STOCKHOLM (Reuters) - Nordea Bank’s (NDAFI.HE) new CEO Frank Vang-Jensen promised to hit financial targets and continue cutting costs on Thursday as the Nordic region’s biggest lender beat fourth-quarter net profit expectations.
Its profit rose to 750 million euros ($825 million) from 505 million a year earlier and topped the 705 million forecast by analysts, Refinitiv Eikon data showed.
“After we struggled for some years, in mortgages for example, we’re back in business, we have turned it around,” Vang-Jensen said on a conference call.
Nordea shares were up 4.9% by 0844 GMT, outperforming the European banking index .SX7P which was up 2.1%.
The bank returned to profitability after a dismal third quarter of 2019, when it reported its first loss since it was created in a merger in 1998 weighed down by 1.3 billion euros in one-off charges.
Vang-Jensen was appointed in September and has promised to revive the lender after years of sluggish profitability.
Nordea said it had reduced costs by 5%, improving the cost-to-income ratio to 57% from 63%.
“We have taken the first steps to establish a new cost culture,” Vang-Jensen said.
Return on equity improved to 7.6% but continued to trail many of its Nordic peers.
Nordea reiterated financial targets it set in October, including a return-on-equity target of above 10% and a cost-to-income ratio of 50% by 2022.
“There are several promising signs ...but we still have a lot of work ahead of us to get to where we want to be,” Vang-Jensen said in the report.
Net interest income, the bank’s most important income line, fell 3% to 1.11 billion euros but was roughly unchanged in local currencies.
“Solid results and what we’re seeing is that the business momentum is finally picking up after two years or more of lagging behind peers,” said Robin Rane, an analyst at Kepler Cheuvreux.
“The capital was strong in the quarter...and that increases the likelihood of the bank doing buy-backs down the road,” Rane said.
The bank proposed a dividend of 0.40 euros per share for 2019, down from 0.69 in 2018 but in line with the mean analyst forecast of 0.40 euros.
Reporting by Colm Fulton and Johan Ahlander; Editing by Kim Coghill. Editing by Gerry Doyle