Nordea Bank Earnings Call Highlights Profitable, Resilient Quarter

Nordea Bank (OTC) ((NRDBY)) has held its Q1 earnings call. Read on for the main highlights of the call.

Nordea Bank’s latest earnings call painted a broadly upbeat picture, with management emphasizing strong profitability, solid capital buffers and resilient growth across lending, savings and fee businesses. While isolated market-making losses and pressure on net interest income tempered results, executives argued that the bank’s structural strengths and cost program more than offset these short‑term headwinds.

Strong profitability and capital position

Nordea delivered a return on equity of 15.4% in the first quarter of 2026, with earnings per share edging up to EUR 0.36 from EUR 0.35 a year earlier. The CET1 capital ratio stood at 15.7%, leaving the bank 1.9 percentage points above current regulatory requirements and giving ample room to support loan growth and continued shareholder distributions.

Robust lending and deposit growth

Corporate lending rose 11% year on year, with all countries contributing, while corporate deposits increased 2%, signaling steady business demand. On the retail side, mortgage lending grew 2% and household deposits climbed 5%, suggesting higher savings and an early recovery in housing activity across Nordea’s Nordic markets.

Assets under management and strong flows

Group assets under management increased 9% to EUR 464 billion, underscoring solid client activity despite volatile markets. Private Banking delivered net flows of EUR 1 billion, while Life & Pension saw EUR 1.7 billion in net inflows and a 10% rise in AUM to EUR 185 billion, supported by higher gross written premiums of EUR 4.0 billion.

Fee income resilience

Net fee and commission income advanced 6% compared with last year, driven mainly by savings-related fees and growing demand for advisory and brokerage services. Stronger debt capital markets activity and an 11% jump in secondary equities income helped offset weakness in the primary equity markets, where issuance remains subdued.

Deposit hedge and NII momentum

The bank’s deposit hedge strategy added EUR 55 million to net interest income in the quarter and helped keep the net interest margin stable at 1.57% versus the prior quarter. Management said Nordea has moved past the low point in daily net interest income, with NII returning to growth during Q1 despite lower policy rates.

Exceptional credit quality and provisioning

Credit quality remained a standout, with net loan losses and similar items showing a reversal of EUR 99 million thanks to releases. Nordea fully redeployed its remaining COVID-era management buffer, reallocating EUR 116 million to modeled provisions and releasing EUR 160 million, and even excluding that release, net loan losses were just EUR 61 million, or 6 basis points.

Cost discipline and strategic cost program

Operating expenses were flat year on year before currency effects, rising only 2% including FX, and the underlying cost-to-income ratio was held below 45%. Nordea booked EUR 190 million in restructuring costs tied to a program affecting about 1,500 roles between 2026 and 2027, aimed at unlocking at least EUR 150 million in annual savings from 2028 through efficiency, scale and AI‑driven initiatives.

Significant market-making losses in March

Net fair value income fell 22% from a year earlier, mainly due to exceptional market-making losses in March as interest rate expectations spiked amid Middle East tensions. Management stressed that these losses were one‑off and isolated, but they still weighed on total income and nudged the reported Q1 cost-to-income ratio higher than planned.

Net interest income under pressure

As expected, net interest income declined, reflecting lower central bank rates and thinner lending margins across several segments. Total group income slipped around 2% year on year, as the drag from NII and weaker market-making outweighed fee growth, with retail margins particularly pressured in highly competitive markets such as Norway and Denmark.

Cost-to-income slightly above target and restructuring

Nordea’s reported cost-to-income ratio came in at 45.5% for the quarter, marginally above its target despite an underlying ratio below 45%. The gap was driven by the EUR 190 million restructuring charge, which management classifies as an item affecting comparability and which is excluded from the bank’s 2026 financial targets, reinforcing the message that profitability goals remain intact.

Geopolitical and market volatility risks

Executives highlighted elevated geopolitical risks, particularly the escalation in the Middle East, as a source of near-term market volatility and swings in interest rate expectations. They cautioned that such developments could temporarily dampen economic activity and earnings, especially through fair value income and energy-related inflation pressures, even as the core Nordic economies remain broadly resilient.

Deposit shifts in large corporates

Deposits in the large corporates and institutions unit fell 5% year on year, though they recovered by 2% quarter on quarter, pointing to more dynamic liquidity management by big clients. Management framed these moves as part of normal treasury optimization rather than a sign of stress, but investors may watch this segment closely for further shifts in corporate cash behavior.

Weak primary equity market

Primary equity issuance remained soft, keeping a lid on related fee opportunities despite Nordea’s strong position in Nordic equity capital markets. The bank partly offset this with better performance in secondary equities and stronger debt capital markets activity, but a sustained recovery in IPOs and rights issues would provide an additional tailwind to fee income.

Forward-looking guidance and outlook

Nordea reaffirmed its full-year 2026 guidance, targeting a return on equity above 15% and a cost-to-income ratio around 45%, underpinned by stable NIM, growing fee income and disciplined costs. Management expects the restructuring program to support a broader efficiency plan toward 2030, while healthy capital, strong credit quality and rising AUM position the bank to navigate volatility and continue delivering attractive shareholder returns.

Nordea’s earnings call ultimately underscored a bank in solid shape, combining high profitability, robust capital and steady growth in lending and savings with a clear cost-cutting roadmap. While market-making losses, rate cuts and geopolitical uncertainty add noise to quarterly numbers, the underlying trends in fees, credit quality and efficiency suggest the group remains well placed for long-term value creation.