Nordea expects higher costs for 2022, but better profitability
The Helsinki-based bank is now aiming for a return on equity (RoE) of more than 13 per cent for 2025 and raised its 2022 target from 10 per cent to more than 11 per cent as it benefits from growth in mortgages and growth in assets under management.
However, Nordea said costs in 2022 will be higher than in 2021, and the company’s shares fell about 2.5%, while the Helsinki Stock Exchange fell 1.2% at noon.
“… A 49-50% cost-revenue target would include growth investments and higher regulatory costs, which include the Swedish bank tax. This is now a 48 percent consensus, according to the Visible Alpha Consensus, ”Credit Suisse analysts wrote in a memo.
Nordea is pursuing Handelsbanken’s profitability targets. The Swedish bank’s return on equity in October was 11.5% for the first three quarters of 2021 and 12.4% for the third quarter.
Danske Bank Denmark’s return on equity target for 2023 is 8.5–9 percent.
“I am pleased that we have exceeded our financial targets for 2022 ahead of schedule and that all of our business areas have met their targets,” said Frank Vang-Jensen, CEO of Nordea.
The Group reports a better-than-expected result for the fourth quarter.
Nordea’s fourth-quarter net profit rose to € 1.02 billion ($ 1.15 billion) from € 725 million a year earlier, exceeding analysts’ forecasts of € 949.1 million, according to Refinitiv.
“Our mortgage lending grew by 6%, lending to SMEs (small and medium-sized enterprises) by 6% and assets under management by 17% to an all-time high.”
Nordea’s Board of Directors proposed that approximately EUR 0.69 per share be distributed for 2021, which is 77% more than in 2020, EUR 0.39 per share.
“Our capital position is one of the strongest in Europe,” Vang-Jensen said in a conference call.
($ 1 = $ 0.8851)
(Reported by Anne Kauranen; Edited by Clarence Fernandez, Shailesh Kuber, Carmel Crimmins and Kim Coghill)