April 29, 2020 / 5:00 AM / a month ago

Nordea first-quarter net profit beats market expectations

HELSINKI (Reuters) - Nordea Bank (NDAFI.HE) on Wednesday reported a 4% increase in first-quarter net profit, well above market expectations, and said it was too early to assess the long-term outlook for loan-loss provisions due to the coronavirus crisis.

FILE PHOTO: The Nordea bank logo is seen outside their corporate headquarters in Stockholm February 2, 2011. REUTERS/Bob Strong

The Nordic region’s biggest bank said its net profit in the first quarter rose to 460 million euros, exceeding the 377 million expected by analysts in a Refinitiv poll.

The bank’s shares were up 4.5% by 0715 GMT.

But its adjusted operating profit in the quarter fell 16% to 599 million euros ($650 million) from 716 million euros a year ago as the coronavirus pandemic’s negative impact hit earnings.

Net loan loss provisions amounted to 154 million euros in the quarter, of which 120 million was an additional management judgement to provide coverage for the likely near-term increase in loan losses, the bank said.

“At this point, it is too early to conclude on the longer term outlook for loan loss provisions. We will make further assessments in Q2, following updated macro assumptions.”

Nordea also said its portfolio was well diversified with low exposures to industries expected to be immediately affected by COVID-19.

“On balance we view the results as Neutral with solid core revenue performance offset by likely increase in provisions in coming quarters,” Citi analysts said in a note.

The group’s net interest income rose 5% to 1.11 billion euros. Net commission income was up 4% to 765 million euros compared to the first quarter of 2019, above analysts’ average expectation of 732.6 million in the poll.

Nordea said its overall revenues decreased by 5% as it was adversely affected by the recent turmoil in the financial markets caused by the pandemic.

On Tuesday, Nordea said its board would decide on a dividend payment of maximum 0.4 euros per share to be distributed in one or several instalments on a later date.

“The Board of Directors intends to follow the recommendation adopted by the ECB (European Central Bank) and refrain from deciding on a dividend payment based on the authorisation before 1 October 2020,” Nordea said.

Shares in insurer Sampo (SAMPO.HE), Nordea’s biggest shareholder, rose more than 5% by 0715 GMT.

Reporting by Anne Kauranen; additional reporting by Tarmo Virki and Johannes Hellstrom, Editing by Amy Caren Daniel and Jane Merriman

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