By Dominic Chopping
Nordea Bank Abp on Friday posted a forecast-beating third-quarter net profit amid higher lending, lower costs and loan loss reversals.
The Helsinki-based bank swung to a net profit of 837 million euros ($990.4 million) from a loss of EUR332 million for the same period a year earlier. Analysts polled by FactSet had expected net profit of EUR697 million.
Net interest income rose to EUR1.15 billion from EUR1.08 billion. Analysts had expected EUR1.11 billion.
Net loan-loss reversals amounted to EUR2 million in the quarter, versus losses of EUR72 million expected, but Nordea kept the longer-term outlook on loan losses largely unchanged because it expects that some customers will suffer further from the Covid-19 crisis after support measures expire.
The bank still expects 2020 total net loan losses below EUR1 billion.
Nordea reiterated that for 2020, it expects to reach a cost base of below EUR4.7 billion. Its financial targets for 2022 are a return on equity above 10% and a cost-to-income ratio of 50%.
Nordea's common equity Tier 1 ratio--a key measure of financial strength--rose to 16.4% at the end of the quarter from 15.4% a year earlier.
Nordea reiterated that it intends to pay out a dividend for the financial year 2019, but it will refrain from deciding on the payment before Jan. 1. Nordea will review the situation in the fourth quarter of 2020 in the light of any further European Central Bank communication.
Write to Dominic Chopping at email@example.com