I have to mention again that Nordea’s reports include a concise one-page overview of the development of the Nordic economies. 
Great for a quick look! And those darn Norwegians, that 2% unemployment rate…
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I asked Grok what Nordea’s operating environment countries would look like as a whole, and I also included Iceland for fun.
Looking over the walls of Finland’s gloom, this doesn’t look bad at all: a powerhouse economy of 28 million inhabitants and $1860 billion, which in size would rank around #12 or #13 globally, slightly smaller than Italy and Canada, and on par with or larger than South Korea, Russia, Brazil, Australia.
As for those unemployment figures, Finland and Sweden, judging by them, certainly have economic potential… We just need to conjure up potential high-productivity jobs for people, ones that contribute to the national economy and don’t just incur costs. Well, that’s another story…
\u003e If you combine Gdp of Sweden, Finland, Denmark, Norway and Iceland how big economy would that be, and what would be the position in world gdp ranking. What would be the population?
\u003e
\u003e Summary
\u003e Combined GDP: ~$1.86 trillion (2023 nominal).
\u003e World GDP Ranking: Approximately 12th or 13th, between Brazil and Australia.
\u003e Combined Population: ~27.89 million.
\u003e
\u003e This hypothetical Nordic economy would be a high-income, mid-sized global player, comparable to Brazil in economic size but with a much smaller population. For context, its GDP per capita would be ~$66,600, among the world’s highest, reflecting the region’s wealth and productivity
\u003e
\u003e Combined GDP
\u003e Based on IMF data for 2023 (nominal GDP at current prices):
\u003e Sweden: $593.3 billion
\u003e Norway: $526.9 billion
\u003e Denmark: $405.7 billion
\u003e Finland: $301.7 billion
\u003e Iceland: $30.6 billion
\u003e Total Combined GDP = $593.3 + $526.9 + $405.7 + $301.7 + $30.6 = $1,858.2 billion (or approximately $1.86 trillion).
\u003e
\u003e World GDP Ranking
\u003e To determine the position in world GDP rankings, we compare the combined GDP to individual countries’ nominal GDPs for 2023 (using IMF or World Bank data). The top economies include:
\u003e United States: ~$25.5 trillion
\u003e
\u003e China: ~$18.3 trillion
\u003e Japan: ~$4.2 trillion
\u003e Germany: ~$4.1 trillion
\u003e India: ~$3.4 trillion
\u003e United Kingdom: ~$3.1 trillion
\u003e France: ~$2.8 trillion
\u003e Italy: ~$2.0 trillion
\u003e Canada: ~$2.0 trillion
\u003e South Korea: ~$1.7 trillion
\u003e Russia: ~$1.8 trillion (estimates vary)
\u003e Brazil: ~$1.9 trillion
\u003e Australia: ~$1.7 trillion
\u003e Spain: ~$1.4 trillion
\u003e Mexico: ~$1.4 trillion
\u003e Indonesia: ~$1.3 trillion
\u003e The combined GDP of $1.86 trillion would place the Nordic economies between Brazil ($1.9 trillion) and Australia (~$1.7 trillion), likely around 12th or 13th in global rankings, depending on precise figures for Russia and Brazil. It would surpass countries like Australia, Spain, Mexico, and Indonesia but fall short of Canada and Italy.
\u003e
\u003e Combined Population
\u003e Using 2023 population estimates from Statista and other sources:
\u003e Sweden: 10.55 million
\u003e Denmark: 5.90 million
\u003e Finland: 5.56 million
\u003e Norway: 5.49 million
\u003e Iceland: 0.39 million
\u003e Total Combined Population = 10.55 + 5.90 + 5.56 + 5.49 + 0.39 = 27.89 million.
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The share of Stage 3 (impaired) loans in the loan portfolios of Finnish households and SMEs is many times higher compared to Sweden and Norway. In Finland, 1.75% of household loans and 2.8% of SME loans are “impaired”. Only the quality of large corporate loan portfolios in Finland is at the same level as in other Nordic countries.
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I’m new to bank sector stocks, and I don’t understand why both Inderes and the market seem to use a higher cost of equity for banks than for other companies on average. Usually, it’s below 9%, but for banks, it’s over 10%. What causes this?
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Banks are inherently very highly leveraged institutions, in which case, when the shit hits the fan, the equity capital is often completely lost. This resulting “bust” risk, at least in my books, significantly increases the required rate of return I use for banks.
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Here’s Sijoittaja.fi’s article about Nordea and its results. The rest of the article is behind a paywall. In itself, there shouldn’t be much new if you’ve checked Nordea’s own materials and Inderes’ comments as well.
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I interviewed Ian in Vallila in my usual style. At least to my taste, it was an even more interesting interview. Ian mentioned that even though corporate clients are prepared, for example, credit card data does not show any weakness due to the trade war so far.
Topics timestamped:
00:00 Nordea Q1
01:30 Credit losses
02:55 Trade war
06:28 Nordic economies
07:40 Assumptions for 2025
09:38 Management buffers
11:35 Effects on Nordea
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Kassu has diligently prepared a new company report right after the results.
Nordea published better-than-expected Q1 results. However, the forecast beat was mainly explained by quarterly fluctuating fair value changes, and the decrease in net interest income kept the result declining as expected. At the same time, increased uncertainty has weakened the outlook for credit demand, which, together with lowered interest rate forecasts, reduced our earnings estimates. In light of the relatively stable earnings outlook, the stock’s return expectation is still sufficient, so we reiterate our Add recommendation.
Dividend distribution remains abundant
Dividend distribution is expected to remain abundant in our forecasts, similar to previous years, and we expect Nordea to distribute 65–70% of its earnings as dividends in accordance with its dividend policy. We understand that the company aims for steadily growing dividends, which our own forecasts also reflect. Dividends are supplemented by regular share buyback programs, the latest of which, an approximately EUR 250 million program, was launched in Q1. In addition, we expect another program of similar size for the rest of the year. For the years 2026–2028, we expect a total of approximately EUR 3.0 billion in share buybacks.
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Was it 9 or 10 quarters ago when I changed the title of the Nordea thread? A lot has happened since then, but it’s still producing top-notch results. Especially considering the circumstances. Q1 was again a strong performance.
Nordea’s operating environment has weakened due to Trump’s erratic behavior, but the Nordic countries seem to form a stable region as widespread uncertainty increases. An optimist might note in this situation that lower inflation and decreased interest rates could quickly increase economic activity as uncertainty dissipates.
My assessment is that Trump will try his tricks against economic logic for a while and then quickly backtrack when facts hit him in the face. It is very possible that as his popularity wanes, he will tire of continuous setbacks and focus again on domestic politics, perhaps even building a wall on the Canadian border.
In early winter, I was involved in financing discussions for a certain company. It was a rather significant sum, and discussions were held with almost all Finnish banks. Nordea was also involved. One bank showed no interest, and a smaller bank, which didn’t get bogged down in minor details, won the deal. What stood out in the process was Nordea’s thorough investigation of the company’s situation. Its meticulousness differed from all others. Nordea has boasted about the quality of its loans, and that claim was confirmed through personal experience. Nordea’s offer was also among the best in the end.
I listed the Q1 highlights from the CEO’s section of the release
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Personal customers: Growth in savings, loans, and digital services.
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Corporate customers: Lending growth in Sweden and Finland, very strong customer satisfaction in Sweden.
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Large corporations and institutions: Strong demand for risk management solutions, lending decreased slightly, bond markets became more active.
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Wealth management and asset management: Positive net subscriptions, assets under management grew by 9% year-on-year to EUR 425 billion.
When you add the strategic outlook, i.e., the return on equity target remaining >15%, there’s still nothing to complain about. My own “Pappaholding Oy” is satisfied with the steady return and operational reliability. Nordea is now the only stock of its kind in my portfolio.
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Antti Saari of OP has written a recent analysis titled “Just a couple more quarters and profits will grow again.”
Target price raised from 12.50 euros to 13.00 euros, and the recommendation remains BUY.
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Danske Bank evaluates Nordea in its morning report following the recent earnings release.
The following is available to read via the link until the next weekday.
12-month target unchanged, 145 SEK (approx. 13.15 EUR) & Buy
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Lest the truth be forgotten, the shredder is running hot at Nordea: Nordea mitätöi takaisinostettuja osakkeita | Kauppalehti
Nordea has today cancelled 10,307,077 of the company’s own shares in accordance with a decision made by Nordea’s Board of Directors. The shares were held by the company for the purpose of optimizing its capital structure and were acquired through share repurchases.
The total number of Nordea shares after the cancellation is 3,480,580,970. The total number of votes associated with the shares is 3,480,580,970.
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Again, the ownership stake in a quality company grew by 0.29% 
It grows from small streams
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I’m sharing some high-level observations here from the European banking sector. This naturally applies to Nordea as well.
Bloomberg had a story about the European banking sector, which has been one of the hottest places in the world to be for the past couple of years, alongside AI and the (European) defense sector.
According to a JP Morgan expert, bank earnings in Europe are “peaking” as interest rates fall, which in turn leads to a decrease in net interest margin. At the same time, the sector is not the most comfortable to own during a recession, and according to analysts, recession risks have not been significantly priced into the sector.
Portfolio managers are increasingly less “overweight” in European banks.
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CEO Frank Vang-Jensen’s review from this spring’s Annual General Meeting! 
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A few highlights for the Nordea thread from today’s Vartti, where I also discussed the European banking sector extensively. The European banking sector is, however, the framework within which Nordea operates.
This chart might require a bit of explanation, which I also provided in the video. The interest rate spread between German 2-year and 10-year government bonds (10-year minus 2-year rate) describes the difference between short-term and long-term interest rates. In practice, the German 2-year rate and the ECB’s policy rate move close to each other, as short-term rates reflect the prevailing monetary policy. In contrast, the 10-year rate reflects the economic and inflation outlook for Germany and the Eurozone, and how they are perceived by the market to look on average over the next 10 years.
In layman’s terms. The 2-year rate affects banks’ deposit rates (borrowing/funding costs), but loans (lending) reflect long-term (10-year) rates.
If the interest rate spread widens, it pays for banks to lend as much as they can tolerate risk. This also heats up the economy.
The European banking sector and this interest rate spread have at least visually correlated well, although this correlation does not apply before the financial crisis. The recent rally can be explained, at least in part, by this steepening of the interest rate spread.
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Based on this release, no sudden halt in consumption or demand for housing loans has been observed in Finland due to fears of a trade war. This is naturally good for Nordea as well as other banks operating in Finland. The increase in applications does not, of course, yet guarantee that new loan drawdowns will continue to grow, but this is certainly a good indication.
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Talouselämä article about Nordea. Interviewing Inderes’ Kasper, of course. (Subscribers only)
A few excerpts from the article:
According to the journalist & analyst, the reasons/background factors for Nordea’s share price increase.
- Benefiting from the interest rate environment:
Rising interest rates swelled banks’ net interest income after years of zero interest rates.
“As a result, their net interest income became fabulous.” – Olli Harma/Article author
- Share price increase with a delay:
Analysts raised target prices already at the beginning of 2023 (around €13), but the markets priced the stock cautiously for a long time.
Now in spring 2025, the share price rose to the analysts’ level. - Share price increase through valuation multiples, not forecast changes:
"Since forecasts have not changed much, this increase has indeed come through valuation multiples.” – Kasper Mellas, Inderes bank analyst
Why did the share price rise just now, even though interest rates fell?
- Macroeconomy improved:
European stimulus packages and the receding recession supported the markets in the early part of the year.
“At that time, Nordea’s share price pulled a clear rally.” – Article author
- Fear of credit losses receded:
Nordean’s credit losses have been minimal.
"Investors have started to expect that Nordea will rather be able to unwind those buffers in the coming years.” – Kasper Mellas
- Interest rate hedging softened the impact of falling interest rates:
Net interest income will decrease moderately (€7.6 billion → €7.2 billion) and then stabilize.
– Source: Factset forecasts, cited in the article - Management and efficiency delivered results:
Nordean’s CEO Frank Vang-Jensen has turned the company into an efficient and profitable one.
“Nordean’s operational efficiency – measured, for example, by the cost-to-income ratio – has been tremendous.” – Olli Harma/Article author
Valuation level and investor outlook:
- P/B ratio risen to 1.4 – highest since the financial crisis:
“When the financial crisis hit, banks were valued at a P/B ratio of even two.” – Kasper Mellas
“Nordea is thus valued higher than the average European bank.” – Olli Harma/Article author
- Strong total return:
The five-year total return has been approximately +240% including dividends and buybacks.
Summary according to Mellas:
- Market and analyst views have converged.
- Fears have dissipated, and the stability of the banking sector was previously underestimated.
“Now it seems that the differences in views have narrowed: the markets appear to be more in agreement than before.” – Kasper Mellas
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Buyback program completed. A new one is being negotiated with the ECB. The buyback party thanks you!
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Message merged into topic: Course Inquiries, Changes, Complaints, and Praises (Part 4)