Frank Vang Jensen is closer to Euro than the other Nordic Banks.
Nordea has just announced its financial results for H1 2026. Here is what we consider on these results:
«Nordea delivered a strong quarter on an underlying operating basis, with income before loan losses increasing 6% year-on-year, driven by solid revenue growth and continued cost discipline. However, this was largely offset by higher loan loss provisions compared with a net release in the prior-year period, resulting in operating profit increasing by only 1% year-on-year.
The cost-to-income ratio improved to 44.0% from 45.1% a year earlier, reflecting ongoing productivity gains. Management also modestly lowered the expected cost-to-income ratio to a range of 44–45% from around 45%.
In our view, many of the positive trends observed in the second quarter should remain supportive through the remainder of the year. While net interest income was still down 1% year-on-year, it is increasingly benefiting from strong loan growth, reflecting higher economic activity in the current lower-rate environment. Beyond the impact of reduced borrowing costs, we also see a catch-up effect following a prolonged period of underinvestment, as well as stronger demand from sectors such as defence and infrastructure. At the same time, lending margins are stabilising, as the most of impact of the 2025 rate cuts has now been absorbed. Looking ahead, we expect recent rate hikes to provide a modest tailwind to net interest income in the second half of 2026, with a more meaningful contribution carrying into 2027.
Fee income increased 5% year-on-year and continues to be primarily driven by the asset management business, which has benefited from both strong net inflows and record-high equity market valuations. While market valuations are inherently difficult to forecast, we expect client activity and net inflows to remain healthy, supporting continued growth in assets under management and fee income.
Nordea is the only bank in our coverage universe that has fully utilised its loan loss management overlays accumulated during previous periods of uncertainty. As a result, we expect credit costs to normalise and remain relatively stable going forward, likely below the bank’s long-term target of 10 basis points, supported by the continued strength of the Nordic economies and Nordea’s high-quality loan portfolio.»
By Sonja Forster, SVP, European Financial Insitutitons, Morningstar DBRS.
Should you like to further discuss this, please do not hesitate to contact me and I’ll be happy to arrange for a call or your email questions answered.
Thank you,
Dennis
________________________________
Dennis Ferreira
Media Relations Director
European Operations
DBRS Ratings Limited – UK
Soursce: Morningstar DBRS. The next generation of credit ratings.
+44 (20) 3356 1555 direct
dennis.ferreira@morningstar.com
1 Oliver’s Yard, 55-71 City Road
London, EC1Y 1HQ United Kingdom
