Nordea Results Beat, Good Asset Quality. Appears Spread Positive.

Nordea 1Q24 are a positive beat with slightly better net interest income, good costs and a big write-back from corporate lending meaning a beat on loan losses. Guidance is maintained. The credit has underperformed the EuroIG peers YTD and this appears a spread positive set of figures.

• Key credit metrics: CET1 ratio came in 16bp ahead of consensus (at 17.2% up 20bp from Dec-23) and guidance around incoming regulatory changes is similar to that given at FY23 results. Loan losses were just 4bp (from 14bp in 4Q23) coming in at less than half what consensus expected. Personal, business banking were both slightly better but it’s big write-back from corporate lending that drove this beat. Non-performers are down on Dec-23, too, again driven by corporates.
• Overall performance: revenues are 2% better than consensus with a small contribution from better net interest margin but this is largely in trading profits (lower quality). Costs are 5% better than consensus which, along with loan losses, drives the 12% pre-tax consensus beat.
• Outlook: FY25 financial targets look identical to the last results.

Conf call is 0900 (London time) at: https://nordea.videosync.fi/q1-2024/register