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

Summary of Conference Call Company and Industry - The conference call pertains to Nordea, a financial services group operating in the Nordic region, focusing on macroeconomic trends, interest rates, and financial performance metrics. Core Points and Arguments 1. Macro Trends: - Interest rates are expected to decrease by approximately 12 basis points quarter on quarter in Q4, following rate cuts in Q3. The average decrease in three-month interbank offered rates was 19 basis points in Sweden and 8 basis points in Norway, while Denmark and Finland saw increases of 2 to 3 basis points [2][3] - The USD-denominated MSCI World Index increased by 4.9% quarter on quarter, and the OMX40 Nordic Index rose by 3.8% [2] 2. Net Interest Income (NII): - NII for Q3 was reported at EUR 1.775 billion, with expectations for Q4 to be lower due to a decrease in average Nordic policy rates [3][4] - The margin-driven NII saw a reduction of nearly EUR 90 million in Q3, with a projected contribution of around EUR 10 million from deposit hedges in Q4 [4][5] 3. Net Fee and Commission Income (NCI): - NCI for Q3 was EUR 811 million, with non-recurring gains of EUR 10 million not expected to repeat, leading to a relevant starting point of EUR 800 million for Q4 [6] - The average quarterly run rate for brokerage and advisory services was around EUR 50 million [7] 4. Net Insurance Results: - Q3 net insurance results were EUR 66 million, benefiting from movements in medium to long-term interest rates [9] 5. Loan Losses: - Historically, loan losses in Q4 tend to be higher, with expectations around 10 basis points based on long-term averages. Significant portions of management judgment buffers have already been released earlier in the year [10][11] 6. Capital and Dividends: - The CET1 ratio was 15.9% at the end of Q3, with a requirement of 13.6%. A new buyback program of EUR 500 million was launched, expected to reduce the CET1 ratio by 30 basis points [12][15] - The dividend policy aims for a payout of 60%-70% of annual profits, with a stable to growing dividend per share ambition [12][13] Other Important Content - The impact of foreign exchange (FX) movements was noted, with SEK and NOK showing minor tailwinds for euro-denominated income in Q4 [3] - The conference call emphasized the importance of tracking FX movements, particularly for the P&L statement [3] - The company plans to book a fee for interest-free deposits under regulatory fees starting Q4, with a limited impact of mid-single-digit million euros [10] - The silent period for further inquiries begins on 7 January, with the Q4 report scheduled for release on 29 January [1][16]