I recently put together this dividend-adjusted comparative chart of Euro Stoxx Banks vs. its largest components. I don’t know if such a comparison makes sense or if I did it the right way, but based on it, Nordea has performed relatively poorly in that group. The index itself has risen approximately 37.5% since the beginning of the year, and Nordea 29%. Leading the pack are Societe Generale (81%), Banco Santander (60%), and Unicredit (52%).
I also used Yahoo Finance to compare these four stocks. Nordea appears somewhat expensively valued, but its margins are in a league of their own.
Offhand, it comes to mind that the starting point can affect quite a lot, and half a year might not be a sufficient review period. But if Nordea has not similarly overperformed for the year 2024 (or even earlier ones), then there might indeed be a point there.
In fact, Nordea has been trailing at the bottom for about five years, but if the starting point is set further back, its position begins to rise. From around the 2010s onwards, Nordea has then been a clear number one. But I didn’t go into finding out which banks were included in the index then (They are probably no longer relevant anyway). Some of these banks apparently hadn’t even been founded then. Is the dividend data even complete?
In the long term, the track record certainly looks much better, and just by looking at the stock price, Nordea has returned precisely to its pre-financial crisis level. Others still have catching up to do.
Nordea and the Nordic banks corrected much earlier to a reasonable profitability level and valuation. Elsewhere in Europe, profitability has been weaker, and banks were at some point valued very cheaply, typically below 0.5 P/B.
Now that profitability has improved there too, a nice valuation correction has been achieved, while Nordic banks were already around book value (with the exception of Danske, which was long burdened by money laundering compensation).
Many other factors have influenced Nordea’s share price besides share buybacks, but they have probably had some limited contribution. The timing of the buybacks, however, has been pretty much spot on (unlike, for example, UPM).
“Nordea’s two programs have performed excellently. The share price has risen by almost a quarter from their average price after both programs. The programs are among the largest on the stock exchange in terms of size”
The European Central Bank will start easing banking regulation. But it is not about a full-scale deregulation. Among the areas to be eased are, for example, own share purchases.
Main points of the article translated into English:
Asset Manager Receives Finma License and Strengthens Institutional Presence.
Nordea Asset Management (NAM) has received approval from the Swiss Financial Market Supervisory Authority (Finma) as a manager of collective investment schemes, the asset manager announced on Tuesday.
The asset manager previously held a wholesale market distribution license, but the new license now entitles it to manage institutional mandates in Switzerland.
“The Finma license is an important step towards our growth targets in Switzerland. It enables us to work more directly and flexibly with institutional investors on the ground,” says Cristian Pappone, NAM’s Head of Switzerland, Austria and Liechtenstein.
In Switzerland, the demand from pension funds and institutional investors for sustainable and tailored solutions is also constantly growing, the company stated. Nordea Asset Management signed its first agreement with a cantonal bank earlier this year under a new strategic partnership model for its BetaPlus product line. This enhanced indexing strategy, which manages over 60 billion euros in assets, aims to generate attractive excess returns through a proven quantitative approach. The product line can be customized in terms of benchmarks, tracking errors, and individual carbon emission targets.
Expected EPS for 2Q2025 is €0.34 vs €0.37 (2Q2024).
Nordea will publish its Q2 results on Thursday, July 17, at approximately 7:30 AM. Nordea’s revenues are expected to continue to decline, driven by net interest income, and we also expect operating profit to have weakened from the comparison period. However, profitability remains at a strong level. On the results day, the wording of the current year’s guidance will be particularly in the spotlight, as achieving a return on equity of over 15% requires excellent development in the latter half of the year.
Spotted in Kauppalehti’s flash news… Danske Bank: Nordea’s share target price has risen to 14.36 euros (from 13.05 euros), buy recommendation unchanged.
To my calculation, this is the third target price increase of over one euro in a short period: a week and a half ago Jefferies, yesterday Handelsbanken, and now this.
Here Danske Bank’s analysis is referred to in Swedish:
I don’t understand, could someone explain why analysts are raising target prices in a situation where we are in a world of falling interest rates. In my opinion, it’s clear that interest rates will still fall significantly from current levels. This is supported by a low inflation outlook and especially the significant weakening of the dollar. I’m quite sure that the ECB does not want the euro to strengthen any further from these levels. Europe has a competitiveness problem due to a strong euro. Therefore, they want to push interest rates down. Negative interest rates are poison for banks, including Nordea. This can be bought sometimes under ten.
Negative news has already been factored into Nordea’s share price. The increase in target prices could be a result of the most negative outlook not materializing, and in that case, an earnings level with a P/E of 9 at low risk is a good investment.
Nordea’s major peer, Handelsbanken, published a reasonably stable result for the second quarter.
Q2 2025 (Q1 2025)
Operating profit was SEK 7,164m (8,136).
Return on equity was 12.7% (12.9).
Earnings per share amounted to SEK 2.77 (3.19).
The C/I ratio was 44.2% (40.7).
The credit loss ratio was -0.03% (-0.01).
The common equity tier 1 ratio was 18.4% (18.4)
Lending volumes grew slightly in the home markets, which for Handelsbanken also include the Netherlands and the United Kingdom. Despite Sweden being the main market, the bank thus has a difference in market area compared to Nordea. Credit losses negligible
Lending volumes increased in all home markets, albeit to a limited extent. At the same time, net interest income was held back by the significant appreciation of the Swedish krona, as well as by the fact that previous positive repricing effects between deposits and lending were not repeated during the quarter. Net fee and commission income was resilient and relatively unchanged compared with the previous quarter, in spite of the effects on assets under management from lower stock markets. Underlying expenses continued to decrease, and credit losses consisted of net reversals for a sixth consecutive quarter. All in all, return on equity was stable compared with the previous quarter.
SEB bank’s Q2 result slightly better than expected. Net interest income declined, but retail banking activity improved and credit losses were negligible. Return on equity at SEB remained just above 15%, which is what Nordea aims for.
In Norway, the largest bank DNB’s result fell slightly short of expectations and its share price dropped almost 10%. Handelsbanken is expected to see a share price decline today. Danske Bank’s results are not yet public.
With these Nordic industry outlooks, I’m looking forward to Nordea’s earnings report tomorrow
