result amounted to EUR 33m, or 4bp - a low level given the challenging economic environment. Nevertheless, we have retained our management judgement buffer in local currencies (translating to EUR 505m) to cover additional potential losses. Our four business areas each delivered good first-quarter results. In Personal Banking we continued to see increased customer savings activity, supported by the introduction of our new deposit products, with deposit volumes up 2% in local currencies. While customer demand for new loan promises was lower than in the same quarter last year, our mortgage lending volumes were stable. Customers continued to take advantage of our digital services, with the number of private app users and logins both up 7% year on year. In Business Banking we worked closely with our customers to help them tackle the current economic challenges. Although the overall market demand for lending continued to be slow, our lending volumes grew by 1% year on year in local currencies, driven by Norway and Sweden. Deposit volumes grew by 1% year on year, and customers continue to choose our attractive fixed-term deposit products in the higher rate environment. We improved service quality in digital channels and began the Norwegian rollout of our Nordea Business app, which enables businesses to manage and purchase products easily through their smartphones. Nordea Business is now available in all of our home markets. In Large Corporates & Institutions we continued to actively support our Nordic customers with their investment plans. Lending grew by 3% and deposit volumes decreased by 13% year on year. In debt capital markets, activity was high and we arranged more than 200 transactions. Our sustainability leadership was also recognised through several awards by Global Finance magazine, including best in the world for sustainability-linked bonds. We take great pride in the role we play in supporting the transition to a low-carbon economy. In Asset & Wealth Management we maintained strong momentum in our private banking business, a key focus in our savings strategy. Customer activity was high and we welcomed new clients. Assets under management increased by 8% year on year to EUR 391bn, supported by net flows of EUR 1.1bn in our Nordic channels, despite seasonal outflows. We continued to see strong traction in our life insurance and pension business, with gross written premiums reaching a record high for the first quarter. We maintain a robust capital position. Our CET1 ratio stood at 17.2%, or 5.1 percentage points above the capital requirement. In March our AGM approved the dividend for 2023, resulting in a total dividend payment of EUR 3.2bn, supporting economic growth broadly in the Nordic societies. We also completed our latest share buy-back programme of EUR 1bn. Our capital policy and our ambition to deliver market-leading shareholder returns remain unchanged. We continue to generate capital and expect to be in a position to provide an update on our capital plans, including buy-backs, later this year after the ECB approves our new capital models for retail exposures. Looking ahead, we remain committed to delivering market-leading performance, supported by focused and profitable growth and improved capital efficiency through our well-diversified business model. We expect to achieve a return on equity above 15% for the full year 2024 and target similarly strong profitability in 2025. We continue to build for the future. A strong bank is a resilient bank, and we are always working to strengthen Nordea - building on our robust financial position and developing every aspect of our operations. We are strengthening our technology foundation. We are investing in our digital offering to ensure we can offer our customers the very best services and experiences. And we are working to protect our customers and societies from financial crime. A strong bank is also a responsible bank, which is why you can expect us to maintain our strong focus on reducing financed emissions and supporting our customers in meeting their climate transition requirements. This is the way we will fulfil our ambition, which remains unchanged - to be the preferred partner for customers in need of a broad range of financial services. Frank Vang-Jensen President and Group CEO Outlook (unchanged) Financial target for 2025 Nordea's financial target for 2025 is a return on equity of above 15%. The target will be supported by a cost-to-income ratio of 44-46%, an annual net loan loss ratio of around 10bp and the continuation of Nordea's well-established capital and dividend policies. Financial outlook for 2024 Nordea expects a return on equity of above 15%. Capital policy A management buffer of 150bp above the regulatory CET1 requirement. Dividend policy Nordea's dividend policy stipulates a dividend payout ratio of 60-70%, applicable to profit for the financial year. Nordea will continuously assess the opportunity to use share buy-backs as a tool to distribute excess capital. Income statement +----------------------------------------------+------+------+-----+-------+---- -+ | EURm | Q1 | Q1 |Chg %|Q4 2023|Chg %| | | 2024 | 2023 | | | | +----------------------------------------------+------+------+-----+-------+---- -+ |Net interest income |1,954 |1,765 |11 |1,946 |0 | +----------------------------------------------+------+------+-----+-------+---- -+ |Net fee and commission income |763 |765 |0 |763 |0 | +----------------------------------------------+------+------+-----+-------+---- -+ |Net insurance result |61 |46 |33 |40 |53 | +----------------------------------------------+------+------+-----+-------+---- -+ |Net result from items at fair value |291 |345 |-16 |154 |89 | +----------------------------------------------+------+------+-----+-------+---- -+ |Profit from associated undertakings and joint |7 |-12 | |2 | | |ventures accounted for under the equity method| | | | | | +----------------------------------------------+------+------+-----+-------+---- -+ |Other operating income |9 |12 |-25 |10 |-10 | +----------------------------------------------+------+------+-----+-------+---- -+ |Total operating income |3,085 |2,921 |6 |2,915 |6 | +----------------------------------------------+------+------+-----+-------+---- -+ |Staff costs |-749 |-719 |4 |-735 |2 | +----------------------------------------------+------+------+-----+-------+---- -+ |Other expenses |-338 |-287 |18 |-323 |5 | +----------------------------------------------+------+------+-----+-------+---- -+ |Regulatory fees |-63 |-255 |-75 |-20 | | +----------------------------------------------+------+------+-----+-------+---- -+ |Depreciation, amortisation and impairment |-139 |-161 |-14 |-339 |-59 | |charges of tangible and intangible assets | | | | | | +----------------------------------------------+------+------+-----+-------+---- -+ |Total operating expenses |-1,289|-1,422|-9 |-1,417 |-9 | | | | | | | | +----------------------------------------------+------+------+-----+-------+---- -+ |Profit before loan losses |1,796 |1,499 |20 |1,498 |20 | +----------------------------------------------+------+------+-----+-------+---- -+ |Net loan losses and similar net result |-33 |-19 |74 |-83 |-60 | +----------------------------------------------+------+------+-----+-------+---- -+ |Operating profit |1,763 |1,480 |19 |1,415 |25 | +----------------------------------------------+------+------+-----+-------+---- -+ |Income tax expense |-402 |-332 |21 |-309 |30 | +----------------------------------------------+------+------+-----+-------+---- -+ |Net profit for the period |1,361 |1,148 |19 |1,106 |23 | +----------------------------------------------+------+------+-----+-------+---- -+ Business volumes, key items1 +----------------------------+-----------+-----------+-----+-----------+-----+ | EURbn |31 Mar 2024|31 Mar 2023|Chg %|31 Dec 2023|Chg %| +----------------------------+-----------+-----------+-----+-----------+-----+ |Loans to the public |346.2 |339.7 |2 |344.8 |0 | +----------------------------+-----------+-----------+-----+-----------+-----+ |Loans to the public, excl. |319.8 |319.3 |0 |324.0 |-1 | |repos/securities borrowing | | | | | | +----------------------------+-----------+-----------+-----+-----------+-----+ |Deposits and borrowings from|216.0 |217.7 |-1 |210.1 |3 | |the public | | | | | | +----------------------------+-----------+-----------+-----+-----------+-----+ |Deposits from the public, |200.3 |210.7 |-5 |202.6 |-1 | |excl. repos/securities | | | | | | |lending | | | | | | +----------------------------+-----------+-----------+-----+-----------+-----+ |Total assets |604.9 |604.1 |0 |584.7 |3 | +----------------------------+-----------+-----------+-----+-----------+-----+ |Assets under management |391.2 |362.4 |8 |378.5 |3 | +----------------------------+-----------+-----------+-----+-----------+-----+ 1. End of period. Ratios and key figures including items affecting comparability1 +---------------------------+-------+-------+-----+-------+-----+ | |Q1 2024|Q1 2023|Chg %|Q4 2023|Chg %| +---------------------------+-------+-------+-----+-------+-----+ |Diluted earnings per share,|0.38 |0.31 |23 |0.31 |23 | |EUR | | | | | | +---------------------------+-------+-------+-----+-------+-----+ |EPS, rolling 12 months up |1.44 |1.21 |19 |1.37 |5 | |to period end, EUR | | | | | | +---------------------------+-------+-------+-----+-------+-----+ |Share price2, EUR |10.47 |9.84 |6 |11.23 |-7 | +---------------------------+-------+-------+-----+-------+-----+ |Equity per share2, EUR |8.25 |7.84 |5 |8.86 |-7 | +---------------------------+-------+-------+-----+-------+-----+ |Potential shares |3,506 |3,605 |-3 |3,528 |-1 | |outstanding2, million | | | | | | +---------------------------+-------+-------+-----+-------+-----+ |Weighted average number of |3,508 |3,622 |-3 |3,534 |-1 | |diluted shares, million | | | | | | +---------------------------+-------+-------+-----+-------+-----+ |Return on equity with |18.1 |17.1 | |14.1 | | |amortised resolution fees, | | | | | | |% | | | | | | +---------------------------+-------+-------+-----+-------+-----+ |Return on equity, % |17.8 |15.3 | |14.7 | | +---------------------------+-------+-------+-----+-------+-----+ |Return on tangible equity, |20.3 |17.6 | |16.9 | | |% | | | | | | +---------------------------+-------+-------+-----+-------+-----+ |Return on risk exposure |3.9 |3.2 | |3.2 | | |amount, % | | | | | | +---------------------------+-------+-------+-----+-------+-----+ |Cost-to-income ratio |39.7 |39.9 | |47.9 | | |excluding regulatory fees, | | | | | | |% | | | | | | +---------------------------+-------+-------+-----+-------+-----+ |Cost-to-income ratio with |40.7 |42.7 | |50.6 | | |amortised resolution fees, | | | | | | |% | | | | | | +---------------------------+-------+-------+-----+-------+-----+ |Cost-to-income ratio, % |41.8 |48.7 | |48.6 | | +---------------------------+-------+-------+-----+-------+-----+ |Net loan loss ratio, incl. |4 |2 | |10 | | |loans held at fair value, | | | | | | |bp | | | | | | +---------------------------+-------+-------+-----+-------+-----+ |Common Equity Tier 1 |17.2 |15.7 | |17.0 | | |capital ratio2,3, % | | | | | | +---------------------------+-------+-------+-----+-------+-----+ |Tier 1 capital ratio2,3, % |19.5 |18.0 | |19.4 | | +---------------------------+-------+-------+-----+-------+-----+ |Total capital ratio2,3, % |22.4 |20.1 | |22.2 | | +---------------------------+-------+-------+-----+-------+-----+ |Tier 1 capital2,3, EURbn |27.1 |25.5 |6 |26.8 |1 | +---------------------------+-------+-------+-----+-------+-----+ |Risk exposure amount2, |138.6 |142.0 |-2 |138.7 |0 | |EURbn | | | | | | +---------------------------+-------+-------+-----+-------+-----+ |Net interest margin, % |1.83 |1.58 | |1.83 | | +---------------------------+-------+-------+-----+-------+-----+ |Number of employees (FTEs)2|29,478 |28,922 |2 |29,153 |1 | +---------------------------+-------+-------+-----+-------+-----+ |Equity2, EURbn |28.9 |28.2 |2 |31.2 |-7 | +---------------------------+-------+-------+-----+-------+-----+ 1. See here for more detailed information regarding ratios and key figures defined as alternative performance measures (https://www.nordea.com/en/investor -relations/reports-and-presentations/group-interim-reports). 2. End of period. 3. Including the result for the period. This release is a summary of Nordea's Q1 results 2024. The complete report is attached to this release and can also be found on the below link on our website. Nordea Group Q1 2024 Report (https://www.nordea.com/en/investor -relations/reports-and-presentations/latest-interim-results/) A webcast will be held on 18 April at 11.00 EET (10.00 CET). Frank Vang-Jensen, President and Group CEO, will present the results followed by a Q&A audio session for investors and analysts with Frank Vang-Jensen, Ian Smith, Group CFO and Ilkka Ottoila, Head of Investor Relations. The event will be webcast live and the recording and presentation slides will be posted on www.nordea.com/ir. For further information: Frank Vang-Jensen, President and Group CEO, +358 503 821391 Ian Smith, Group CFO, +45 5547 8372 Ilkka Ottoila, Head of Investor Relations, +358 9 5300 7058 Ulrika Romantschuk, Head of Brand, Communication and Marketing, +358 10 416 8023 The information provided in this stock exchange release was submitted for publication, through the agency of the contacts set out above, at 07:30 EET (06:30 CET) on 18 April 2024. We are a universal bank with a 200-year history of supporting and growing the Nordic economies - enabling dreams and aspirations for a greater good. Every day, we work to support our customers' financial development, delivering best-in -class omnichannel customer experiences and driving sustainable change. The Nordea share is listed on the Nasdaq Helsinki, Nasdaq Copenhagen and Nasdaq Stockholm exchanges. Read more about us at nordea.com.
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