Nordea’s Profit Beats Estimates on Loan Losses, Commissions

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Nordea Bank AB said profit in the second quarter jumped 39 percent, beating analyst estimates, as fee and commission income increased and loan losses fell.

The Nordic region’s biggest bank saw net income in the three months through June rise to 952 million euros ($1.04 billion) from 686 million euros a year earlier, according to a statement on Thursday. That beat the average 896 million-euro estimate of 14 analysts surveyed by Bloomberg.

Sweden’s banks are trying to adapt their businesses to negative interest rates, which they’ve hesitated to pass on to retail customers. Meanwhile, the lenders are among Europe’s best capitalized, with much of the surplus cash going to shareholders. Nordea in May almost doubled its dividend payout target to at least 75 percent of profit.

Chief Executive Officer Christian Clausen described the bank’s results as “exceptional.” The second quarter brought with it “a stabilization of net interest income, a somewhat lower customer activity level in the capital markets, while the strong trend in the savings and investment operations continued,” he said in the statement.

Nordea’s shares gained as much as 2 percent to 113.4 kronor in Stockholm trading, their highest level since March 19. The stock rose 1.5 percent as of 10:30 a.m. local time.

The report contained “overall a solid set of numbers,” Karl Morris, an analyst at Keefe, Bruyette & Woods Ltd. in London, said in an e-mailed note.

Prudential Measures

Net interest income dropped to 1.31 billion euros in the quarter from 1.37 billion euros, meeting the average estimate of 1.30 billion euros. Net fee and commission income rose to 783 million euros from 708 million euros, beating the 765 million-euro estimate. Net loan losses of 103 million euros were lower than the 144 million-euro estimate.

The bank said its common equity Tier 1 capital ratio rose to 16.0 percent of risk-weighted assets, from 15.2 percent a year earlier. Nordea made a risk-exposure amount reservation of 4.6 billion euros “as a proactive prudential measure while awaiting the final Swedish regulatory capital outcome” as requirements for Swedish banks could increase in the future, it said.

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