Half-year results 2024

15 Jul 2024 06:30 CEST

Nordea Bank Abp
Half year financial report
15 July 2024 at 7:30 EET

Summary of the quarter

Continued high-quality income growth. Net interest income grew 4% and net fee
and commission income returned to growth, up 6%. Net insurance result and net
fair value result were solid, following a strong second quarter last year. Total
income improved, up 3%. Inflation and continued significant investments in
technology, data and risk management capabilities resulted in a cost increase of
6%, in line with Nordea's plan. Operating profit held up well, 2% lower compared
to a year ago.

Return on equity 17.9% - earnings per share EUR 0.37. Nordea's return on equity
remained very strong at 17.9% in the second quarter, reflecting Nordea's
resilience and continued high performance. The cost-to-income ratio with
amortised resolution fees remained stable at 43% compared with a year ago.
Earnings per share were EUR 0.37, unchanged from a year ago.

Mortgage lending stable and growing deposit volumes. The Nordic mortgage and
corporate lending markets remained slow. Mortgage lending volumes were unchanged
and corporate lending volumes decreased slightly. Retail and corporate deposit
volumes increased by 1% and 5%, respectively, year on year. Assets under
management increased by 10% and Nordic net flows amounted to EUR 1.9bn in the
quarter.

Solid credit quality, net loan losses increase mainly driven by a few single
corporate exposures. Net loan losses and similar net result amounted to EUR 68m
or 8bp. EUR 30m was released from the management judgement buffer reflecting
improved macroeconomic outlook. Total management judgment buffer now stands at
EUR 464m.

Continued strong capital position. Nordea's CET1 ratio increased to 17.5%, 4.4
percentage points above the current regulatory requirement, which demonstrates
the bank's continued strong underlying capital generation and capacity to
support its customers. In July, Nordea received ECB approval for new capital
models for retail exposures, and the new models are expected to go live in Q3
this year. The impact on REA*, after adjusting for prospective rule changes
recently proposed by the Norwegian FSA, is broadly in line with Nordea's
expectations.

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 details see the capital section in the Q2 2024 report on page 13

(For further viewpoints, see the CEO comment on page 2. For definitions, see
page 54 in the Q2 2024 report.)

Group quarterly results and key ratios

+---------------------------+------+------+---+------+---+------+------+-----+
| EURm | Q2 | Q2 |Chg| Q1 |Chg| Jan | Jan |Chg %|
| | 2024 | 2023 | % | 2024 | % | -Jun | -Jun | |
| | | | | | | 2024 | 2023 | |
+---------------------------+------+------+---+------+---+------+------+-----+
|Net interest income |1,904 |1,831 |4 |1,954 |-3 |3 858 |3 596 |7 |
+---------------------------+------+------+---+------+---+------+------+-----+
|Net fee and commission |795 |751 |6 |763 |4 |1 558 |1 516 |3 |
|income | | | | | | | | |
+---------------------------+------+------+---+------+---+------+------+-----+
|Net insurance result |63 |68 |-7 |61 |3 |124 |114 |9 |
+---------------------------+------+------+---+------+---+------+------+-----+
|Net fair value result |247 |290 |-15|291 |-15|538 |635 |-15 |
+---------------------------+------+------+---+------+---+------+------+-----+
|Other income |21 |15 |40 |16 |31 |37 |15 | |
+---------------------------+------+------+---+------+---+------+------+-----+
|Total operating income |3,030 |2,955 |3 |3,085 |-2 |6 115 |5 876 |4 |
+---------------------------+------+------+---+------+---+------+------+-----+
|Total operating expenses |-1,260|-1,184|6 |-1,226|3 |-2 486|-2 351|6 |
|excluding regulatory fees | | | | | | | | |
+---------------------------+------+------+---+------+---+------+------+-----+
|Total operating expenses |-1,278|-1,205|6 |-1,289|-1 |-2 567|-2 627|-2 |
| | | | | | | | | |
+---------------------------+------+------+---+------+---+------+------+-----+
|Profit before loan losses |1,752 |1,750 |0 |1,796 |-2 |3 548 |3 249 |9 |
+---------------------------+------+------+---+------+---+------+------+-----+
|Net loan losses and similar|-68 |-32 | |-33 | |-101 |-51 | |
|net result | | | | | | | | |
+---------------------------+------+------+---+------+---+------+------+-----+
|Operating profit |1,684 |1,718 |-2 |1,763 |-4 |3 447 |3 198 |8 |
+---------------------------+------+------+---+------+---+------+------+-----+
| | | | | | | | | |
+---------------------------+------+------+---+------+---+------+------+-----+
|Cost-to-income ratio |41.6 |40.1 | |39.7 | |40,7 |40,0 | |
|excluding regulatory fees, | | | | | | | | |
|% | | | | | | | | |
+---------------------------+------+------+---+------+---+------+------+-----+
|Cost-to-income ratio with |42.6 |42.8 | |40.7 | |41,6 |42,7 | |
|amortised resolution fees, | | | | | | | | |
|% | | | | | | | | |
+---------------------------+------+------+---+------+---+------+------+-----+
|Return on equity with |17.9 |18.4 | |18.1 | |18,0 |17,8 | |
|amortised resolution fees, | | | | | | | | |
|% | | | | | | | | |
+---------------------------+------+------+---+------+---+------+------+-----+
|Diluted earnings per share,|0.37 |0.37 |0 |0.38 |-3 |0,75 |0,68 |10 |
|EUR | | | | | | | | |
+---------------------------+------+------+---+------+---+------+------+-----+

CEO comment

This was another strong quarter for Nordea. Second-quarter return on equity
reached 17.9%, led by growth in both net interest and net fee and commission
income. Our results show that despite the slow economy, we continue to make good
progress on our strategic priorities and deliver industry-leading financial
performance.

Macroeconomic uncertainty remains high due to the challenging geopolitical
climate. Nevertheless, household and business sentiment in the Nordics has
recently shown signs of improvement. Inflation has fallen, and during the
quarter we saw the first policy rate cuts in three of our four home markets.
These cuts, along with further anticipated reductions this year, should help
brighten the picture for the Nordic economies.

Total income for the quarter was EUR 3.0bn, an increase of 3% year on year. Year
-on-year net interest income improved by 4%. We also grew net fee and commission
income by 6%, driven by higher activity in savings and investments and continued
outstanding performance in debt capital markets.

We continue to engage extensively with our customers across all touch points.
During the quarter, we assisted customers in 259,000 advisory meetings, 7% more
than a year ago. Furthermore, use of our digital banking services reached
another record high. We have further strengthened our digital services, adding
more personalisation, self-service features as well as improved protection
against fraud. Good customer satisfaction scores show that our efforts are
appreciated.

Cost development was as planned and reflected the significant investments we
continue to make into our technology infrastructure, data and AI, digital
offering, financial crime prevention and other risk management capabilities, as
well as integration costs related to our Norwegian acquisition. The lower
resolution fees this year have given us the opportunity to further increase
overall investment capacity. Excluding regulatory fees, costs increased by 6%
year on year, while our cost-to-income ratio with amortised resolution fees was
stable at 43%. Operating profit was stable at EUR 1.7bn.

Net interest margin continued to improve year on year, and remained stable for
the third quarter in a row. We improved lending margins, with mortgage lending
volumes stable year on year, and corporate lending down 1%. Retail and corporate
deposit volumes increased, respectively, by 1% and 5%, with resilient deposit
margins. The positive development in deposit volumes demonstrates resilience
among our household and business customers in the face of higher living and
operating costs.

Our risk position is sound, and credit quality continues to be strong and in
line with our long-term expectations. Net loan losses and similar net result
were EUR 68m, or 8bp, mainly driven by provisions for a few single corporate
client exposures. Reflecting the improved macroeconomic outlook, we released EUR
30m from our management judgement buffer, which now stands at EUR 464m.

Our four business areas did well. In Personal Banking we continued to see good
customer savings activity. We have expanded our range of deposit products, which
contributed to a 2% year-on-year increase in deposit volumes in local
currencies. While the Nordic housing markets were subdued, we delivered stable
mortgage lending volumes. In the latter part of the quarter we saw the first
small signs of improvement as demand for new loan promises grew. Customers
continued to take advantage of our digital services, with the number of private
app users and logins up 5% and 12%, respectively, year on year. Fraud is a
growing problem for societies and we have continued to strengthen the measures
that keep our customers safe. Alongside increased monitoring, we have
implemented enhanced security features, such as delayed withdrawals and
transaction limits, and continue to raise awareness about fraud through active
dialogue in society and our marketing.

In Business Banking we worked closely with our customers to help them address
the current economic challenges and growth opportunities. Our lending volumes
were stable year on year in local currencies, as overall market demand remained
subdued. Deposit volumes increased by 1%. Activity in the capital markets
increased and we supported our customers in securing both equity and bond market
funding in the more stable interest rate environment.

In Large Corporates & Institutions we kept up the good momentum from the first
quarter, actively supporting our Nordic customers with their investment plans.
Lending volumes decreased by 2%, and deposit volumes increased by 12% year on
year. In debt capital markets, activity remained high. We supported our
customers with more than 150 transactions, as issuers are keen to front-load
their funding plans in the current favourable market. Activity in the equity
capital markets also showed signs of picking up.

In Asset & Wealth Management we further grew our Private Banking business and
secured positive net flows of EUR 2.0bn. In line with our growth strategy, we
reached an all-time-high customer intake during the quarter in Norway and
Sweden. Assets under management increased by 10% year on year to EUR 400bn. We
continued to grow with strong momentum in our life insurance and pension
business. In Denmark, our local life insurance company was awarded pension
company of the year by Finanswatch and EY. Gross written premiums reached new
record highs, increasing to EUR 2.9bn from EUR 2.2bn a year ago.

Capital generation remains strong, and we further reinforced our capital
position. At the end of the quarter, our CET1 ratio stood at 17.5%, or 4.4
percentage points above the capital requirement. In July we received ECB
approval for new capital models for retail exposures. The net impact on our REA,
after adjusting for prospective rule changes recently proposed by the Norwegian
FSA, is broadly in line with our expectations. Following the approval, we have
initiated a dialogue with the ECB regarding a resumption of share buy-back
programmes from early 2025.

Our results for the second quarter keep us on track to deliver strong
profitability in 2024. We expect to achieve a return on equity of above 15% for
the full year, and also target a return of equity of above 15% for 2025. We are
determined to push forward with our strategic priorities and further improve
customer experience and operational performance.

Our ambition remains unchanged - to be the preferred financial 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 | Q2 | Q2 |Chg| Q1 |Chg| Jan | Jan |Chg|
| | 2024 | 2023 | % | 2024 | % | -Jun | -Jun | % |
| | | | | | | 2024 | 2023 | |
+-----------------------+------+------+---+------+---+------+------+---+
|Net interest income |1,904 |1,831 |4 |1,954 |-3 |3 858 |3 596 |7 |
+-----------------------+------+------+---+------+---+------+------+---+
|Net fee and commission |795 |751 |6 |763 |4 |1 558 |1 516 |3 |
|income | | | | | | | | |
+-----------------------+------+------+---+------+---+------+------+---+
|Net insurance result |63 |68 |-7 |61 |3 |124 |114 |9 |
+-----------------------+------+------+---+------+---+------+------+---+
|Net result from items |247 |290 |-15|291 |-15|538 |635 |-15|
|at fair value | | | | | | | | |
+-----------------------+------+------+---+------+---+------+------+---+
|Profit from associated |2 |3 |-33|7 |-71|9 |-9 | |
|undertakings and joint | | | | | | | | |
|ventures accounted for | | | | | | | | |
|under the equity method| | | | | | | | |
+-----------------------+------+------+---+------+---+------+------+---+
|Other operating income |19 |12 |58 |9 | |28 |24 |17 |
+-----------------------+------+------+---+------+---+------+------+---+
|Total operating income |3,030 |2,955 |3 |3,085 |-2 |6 115 |5 876 |4 |
+-----------------------+------+------+---+------+---+------+------+---+
|Staff costs |-761 |-725 |5 |-749 |2 |-1 510|-1 444|5 |
+-----------------------+------+------+---+------+---+------+------+---+
|Other expenses |-361 |-304 |19 |-338 |7 |-699 |-591 |18 |
+-----------------------+------+------+---+------+---+------+------+---+
|Regulatory fees |-18 |-21 |-14|-63 |-71|-81 |-276 |-71|
+-----------------------+------+------+---+------+---+------+------+---+
|Depreciation, |-138 |-155 |-11|-139 |-1 |-277 |-316 |-12|
|amortisation and | | | | | | | | |
|impairment | | | | | | | | |
|charges of tangible and| | | | | | | | |
|intangible assets | | | | | | | | |
+-----------------------+------+------+---+------+---+------+------+---+
|Total operating |-1,278|-1,205|6 |-1,289|-1 |-2 567|-2 627|-2 |
|expenses | | | | | | | | |
+-----------------------+------+------+---+------+---+------+------+---+
|Profit before loan |1,752 |1,750 |0 |1,796 |-2 |3 548 |3 249 |9 |
|losses | | | | | | | | |
+-----------------------+------+------+---+------+---+------+------+---+
|Net loan losses and |-68 |-32 | |-33 | |-101 |-51 |98 |
|similar net result | | | | | | | | |
+-----------------------+------+------+---+------+---+------+------+---+
|Operating profit |1,684 |1,718 |-2 |1,763 |-4 |3 447 |3 198 |8 |
+-----------------------+------+------+---+------+---+------+------+---+
|Income tax expense |-381 |-383 |-1 |-402 |-5 |-783 |-715 |10 |
+-----------------------+------+------+---+------+---+------+------+---+
|Net profit for the |1,303 |1,335 |-2 |1,361 |-4 |2 664 |2 483 |7 |
|period | | | | | | | | |
+-----------------------+------+------+---+------+---+------+------+---+

Business volumes, key items1

+----------------------------+-----------+-----------+-----+-----------+-----+
| EURbn |30 Jun 2024|30 Jun 2023|Chg %|31 Mar 2024|Chg %|
+----------------------------+-----------+-----------+-----+-----------+-----+
|Loans to the public |346.9 |340.0 |2 |346.2 |0 |
+----------------------------+-----------+-----------+-----+-----------+-----+
|Loans to the public, excl. |319.7 |316.6 |1 |319.8 |0 |
|repos/securities borrowing | | | | | |
+----------------------------+-----------+-----------+-----+-----------+-----+
|Deposits and borrowings from|223.8 |217.9 |3 |216.0 |4 |
|the public | | | | | |
+----------------------------+-----------+-----------+-----+-----------+-----+
|Deposits from the public, |208.1 |202.9 |3 |200.3 |4 |
|excl. repos/securities | | | | | |
|lending | | | | | |
+----------------------------+-----------+-----------+-----+-----------+-----+
|Total assets |606.8 |602.4 |1 |604.9 |0 |
+----------------------------+-----------+-----------+-----+-----------+-----+
|Assets under management |400.3 |363.1 |10 |391.2 |2 |
+----------------------------+-----------+-----------+-----+-----------+-----+

1. End of period.

Ratios and key figures including items affecting comparability1

+---------------------------+------+------+---+------+---+------+------+-----+
| | Q2 | Q2 |Chg| Q1 |Chg| Jan | Jan |Chg %|
| | 2024 | 2023 | % | 2024 | % | -Jun | -Jun | |
| | | | | | | 2024 | 2023 | |
+---------------------------+------+------+---+------+---+------+------+-----+
|Diluted earnings per share,|0.37 |0.37 |0 |0.38 |-3 |0,75 |0,68 |10 |
|EUR | | | | | | | | |
+---------------------------+------+------+---+------+---+------+------+-----+
|EPS, rolling 12 months up |1.44 |1.30 |11 |1.44 |0 |1,44 |1,30 |11 |
|to period end, EUR | | | | | | | | |
+---------------------------+------+------+---+------+---+------+------+-----+
|Share price2, EUR |11.12 |9.97 |12 |10.47 |6 |11,12 |9,97 |12 |
+---------------------------+------+------+---+------+---+------+------+-----+
|Equity per share2, EUR |8.67 |8.13 |7 |8.25 |5 |8,67 |8,13 |7 |
+---------------------------+------+------+---+------+---+------+------+-----+
|Potential shares |3,506 |3,589 |-2 |3,506 |0 |3 506 |3 589 |-2 |
|outstanding2, million | | | | | | | | |
+---------------------------+------+------+---+------+---+------+------+-----+
|Weighted average number of |3,502 |3,588 |-2 |3,508 |0 |3 506 |3 607 |-3 |
|diluted shares, million | | | | | | | | |
+---------------------------+------+------+---+------+---+------+------+-----+
|Return on equity with |17.9 |18.4 | |18.1 | |18,0 |17,8 | |
|amortised resolution fees, | | | | | | | | |
|% | | | | | | | | |
+---------------------------+------+------+---+------+---+------+------+-----+
|Return on equity, % |18.0 |19.1 | |17.8 | |17,9 |17,1 | |
+---------------------------+------+------+---+------+---+------+------+-----+
|Return on tangible equity, |20.8 |22.2 | |20.3 | |20,6 |19,8 | |
|% | | | | | | | | |
+---------------------------+------+------+---+------+---+------+------+-----+
|Return on risk exposure |3.7 |3.8 | |3.9 | |3,8 |3,5 | |
|amount, % | | | | | | | | |
+---------------------------+------+------+---+------+---+------+------+-----+
|Cost-to-income ratio |41.6 |40.1 | |39.7 | |40,7 |40,0 | |
|excluding regulatory fees, | | | | | | | | |
|% | | | | | | | | |
+---------------------------+------+------+---+------+---+------+------+-----+
|Cost-to-income ratio with |42.6 |42.8 | |40.7 | |41,6 |42,7 | |
|amortised resolution fees, | | | | | | | | |
|% | | | | | | | | |
+---------------------------+------+------+---+------+---+------+------+-----+
|Cost-to-income ratio, % |42.2 |40.8 | |41.8 | |42,0 |44,7 | |
+---------------------------+------+------+---+------+---+------+------+-----+
|Net loan loss ratio, incl. |8 |4 | |4 | |6 |3 | |
|loans held at fair value, | | | | | | | | |
|bp | | | | | | | | |
+---------------------------+------+------+---+------+---+------+------+-----+
|Common Equity Tier 1 |17.5 |16.0 | |17.2 | |17,5 |16,0 | |
|capital ratio2,3, % | | | | | | | | |
+---------------------------+------+------+---+------+---+------+------+-----+
|Tier 1 capital ratio2,3, % |19.8 |18.3 | |19.5 | |19,8 |18,3 | |
+---------------------------+------+------+---+------+---+------+------+-----+
|Total capital ratio2,3, % |23.0 |20.5 | |22.4 | |23,0 |20,5 | |
+---------------------------+------+------+---+------+---+------+------+-----+
|Tier 1 capital2,3, EURbn |27.6 |25.6 |8 |27.1 |2 |27,6 |25,6 |8 |
+---------------------------+------+------+---+------+---+------+------+-----+
|Risk exposure amount2, |139.3 |140.0 |0 |138.6 |1 |139,3 |140,0 |0 |
|EURbn | | | | | | | | |
+---------------------------+------+------+---+------+---+------+------+-----+
|Net interest margin, % |1.83 |1.69 | |1.83 | |1,83 |1,64 | |
+---------------------------+------+------+---+------+---+------+------+-----+
|Number of employees (FTEs)2|29,680|29,317|1 |29,478|1 |29,680|29,317|1 |
+---------------------------+------+------+---+------+---+------+------+-----+
|Equity2, EURbn |30.4 |29.1 |4 |28.9 |5 |30,4 |29,1 |4 |
+---------------------------+------+------+---+------+---+------+------+-----+

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 Q2 results 2024. The complete report is
attached to this release and can also be found on the below link on our website.

Nordea Group Q2 2024 Report (https://www.nordea.com/en/investor
-relations/reports-and-presentations/latest-interim-results/)

A webcast will be held on 15 July 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 15 July 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.

More information:
Access the news on Oslo Bors NewsWeb site

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623607_Q2_2024_Report.pdf