IBOS member Nordea has announced their financial results for the second quarter ended 30 June 2016, in a report released on 20 July 2016.
For the majority of the quarter, the business environment was relatively stable. However, with the outcome of the British EU referendum, the economy has declined. Although the economic growth within Europe has continued its stable recovery despite the result, financial markets reacted negatively to the UK’s decision. The result of the referendum resulted in a large decrease in bond yields; and, the EURUSD exchange rate dropped from 2.4% to 1.11%.
Despite this, net fee and commission income increased 4% in local currencies since the previous quarter. The net profit increased 26 per cent in local currencies (+27% in EUR) from the previous quarter to EUR 996m. Return on equity excluding, non-recurring items, is a total of 11.4% up by 1.1%-points.
“Costs are in line with the plans and credit quality remains solid. An important milestone was reached in the beginning of June when the first product on our core banking platform successfully went live, less than six months after installing the model bank,” said Casper von Koskull, CEO, Nordea. “Although there are many challenges remaining, we can start to report progress in our simplification program and compliance procedures and we continue to deliver on our AML remediation efforts. The transformation of the bank is all about becoming the bank our customers want us to be.”
Below are the highlights of our second quarter 2016 results (compared to the first quarter):
- Net interest income EUR 1,172m, 0% (-8%, -5% in local currencies)
- Total operating income  5% (-5%, -3% in local currencies)
- Total expenses 2% (2%, 3% in local currencies)
- Profit before loan losses EUR 1,350m, 21% (1%, 3% in local currencies)
- Net loan losses EUR 127m, 14% (23%, 31% in local currencies)
- Operating profit 7% (-13%, -12% in local currencies)
- Common Equity Tier 1 capital ratio 16.8%, up from 16.7% (up 80 bps from 16.0%)
- Cost/income ratio 50%, down from 51% (up 3%-points from 47%)
- Loan loss ratio of 15 bps, up from 13 bps (up 3 bps from 12 bps)
- Return on equity 11.4%, up from 10.3% (down 1.7%-points from 13.1%)
- Diluted EPS EUR 0.25 vs. EUR 0.19 (EUR 0.25 vs. EUR 0.24)
Access the full report, via Nordea’s website, here.