Nordea CEO Sees Bigger Shareholder Payouts as Lending Recedes

Nordea Bank AB (NDA) said weak demand for loans will help boost its capital buffers in coming years, leaving more cash for shareholders.

Scandinavia’s largest bank will probably be able to pay out “quite a lot” to its shareholders, Chief Executive Officer Christian Clausen told reporters in Stockholm today. The bank is making enough money to allow it to return capital without eroding plans to “build growth” by “a real margin,” he said.

Nordea proposed increasing its dividend by 31 percent for 2012, to 0.34 euros a share, after building up cash buffers that exceed a 12 percent minimum requirement due to be enforced in Sweden by 2015. The bank can build up “significantly more” capital this year as demand for loans is likely to stay “very low,” Clausen said.

“We cannot run a bank with too much excess capital,” he said. “We don’t need to grow our capital very much, which suggests that we will probably repatriate quite a lot of our income to shareholders.”

Swedish regulators will require banks to set aside core Tier 1 capital equivalent to at least 10 percent of their risk- weighted assets this year, with the minimum rising to 12 percent in two years. The country’s four biggest banks, including Nordea, Swedbank AB (SWEDA), SEB AB and Svenska Handelsbanken AB (SHBA), already exceed this target.

Nordea on Jan. 30 said its core Tier 1 capital ratio rose to 13.1 percent at the end of December, from 12.2 percent at the end of the third quarter, and 11.2 percent at the end of 2011. Nordea’s profit jumped 19 percent to 3.12 billion euros ($4.12 billion) last year, after net interest income and net fee and commission income increased by 5 percent. Nordea’s loans to the public decreased 2 percent to 346.3 billion euros in the fourth quarter of 2012, compared with the three months through September.

To contact the reporter on this story: Johan Carlstrom in Stockholm at jcarlstrom@bloomberg.net

To contact the editor responsible for this story: Tasneem Brogger at tbrogger@bloomberg.net

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