Nordea predicts strong return on equity despite Q4 profit shortfall

Nordea, Nordic region’s largest bank, announced on Monday a fourth-quarter profit that fell short of expectations. However, it projected a return on equity (RoE) exceeding 15 per cent for 2024 and 2025, matching its regional competitors.

Nordea, along with counterparts like SEB and Swedbank, have accumulated substantial profits in the last two years due to rising interest rates.

CEO Frank Vang-Jensen stated that their revised 2025 goal is a testament to the substantial structural enhancements they’ve implemented over the last four years, which bolster the generation of high-quality earnings characterised by high profitability and low volatility.

The bank aims for RoE of over 15 per cent in 2024 and has raised its 2025 target to 15 per cent from 13 per cent.

The bank reported an increase in its full-year RoE to 16.9per cent in 2023, up from 13.8 per cent in 2022. Nordea’s operating profit for the fourth quarter was €1.42 billion ($1.53 billion), down from €1.61 billion the previous year and below the LSEG analysts’ average prediction of €1.64 billion.

The board proposed a €0.92 per share dividend for 2023, a 15 per cent increase from the previous year, but below the analysts’ average prediction of €0.95 per share.