Nordea Bank Reports Q4 Earnings

By Jesus Calero

(Reuters) – Finnish lender Nordea Bank reported fourth-quarter operating earnings slightly above estimates on Thursday. The bank noted that while lower interest rates helped the housing market, the Nordic mortgage and corporate lending markets remained “slow”.

Having previously benefited from high rates across the region, Nordea now faces a shifting landscape as central banks pivot to easing, leading to lower lending income and profitability pressures from reduced rates in the future.

Additionally, U.S. President Donald Trump’s trade policies have added uncertainty for European banks. U.S. deregulation may restrict profits and impede growth ambitions into 2025.

“Nordic mortgage and corporate lending markets remained slow, though demand for new loan promises again increased, indicating that housing markets are improving,” Nordea stated.

The largest lender in the Nordic region expects its return on equity to remain above 15% this year. Brokerage Inderes mentioned that despite rising deposit costs, Nordea is well-positioned to achieve this target.

In contrast, J.P. Morgan expressed caution, highlighting challenges in maintaining earnings momentum amid competitive pressures and changing market dynamics.

Nordea’s operating profit rose by 5% year-on-year to 1.47 billion euros ($1.53 billion) for the quarter ending December 31, surpassing analysts’ average estimate of 1.45 billion euros, based on LSEG data.

Net interest income fell by 5% to 1.85 billion euros due to the European Central Bank’s rate cuts, yet it exceeded analysts’ estimates of 1.84 billion euros.

CEO Frank Vang-Jensen reported that despite financial pressures, corporate and retail customers remained resilient, showcasing strong deposit activity and low credit losses.

Sweden, Nordea’s largest market, is expected to recover from a sluggish year, aided by lower rates and stronger household purchasing power.

The bank proposed raising its dividend to 0.94 euros per share for 2024, up from 0.92 euros the previous year.

Last week, peer Swedbank also surpassed fourth-quarter expectations and raised its dividend, while SEB missed forecasts and disappointed by not increasing its dividend.

($1 = 0.9599 euros)