Nordea Bank Abp (NRDBY) Q2 2025 Earnings Call Highlights: Strong ROE and Asset Growth Amidst ...

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Return on Equity: 16.2%.
Earnings Per Share: EUR0.35.
Mortgage Lending Growth: 6% increase.
Retail Deposits Growth: 8% increase.
Corporate Lending and Deposits Growth: 5% increase year-on-year.
Assets Under Management: 9% increase to EUR437 billion.
Net Interest Income: Decreased by 6% year-on-year and 2% quarter-on-quarter.
Operating Profit: EUR1.6 billion, stable quarter-on-quarter.
Cost Increase: 3% excluding foreign exchange effects.
Cost-to-Income Ratio: 46.1%.
Net Loan Losses: Net reversal of EUR21 million.
CET1 Ratio: 15.6%, 1.9 percentage points above regulatory requirement.
Net Flows in Private Banking: EUR2 billion.
Gross Written Premiums: EUR3 billion.
Warning! GuruFocus has detected 4 Warning Sign with NRDBY.
Release Date: July 17, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
Nordea Bank Abp (NRDBY) delivered a strong return on equity of 16.2% for Q2 2025, highlighting its structural improved profitability.
Mortgage lending increased by 6% and retail deposits were up 8%, driven by strong performance in Norway and Sweden.
Assets under management grew by 9% to EUR437 billion, demonstrating resilience in turbulent markets.
The bank maintained a strong capital position with a CET1 ratio of 15.6%, which is 1.9 percentage points above the regulatory requirement.
Nordea Bank Abp (NRDBY) continued significant investments in technology, digital capabilities, data and AI, and cybersecurity to support future growth and resilience.
Negative Points
Net interest income decreased by 6% year-on-year due to the declining interest rate environment.
Operating profit was slightly down at EUR1.6 billion compared to EUR1.7 billion a year ago.
Cost increased by 3% excluding foreign exchange effects, driven by strategic investments including the Norwegian acquisition.
Net fee and commission income was stable year-on-year but impacted by financial market turmoil.
The equity capital markets and mergers and acquisitions activities remained challenging with volatility and uncertainty postponing transactions.
Q & A Highlights
Q: You maintain your guidance of more than 15% ROE for the year and your cost guidance. Given the current rate environment, how do you see the outlook for the various P&L items for the remainder of the year? A: Ian Smith, CFO, explained that despite market volatility and lower activity levels, especially in equity and corporate finance, Nordea finished the first half strongly. The expectation is for a quieter Q3 due to usual seasonality and cautious customer behavior, but momentum is expected to build into Q4. Net interest income (NII) is expected to be lower but resilient, with some pressure on lending margins due to competition. Fee income is expected to slow in Q3, and net fair value is anticipated to be smaller in the second half. Cost guidance remains at 2% to 2.5% growth for the full year.
Q: You reduced your management judgment buffer by EUR60 million. Can we expect further reductions in H2? Also, how close can you realistically get to your 1.5% management buffer target? A: Ian Smith confirmed that Nordea expects to either use or release the management judgment buffer, with releases likely due to strong credit quality. On capital, Nordea maintains a substantial excess over the regulatory requirement and the 1.5% management buffer, providing flexibility for buybacks and capital distribution.
Q: Regarding NII sensitivity to interest rate changes, how significant would the impact be if rates fall further in the Nordic countries? A: Ian Smith noted that Nordea's sensitivity range accounts for rate path uncertainties. While there is an expectation of a rate cut in Norway, the sensitivity remains towards the upper end of the range. In Norway, NII compression is due to internal factors rather than rate cuts, and in Denmark, competitive pressures are affecting margins.
Q: Could you provide an update on the Norwegian business after the integration of the acquisition from Danske? A: Frank Vang-Jensen, CEO, stated that the integration is progressing well, with positive customer engagement and cross-selling opportunities. The business case is aligned with or slightly better than planned, with strong ancillary and cross-sell metrics in Norway compared to Sweden.
Q: What are the main themes for the upcoming Capital Markets Day? A: Frank Vang-Jensen mentioned that the focus will be on building on Nordea's strong foundation, growing income above market rates, leveraging Nordic scale, and maintaining market-leading returns and superior EPS growth. The aim is to demonstrate how Nordea will achieve these goals.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
This article first appeared on GuruFocus.