Nordea - Nordic banking leader

Great development suggestions! Overall, I am satisfied with the presentation and otherwise extremely satisfied as a Nordea owner.

It certainly says something about the company’s current momentum that the biggest problems related to investing and investor communications are focused on statistical charts.

Q1 2025 is starting to be wrapped up and interest rates are still hovering around 2.5%. Funds from future European investments are flowing through Nordea’s channels as well, people are spending money again (because they have something to spend) etc.

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I agree, and in my opinion, there’s no point in trying to be clever when the numbers are already impressive without it. That kind of cleverness, in my opinion, belongs to companies that have more operational improvements to make, which they then try to obscure with these “techniques.” Of course, this could be due to carelessness on the part of whoever prepared the slides, but I think those slides must have passed through quite a few pairs of eyes before publication.

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The same error in the scales was already present last year. I provided feedback about it, which Nordea acknowledged. However, they haven’t corrected the issue. Or rather, there isn’t a scale on the Y-axis at all.

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Overall, quite incomprehensible from a company that is a leader in numerical matters.
The purpose of graphs is to visualize numbers, and here that doesn’t happen at all; instead, the visual narrative and the numbers cause confusion. Significant improvement has been achieved in operating profit and revenue! Or wait, no…

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Thank you for the feedback, which has been received and will be corrected for future presentations!

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Juho Toratti has written an article about Nordea’s dividend, which doesn’t cover much else. :slight_smile:

In the current year, analysts expect Nordea’s earnings to fall to 1.36 euros. Despite this, the financial giant is expected to maintain the 0.02 euro annual dividend increase seen in recent years. Analysts’ dividend forecast for the 2025 financial year is thus 0.96 euros.

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Nordea’s pricing multiple?

Currently, Nordea’s consensus earnings for 2025 are EUR 1.37 and the share price is 11.94, giving a P/E ratio of 8.7.

What do you think is the “correct” pricing multiple for Nordea and why?

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PB 1-1.2. I don’t believe in a 15% ROE in the long run, but 12% could very well be the long-term average.

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Oh, this Sijoituskästi/STNX tweet thread about Nordea hasn’t been here yet. :slight_smile:

https://x.com/STNXfi/status/1905146934089638257
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Rest of the tweet thread

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Yesterday’s business newspaper featured a fairly extensive article about banks as investment targets. A favorable outlook was painted for Nordea and Aktia. Thumbs down, however, were offered to these: OmaSP and Alisa.

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It seems that Nordea experienced a ‘limit down’ and consequently a trading halt. Can someone confirm this? Is it possible for a retail investor to see Dark Pool data for Hex shares from any source?

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This didn’t age very well… Things are wild for Nordea too.

Interest rates appear to be falling, and all this economic uncertainty is toxic for banks. If a major bank runs into trouble, the ripple effects will be far-reaching. The ECB may also freeze dividend payments in a major crisis. Understandably, bank values are falling.

I myself, of course, am looking to add if they were to dip below book value, but the daily decline seems to have eased.

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The value of a business and its ability to generate profit over the long term are different from a stock’s short-term price performance.

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Here are preliminary comments from Kasper as Nordea publishes its Q1 results on Wednesday. :slight_smile:

Nordea’s net interest income is likely to remain in decline, which, together with increased costs, will pull the Q1 result in our forecasts clearly below the strong comparison period’s level. On the report, our attention will be drawn, in addition to the figures, especially to management’s comments on the possible effects of increased uncertainty on the bank’s future outlook.

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@Kasper_Mellas what happens to P/B and ROE in 2028 when they rise so sharply in the forecasts?

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Next week, Nordea’s first-quarter earnings release is due. Profitability should remain at a good level, even though the decrease in net interest income is weighing on earnings development.

Regarding the recent sharp movements, an escalation of a potential trade war would, in principle, weaken Nordea’s growth and earnings outlook.

The impact would be indirect and would come through 1) lower interest rates, 2) weakening loan demand, and 3) increasing credit losses. Nordea has a substantial buffer in place for increasing credit losses, so the impact of point 3 would remain moderate. Furthermore, the bank’s lending criteria are, in our assessment, quite conservative regarding creditworthiness and collateral, so it is unlikely that an economic downturn would dramatically affect the bank’s profitability even without buffers (although there would certainly be some short-term effects). However, lower interest rates would, in principle, weaken the net interest income of all Nordic banks. The outlook for loan demand also affects all banks, as declining consumer confidence erodes mortgage demand, and an unpredictable macro environment curbs companies’ investment enthusiasm and, through this, loan demand.

For now, I do not consider the impact of the factors listed above to be dramatic, as no boom-time celebrations have been baked into bank forecasts even before this. In addition, market interest rate forecasts have, at least for now, fallen relatively moderately – by 15–20 bps in Europe after the tariffs were announced. The situation may, of course, have already changed today, given how rapid the news cycle currently is. The euro area interest rate level (e.g., 12-month Euribor) is still, in forecasts, around the 2% level that Nordea applies in its calculations and targets. At its lowest, the interest rate level in forecasts falls to exactly around 2% in 2027. Of course, when reading these, it is good to remember that it is rare for markets to successfully predict the overall development correctly. The current year serves as a good example: at the beginning of the year, interest rates rose amid hopes of European stimulus, until the rug was pulled out from under due to fears of a tariff war.

In addition, a decline in capital markets would affect commission income through assets under management. A cooling market sentiment could also weaken the investment enthusiasm of wealth management clients and reduce new subscriptions (or even lead to significant redemptions, as at the beginning of the corona crisis).

In summary, the threat of tariffs and a trade war is also negative for banks, as they are very closely tied to the macroeconomy in their business, but the ultimate impact is impossible to reasonably assess at this point. So, there is nothing to do but monitor the situation’s development. In my opinion, the market reaction has, however, been quite sharp, and Nordea, for example, was momentarily priced at its book value. This is difficult to justify, even if the visibility into the ultimate effects is hazy. Of course, today there was a strong upward correction again, so at the time of publication of this article, it has already returned slightly above book value.

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There’s an error in the data, this will be corrected. The correct ROE forecast is 14.3%. Thanks for noticing!

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Nordea’s Q1’25 result is out! EPS 0.35 EUR, easily exceeding expectations by a quick judgment.

" Summary of the first quarter

Commission income growth continued; total income remained at a high level. Net interest income decreased by 6 percent due to the reduction in key interest rates. Net commission income grew by 4 percent. Both net result from insurance activities and net result from items valued at fair value were stable. Total income decreased by 4 percent year-on-year, but increased by one percent compared to the previous quarter. Expenses grew by 5 percent. Strategic investments accounted for 4 percentage points of this. Operating profit was 1.6 billion euros. It decreased by 9 percent year-on-year but increased by 10 percent from the previous quarter.

Return on equity 15.7 percent; earnings per share 0.35 euros. Nordea’s return on equity remained strong at 15.7 percent in the first quarter. This reflects the sustainability of Nordea’s operating model and continued very good development. The first quarter’s cost-to-income ratio, including amortized stability fees, was 44.6 percent, which is in line with Nordea’s target of 44-46 percent. Earnings per share were 0.35 euros, compared to 0.38 euros a year earlier."

Link to the release https://www.inderes.fi/releases/nordean-tulos-ensimmainen-neljannes-2025

Here is the table from the pre-comment for comparison.

Screenshot 2025-04-16 at 7.26.59

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”Nordea exceeded expectations”

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