Nordea Bank (OTCPK:NBNK.F) Update / Briefing Transcript

Summary of Nordea Bank's Q3 2025 Pre-Close Call Company Overview - Company: Nordea Bank - Event: Q3 2025 Pre-Close Call - Date of Report Release: October 16, 2025 - Silent Period Start: October 7, 2025 Key Points Macro Environment - Interest Rates: Norway and Sweden cut policy rates by 25 basis points in September, leading to a quarter-on-quarter decrease of approximately 25 basis points in average Nordic policy rates for Q3, similar to Q2's decrease of around 30 basis points [3][5] - Interbank Rates: Average quarter-to-date decreases were 30 basis points for Norway, 17 basis points for Sweden, and 10 basis points for Denmark and Finland [3] - Equity Markets: The U.S. dollar-denominated MSCI World Index increased by 11% quarter-on-quarter, while the OMX 40 Nordic Index decreased by 1% [3] - Fixed Income: The U.S. dollar-denominated Bloomberg Global Aggregate Bond Index rose by 2% [3] Financial Performance - Net Interest Income (NII): Reported NII for Q2 was €1,798 million, with expectations of lower NII in Q3 due to pressure on lending margins and a negative impact from deposit rates bottoming out [4][5] - FX Impact: The average FX presented a headwind for euro-denominated income in Q3, with SEK down 1.5% and NOK down 1% quarter-on-quarter [4] - Net Fee and Commission Income: Q2 reported €792 million, with Q3 expected to be impacted by seasonality and market quietness, particularly in brokerage and advisory services [9][10] - Net Insurance Result: Q2 net insurance result was €58 million, up from €54 million in Q1 [10] Cost Management - Cost Growth: Year-on-year cost growth is expected to slow significantly, with full-year costs projected to grow by no more than 2% to 2.5%, excluding FX effects [12] - Credit Losses: Normalized loan loss level is 10 basis points, with a management judgment buffer of €341 million [12] Capital and Dividends - CET1 Ratio: CET1 requirements stood at 13.7% at the end of Q2, with a CET1 ratio of 15.6% [13] - Dividend Policy: The company aims to pay out 60% to 70% of annual profits in dividends, with discussions around interim dividends being hypothetical at this stage [17][18] Other Notable Points - AT1 Issuances: Recent AT1 issuances in USD, SEK, and NOK are expected to create a headwind of approximately €20 million, offsetting some positive effects [6][21] - Market Activity: M&A activity is down by 40% and ECM by 50% quarter-on-quarter, indicating a continued slow market environment [10][35] - Capital Markets Day: Scheduled for November 5, 2025, with potential updates on financial targets expected [30][31] Conclusion - The call highlighted the challenges faced by Nordea Bank in a mixed macroeconomic environment, with interest rate cuts impacting NII and market activity remaining subdued. The focus on cost management and maintaining a stable dividend policy reflects the bank's strategy to navigate these challenges while preparing for future growth opportunities.