Nordea posts shortfall as loan losses rise

Nordea Bank Abp on Friday reported lower than expected second quarter net profit amid higher loan losses.

The Helsinki-based bank posted a net profit of 243 million euros ($ 276.7 million), down from 681 million euros in the same period a year earlier. Analysts polled by FactSet expected a net profit of 406 million euros.

Net interest income increased to 1.09 billion euros from 1.07 billion euros. Analysts had expected 1.1 billion euros.

“Our high level of activity has kept revenues largely unchanged,” said Managing Director Frank Vang-Jensen.

“However, the bottlenecks and market turmoil had a negative financial impact, mainly affecting the net fee and commission income which decreased by 9%,” said the CEO.

Provisions for net loan losses amounted to 698 million euros for the quarter, higher than the 380 million euros expected, the bank having made additional provisions, in particular for the oil, gas and offshore sector.

The bank expects total net loan losses in 2020 of less than € 1 billion, corresponding to a level of loan losses below 41 basis points. In the first half of the year, Nordea reported total net loan losses of 852 million euros.

Nordea reiterated that in 2020 it expects to achieve a cost base of less than 4.7 billion euros, with continued net cost reductions expected beyond 2020. Its financial targets for 2022 are a return equity greater than 10% and a cost / income ratio. by 50%.

Nordea’s Tier 1 common stock ratio – a key measure of financial strength – rose to 15.8% at the end of the quarter, from 14.8% a year earlier.

Write to Dominic Chopping at [email protected]

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