Nordea’s earnings improved more than expected – Net credit losses increased

Financial Group Nordea announced its second quarter results. The novelty of the results publication is the semi-annual dividend paid based on the beginning of the year, which Nordea will be the first to introduce in Finland. The semi-annual dividend is also expected to be announced on Friday Åland bank nilt.

Nordea’s net interest income was EUR 1,779 million in April-June. The consensus forecast of 12 analysts compiled by Factset was EUR 1,785 million.

A year earlier, in April-June, the interest margin was EUR 1,798 million, and in the first quarter of this year, January-March, the margin was EUR 1,759 million.

As expected, net interest income increased compared to the previous quarter, but not yet compared to a year ago.

Fee income in strong growth

Nordea’s net fee income rose to 880 million euros from 792 million euros in the comparison period. Analysts expected revenues of 865 million euros.

Total operating income rose to 3,032 million euros from 2,911 million euros in the same period last year. The predicted level was EUR 2,980 million. The net result from items valued at fair value improved to 281 million euros from 254 million.

The result before bad debts was 1,669 million euros compared to 1,578 million euros a year earlier. Analysts’ consensus was 1,620 million euros. The forecast range was 1,531–1,740 million euros.

Credit losses are no longer offset from the reserve buffer

The credit loss posting was EUR -61 million, and the operating result was EUR 1,608 million compared to EUR 1,599 million a year earlier. In the comparison period, reversals of credit loss entries increased the income statement line to 21 million euros in revenue.

Nordea previously said in the interim report for January–March that it had released the loan loss provisions that were still in the buffer at the turn of the year.

The dividend is paid based on the half-yearly result

Diluted earnings per share were EUR 0.36. A year earlier, the result was 0.35 euros and analysts were expecting a similar result.

The half-year profit per share was EUR 0.73, and based on that, Nordea presents a semi-annual dividend of EUR 0.34. The dividend forecast compiled from the forecasts of five analysts at Factset was EUR 0.33. Nordea has previously announced that about half of the January-June result will be paid as a semi-annual dividend.

For 2026, Nordea is recommending a return on equity (ROE) of more than 15 percent and a cost-to-income ratio of approximately 44–45 percent adjusted for official fees. The guidelines for the cost-benefit ratio improved. Earlier it was 45 percent.

“Good mood”

Group CEO Frank Vang-Jensen emphasizes in the review that the past quarter was strong for the bank.

“The business performance was good in all respects, we gained more new customers and deepened existing customer relationships. Savings and investments also grew strongly. This all helped us to get back on the road to revenue growth on an annual basis.”

Vang-Jensen emphasizes that Nordic companies will continue to invest. During the quarter, Nordea’s lending to companies and company deposits grew by 9 percent from a year ago, as a continuation of a strong start to the year.

Lending to personal customers also increased.

“The gradual recovery of the housing market in the Nordic countries continued, albeit still slowly. Housing loan volumes grew by 2 percent from a year ago. The development was driven by Sweden and Norway, which are two of Nordea’s strategic growth markets,” says Vang-Jensen.

Deposits from personal customers grew by 4 percent. According to Vang-Jensen, the net amounts of the new wealth received for treatment were good.

“During the quarter, customers continued to invest through our funds and pension insurance products aimed at the retail market. We also gained a significant number of new private banking customers. Assets under management increased by 16 percent and reached a record 505 billion euros.”

“Total revenues grew by 4 percent from a year ago and were more than 3 billion euros. Previously, we have only achieved the corresponding quarterly revenues in 2024, when the interest rate was at its highest. This shows the strength of both our decentralized business model and our precisely targeted and growth-oriented 2030 strategy.”

The financial margin improved from the beginning of the year, credit losses still low

Vang-Jensen points out that net fee income increased by 11 percent, and the net result from items valued at fair value was strong. The financial margin also developed positively.

“Although the financial margin decreased from a year ago as a result of the 1 percent decrease in key interest rates, it increased by 1 percent from the previous quarter. This was the first time that the financial margin increased since interest rates started to fall two years ago.”

Expenses remained flat compared to a year ago, when the effects of exchange rate changes are not taken into account. Revenues therefore grew faster than expenses.

The cost/income ratio improved in the second quarter from 45.1 percent to 44.0 percent. The operating profit was 1.6 billion euros and the return on equity was 15.9 percent.

According to Vang-Jensen, the quality of the credit portfolio and assets remained very strong. The net amount of credit losses and other similar items was EUR 61 million (6 percentage points). Thanks to the strong credit portfolio, there are still very few credit losses and the level of credit losses is well below the group’s long-term expectation of 10 basis points.