Nordea Bank has raised its short-term return on equity targets.
The Finnish bank also announced on Monday that it posted second-quarter net profit above market expectations, benefiting from improved net interest margins and lending growth.
Net income attributable to shareholders was 1.34 billion euros, compared to 1.06 billion euros in the prior-year quarter. Net interest income increased by 40 percent to 1.83 billion euros.
In a factset consensus estimate, analysts had forecast net income of 1.26 billion euros and net interest income of 1.8 billion euros.
“It is clear that the economic slowdown and interest rate increases have had a negative impact on the growth of our business volume, particularly in the mortgage sector,” said CEO Frank Vang-Jensen. “Our corporate lending volume continues to grow, particularly in Norway and Sweden.”
For 2023 as a whole, the bank now expects a return on equity of more than 15 percent instead of more than 13 percent. The bank is currently sticking to its targets for 2025, but the CEO is promising an update with the figures for the fourth quarter.
Nordea is currently targeting a return on equity of more than 13 percent in 2025, a cost-income ratio of 45 to 47 percent and an annualized net loan default rate of around 10 basis points.
Nordea’s Common Equity Tier 1 ratio was 16.0 percent for the quarter, compared to 16.6 percent a year earlier.
The Nordea share temporarily gains 0.36 percent on the Helsinki stock exchange to 10.18 euros.
HELSINKI (Dow Jones)
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