Nordea profit tops estimates as bank says strategy bearing fruit

STOCKHOLM: The Nordic region’s biggest bank reported profit in the second quarter that exceeded market estimates and committed to a forecast that it will make more money in 2018 than it did last year.

Nordea Bank AB saw net income grow to € €

1.09bil, just beating the 1.05bil estimate in a Bloomberg survey of analysts, according to a statement sent from Stockholm .

Net fee and commission income was in line with market expectations, coming in at € €

800mil, versus the estimated 799.3mil. Chief executive officer Casper von Koskull said efforts to transform Nordea into a lean- er bank with more digital offerings are starting to bear fruit. With most of the bank’s major projects now “largely” behind it, including efforts to shed riskier businesses, it’s clear that “underlying income is now improving,” the CEO said in an interview with Bloomberg Television’s Anna Edwards and Manus Cranny.

More than any other bank in the region, Nordea has focused on revamping its operations to prepare for the digital age.

Von Koskull said last year that part of that focus requires cutting about 6,000 jobs, including 4,000 full-time staff, as humans make way for technology.

Nordea will soon be based in Helsinki, as the only global systemically important bank in the Nordic region moves its headquarters into the eurozone and under the supervision of the European Central Bank.

Von Koskull has said the relocation gives the bank a more predictable regulatory environment, after Nordea criticised Sweden’s tougher standards on everything from capital adequacy to its ambitions with the state resolution fund.

Nordea’s plans to be inside the European banking union by Oct 1 are “on track,” after the lender was awarded a banking license by the ECB last month, von Koskull said.

Despite a period of heavy investment, the bank is committed to a “progressive” dividend policy, the CEO said.

Management expects to make more money this year than it did last year, though it toned down the bank’s revenue outlook.

“Although we expect some modest growth for the remainder of the year, given the slower first half of 2018, it is unlikely that the repeating revenues in 2018 will reach the 2017 level,” von Koskull said. — Bloomberg