Nordea launches share buybacks as recovery boosts Nordic banks

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The Nordea Bank AB logo is seen at the SIBOS Banking and Financial Conference in Toronto, Ontario, Canada, October 19, 2017. REUTERS / Chris Helgren / File Photo

  • Profits increase at Nordea, Swedbank
  • DNB reports record third quarter results
  • Nordea will launch share buybacks
  • Nordea plans another buyback program in early 2022

HELSINKI / STOCKHOLM, Oct.21 (Reuters) – Finland’s Nordea (NDAFI.HE) and Sweden’s Swedbank (SWEDa.ST) on Thursday reported higher profits for the third quarter as banks in the region recovered strongly from the impact of the pandemic and shifting excess capital to shareholders.

Helped by vaccine deployment, Nordic banks, like their peers elsewhere in Europe, have benefited from increased business and consumer activity, while a glut of mergers and acquisitions (M&A) and deals Public Initials (IPOs) generated rich choices for their investment banking business.

After beating the profit forecasts of Swedish companies SEB (SEBa.ST) and Handelsbanken (SHBa.ST) this week, the largest lender in the Nordea region saw its quarterly operating profit rise to 1.27 billion euros ($ 1.48 billion) against 1.09 billion a year ago, in line with market expectations. Read more

“We have entered a new phase of recovery from the pandemic and, as a bank, we have done so from a position of strength,” Nordea chief executive Frank Vang-Jensen said in a statement.

Meanwhile, Swedbank, Sweden’s oldest retail bank, said its net profit reached 5.50 billion kroner from 5.26 billion a year earlier, beating analysts’ expectations of 5.10 billion in a Refinitiv survey. Read more

“The quarter was characterized by a gradual return to the new normal,” Swedbank CEO Jens Henriksson told reporters. “We are seeing a strong recovery, especially in Sweden.”

To top off the large number of bank profits, Norway’s largest bank, DNB (DNB.OL), reported its best third quarter results and said it will now pay a dividend for 2020. read more

Andreas Hakansson, banking analyst at Danske Bank, said Nordea’s profit was as expected but slightly lower on important income lines such as net interest income and commission income.

“So from that point of view, maybe it’s a little lower than expectations,” he said. “Swedbank has exceeded expectations on some of the important lines and I think the stock will trade higher on this point.”

Worries about worsening debts due to the pandemic quickly eased for banks as financial regulators relaxed temporary restrictions on shareholder payments, helping to generate solid gains for stocks across the board. sector.

In addition to a dividend of 0.72 euro paid in October, Nordea announced that it will distribute the excess capital to shareholders by starting to buy back its own shares from October 22 at the earliest.

Nordea also said it plans to seek European Central Bank approval for another buyback program in early 2022.

Its Nordic rivals have also increased their payouts, with SEB unveiling a new dividend and the start of share buybacks earlier this week.

A lingering uncertainty for some banks in the region remains their efforts to contain costs.

In July, Nordea raised its cost forecast for 2021 to around 4.6 billion euros, having previously said it would be lower than that figure, due to the acquisition of Nordea Finance Equipment and the increase staff compensation due to a strong performance during the quarter.

The Helsinki-based lender maintained its cost outlook on Thursday, as did Swedbank, which is also burdened by high legal expenses resulting from money laundering investigations into its Baltic operations in recent years.

($ 1 = € 0.8581)

Report by Essi Lehto; written by Niklas Pollard; Editing by Stephen Coates and Edmund Blair

Our standards: Thomson Reuters Trust Principles.


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