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Despite the covid crisis, the Nordea banking group is well equipped for dividends for 2019 to the owners, according to the Group’s management. But the money is delayed until next year.
“The Board will refrain from deciding on the dividend for 2019 until after January 1, 2021. Nordea will review the situation during the fourth quarter of 2020 with respect to any other communication from the European Central Bank,” the bank wrote in a report to the third quarter of the year.
Unexpectedly strong result
At the same time, Nordea reports an unexpectedly strong operating profit.
Profit excluding credit losses was 1,083 million euros for the third quarter of 2020. This can be compared to the loss of 90 million euros in the corresponding period last year.
Including credit losses, the profit was € 1,085 million, which can be compared to an average analyst forecast of € 966 million.
Net interest income, which the bank derives from the difference between deposit and loan rates, rose 6 percent to 1,146 million euros, from 1,083 million euros. The average forecast of the analysts was 1,100 euros.
Net fees decreased to € 729 million, from € 756 million. This can be compared to an average forecast of 731 million euros.
Venereal disease Frank Vang-Jensen describes the development as “clearly positive” in a comment.
“Our revenue growth was driven by high customer activity. Our assessment is that we are growing faster than the market in several areas,” he writes.
Higher market shares in mortgages
It notes, among other things, that net interest income was 6 percent higher than in the third quarter of 2019 and states that this is the highest growth rate since 2012.
According to Frank Vang-Jensen, this was due to increased volumes and higher market shares for mortgages, as well as increased loans to small and medium-sized businesses.
At the same time, net fees and commissions are tempered by the fact that revenue from payment and card fees is negatively affected by the moderate economic activity as a result of COVID-19.
Net, there were no credit losses at all in the third quarter, quite the contrary. At the beginning of the crisis, Nordea took into account credit losses greater than the result, so that during the quarter operating profit from a reversal of provisions for expected credit losses increased by € 2 million. This can be compared to credit losses of € 331 million in the previous year.
“The cushion, according to management’s assessment of a total of 650 million euros, has been held, as the overall economic consequences of the pandemic are still uncertain,” writes Nordea.
The forecast for the whole year remains that there will be credit losses of one billion euros.
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