UK markets closed
  • FTSE 100

    7,556.23
    -2.26 (-0.03%)
     
  • FTSE 250

    19,363.28
    -46.14 (-0.24%)
     
  • AIM

    853.32
    +2.76 (+0.32%)
     
  • GBP/EUR

    1.1660
    +0.0017 (+0.15%)
     
  • GBP/USD

    1.2296
    +0.0040 (+0.33%)
     
  • BTC-GBP

    13,809.25
    -23.84 (-0.17%)
     
  • CMC Crypto 200

    404.33
    +2.91 (+0.72%)
     
  • S&P 500

    4,071.70
    -4.87 (-0.12%)
     
  • DOW

    34,429.88
    +34.87 (+0.10%)
     
  • CRUDE OIL

    80.34
    -0.88 (-1.08%)
     
  • GOLD FUTURES

    1,797.30
    -3.80 (-0.21%)
     
  • NIKKEI 225

    27,777.90
    -448.18 (-1.59%)
     
  • HANG SENG

    18,675.35
    -61.09 (-0.33%)
     
  • DAX

    14,529.39
    +39.09 (+0.27%)
     
  • CAC 40

    6,742.25
    -11.72 (-0.17%)
     

Nordea Bank Abp: Fourth-quarter and full-year results 2021

EQS-News: Nordea Bank Abp / Key word(s): Annual Results
03.02.2022 / 08:00

Fourth-quarter and full-year results 2021

Nordea Bank Abp
Financial Statement Release
3 February 2022 at 7:30 EET

Summary of the quarter

Customer business volumes at record-high levels. Mortgage lending volumes increased by 6%, year on year, in the fourth quarter, supported by market share growth across the Nordics. SME lending grew by 6% and assets under management (AuM) increased by 17%. Mortgages, SME lending and AuM reached the highest levels in Nordea's history.

Strong profit growth, driven by 10% increase in income and tight cost control. Fourth-quarter operating profit increased by 32%, year on year, to EUR 1,281m. Total income was up 10%, driven by a 7% increase in net interest income and a 16% increase in net fee and commission income. Net fair value result increased by 14%. Costs were in line with the previous quarter but decreased by 10%, year on year, as the fourth quarter of 2020 was impacted by exceptional cost items.

Continued strong credit quality. Net loan losses and similar net result amounted to EUR 56m or 7bp in the quarter, compared with 3bp in the fourth quarter of 2020. Realised net loan losses remained low, consistent with previous periods, and the charge for the quarter included strengthened provisions for a small number of specific items. The management judgement buffer was unchanged at EUR 610m.

Cost-to-income ratio down to 47% and return on equity at 11.3%. Nordea's cost-to-income ratio improved to 47% from 57% a year ago in the fourth quarter, supported by income growth and continued cost efficiency. Return on equity (RoE) was 11.3%. Earnings per share increased by 44% to EUR 0.26 from EUR 0.18.

Dividend of approx. EUR 0.69* per share proposed for 2021 - CET1 ratio at 17.0%. Nordea's Board has proposed a dividend of approximately EUR 0.69* per share for 2021 - up 77% from EUR 0.39 for 2020. This translates to a 70% payout ratio, in line with Nordea's dividend policy. The CET1 ratio increased to 17.0% from 16.9% in the previous quarter and is now 6.8 percentage points above the regulatory requirement. Nordea is committed to implementing an efficient capital structure and commenced a EUR 2bn share buy-back programme on 22 October 2021. As at 31 December 2021, 109m shares had been repurchased at a cost of EUR 1,160m. Nordea has submitted a formal application to the ECB in January 2022 for potential follow-on share buy-backs.

New financial target for 2025. With a 2021 RoE of 11.2% and a cost-to-income ratio of 48%, Nordea has surpassed its full-year 2022 financial targets one year ahead of schedule. Nordea's new, full-year 2025 financial target is a RoE above 13%, supported by a cost-to-income ratio of 45-47%. For 2022, Nordea expects a RoE above 11%, supported by a cost-to-income ratio of 49-50%, despite investment for growth and higher regulatory costs, including the Swedish bank tax. Nordea will hold a Capital Markets Day on 17 February to discuss its financial target and plans for the new strategy period in more detail.

(For further viewpoints, see the CEO comment on page 2. For definitions, see page 53 in the Q4 2021 report)

* Approximate amount based on the estimated number of shares that will be in issue at the estimated dividend decision date.

 

Group quarterly results and key ratios, Q4 2021

 

Q4 2021

Q4 2020

Chg %

Q3 2021

Chg %

Jan-Dec 2021

Jan-Dec 2020

Chg %

EURm

 

 

 

 

 

 

 

 

Net interest income

1 255

1 169

7

1 226

2

4 925

4 515

9

Net fee and commission income

920

792

16

870

6

3 495

2 959

18

Net fair value result

247

217

14

224

10

1 119

900

24

Other income

16

41

-61

24

-33

81

92

-12

Total operating income

2 438

2 219

10

2 344

4

9 620

8 466

14

Total operating expenses excluding resolution fees

-1 101

-1 218

-10

-1 098

0

-4 425

-4 441

0

Total operating expenses

-1 101

-1 218

-10

-1 098

0

-4 649

-4 643

0

Profit before loan losses

1 337

1 001

34

1 246

7

4 971

3 823

30

Net loan losses and similar net result

-56

-28

 

22

 

-35

-860

 

Operating profit

1 281

973

32

1 268

1

4 936

2 963

67

 

 

 

 

 

 

 

 

 

Cost-to-income ratio with amortised resolution fees, %

47

57

 

49

 

48

55

 

Return on equity with amortised resolution fees, %

11.3

8.4

 

10.8

 

11.2

7.1

 

Diluted earnings per share, EUR

0.26

0.18

 

0.25

 

0.95

0.55

 

 

 

CEO comment
We all hoped we would be able to put COVID behind us in 2021, but unfortunately the pandemic and the related uncertainty continued. All in all, though, 2021 was encouraging, with many positive signs in the economy and society. Going forward, we may still face some setbacks from new virus variants, but we are more experienced and resilient in managing the changing circumstances.

For Nordea, 2021 was a successful year. I'm proud of how we have progressed as a bank - together with our customers. Our business volumes grew and we gained market shares across the Nordics. Our mortgage lending grew by 6%, SME lending by 6% and assets under management (AuM) by 17%, reaching all-time-high levels. At the same time, we continued to create better customer experiences. We improved our customer satisfaction scores and reduced customer complaints by 9%. We are now receiving 41% fewer complaints than three years ago.

The strength of our business model was evident in 2021. We drove high levels of customer activity, both digital and in-person, by further developing our omnichannel model. For example, we had 22% more monthly logins to our digital services compared with last year. Customer satisfaction with our digital services remained high, with the mobile app achieving top ratings in all four Nordic countries.

Sustainability is at the core of our strategy - integrated into all aspects of our business, from our product offering to our investment decisions to our internal operations. In 2021 we continued to develop our service and product offering within financing and asset management. Total green lending grew to EUR 9.7bn, investor demand for our ESG savings products remained high and we continue to be the top-ranking bank for Nordic sustainable bonds. We were again ranked among the top 100 most sustainable corporations in the world by Corporate Knights - the only Nordic bank in the ranking.

All these activities resulted in a strong full-year financial performance. Our 2021 operating profit was over EUR 4.9bn, which is 67% higher than in 2020, and our return on equity was 11.2%, up from 7.1% last year.

In the fourth quarter we continued to make steady progress, growing our business and customer activity in line with previous quarters and achieving a return on equity of 11.3%. Our key focus remains on growing revenues faster than costs. This quarter, our cost-to-income ratio improved to 47% from 57% a year ago.

Our credit quality remains strong, with net loan losses of 7bp during the quarter. In 2021 as a whole, our net loan losses were only 1bp, compared with 35bp in 2020. We kept our management judgement buffer unchanged at EUR 610m as the impact of the pandemic on our customers remains uncertain.

We remain highly committed to implementing an efficient capital structure. Our capital strength is among the best in Europe, with a CET1 ratio of 17.0%, which is 6.8 percentage points above the current regulatory requirement. This means we can continue to support our customers, pay out dividends and deploy excess capital - benefiting both our shareholders and society at large.

Reflecting our very strong financial performance and capital position, our Board has proposed a 2021 dividend of
approximately EUR 0.69* per share - a significant increase on the dividend of EUR 0.39 per share for 2020. This translates to a payout ratio of 70%, in line with our dividend policy.

Meanwhile, our share buy-back programme continues. To date, we have deployed 75% of the initial EUR 2bn planned, having bought back 141m shares from our shareholders. We consider share buy-backs to be an integral part of our capital management and submitted a formal application to the ECB in January 2022 for a potential follow-on programme.

For 2022, we expect to deliver a return on equity above 11%, with continued profitable growth, and our cost-to-income ratio is expected to be 49-50%. In 2021 the cost-to-income ratio benefited from exceptionally high financial market income and we expect to invest for continued growth and also to incur higher regulatory costs in 2022, including the Swedish bank tax. Our operational efficiency continues to improve and we expect our cost-to-income ratio to keep on decreasing in the coming years.

Targets for 2022 surpassed in 2021 - new target for 2025
In October 2019 we launched a new strategic direction for Nordea. With ambitious financial targets for 2022 and an updated business plan, our aim was to retake lost ground in business and improve our financial performance. We decided to focus on three key priorities: to create great customer experiences, drive income growth initiatives and optimise operational efficiency.

We have been very focused on delivering on our targets and priorities. I'm happy that we have surpassed our 2022 financial targets one year ahead of schedule and that all of our business areas have met their respective targets.

I would describe our current position as an important milestone. Now we will move forward to deliver best-in-class omnichannel customer experiences, raise the bar on our financial performance and drive further value creation for our shareholders. We want to be the preferred partner for Nordic customers in need of a broad range of financial services.

Today, we have published our new financial target for 2025, which is ambitious - yet realistic. We are targeting a return on equity above 13%. This will be supported by a cost-to-income ratio of 45-47% and assumes a CET1 requirement of 15-16%, including our management buffer. I am confident that with hard work we will meet it, just as we met our previous targets.

We will hold a Capital Markets Day on 17 February to present our 2025 financial target, respective business area ambitions and updated priorities, and discuss the new strategy period in more detail.

We could not have achieved these results without our skilled, passionate and very dedicated employees - I would like to thank all of them for their great efforts. I would also like to thank all our customers and shareholders for their very good cooperation over the past few years.

While we have a new target, our direction as a bank is not going to change. For more than 200 years we have played a key role in supporting our customers and developing the Nordic societies. That will be our role going forward as well.

Frank Vang-Jensen
President and Group CEO

* Approximate amount based on the estimated number of shares that will be in issue at the estimated dividend decision date.

 

Income statement

 

Q4 2021

Q4 2020

Chg %

Q3 2021

Chg %

Jan-Dec 2021

Jan-Dec 2020

Chg %

EURm

 

 

 

 

 

 

 

 

Net interest income

1 255

1 169

7

1 226

2

4 925

4 515

9

Net fee and commission income

920

792

16

870

6

3 495

2 959

18

Net result from items at fair value

247

217

14

224

10

1 119

900

24

Profit from associated undertakings and joint ventures accounted for under the equity method

-4

5

 

9

 

-6

-1

 

Other operating income

20

36

-44

15

33

87

93

-6

Total operating income

2 438

2 219

10

2 344

4

9 620

8 466

14

Staff costs

-670

-722

-7

-702

-5

-2 759

-2 752

0

Other expenses

-241

-319

-24

-237

2

-1 226

-1 286

-5

Depreciation, amortisation and impairment charges of tangible and intangible assets

-190

-177

7

-159

19

-664

-605

10

Total operating expenses

-1 101

-1 218

-10

-1 098

0

-4 649

-4 643

0

Profit before loan losses

1 337

1 001

34

1 246

7

4 971

3 823

30

Net loan losses and similar net result

-56

-28

100

22

 

-35

-860

-96

Operating profit

1 281

973

32

1 268

1

4 936

2 963

67

Income tax expense

-264

-248

6

-267

-1

-1 105

-698

58

Net profit for the period

1 017

725

40

1 001

2

3 831

2 265

69

 

 

Business volumes, key items1

 

31 Dec 2021

31 Dec 2020

Chg %

30 Sep 2021

Chg %

EURbn

 

 

 

 

 

Loans to the public

345.0

329.8

5

342.6

1

Loans to the public, excl. repos/securities borrowing

328.3

313.3

5

319.5

3

Deposits and borrowings from the public

205.8

183.4

12

210.8

-2

Deposits from the public, excl. repos/securities lending

203.2

181.0

12

202.1

1

Total assets

570.4

552.2

3

614.5

-7

Assets under management

411.3

351.4

17

392.9

5

Equity

33.5

33.7

-1

36.6

-8

 

 

Ratios and key figures2

 

Q4 2021

Q4 2020

Chg %

Q3 2021

Chg %

Jan-Dec 2021

Jan-Dec 2020

Chg %

Diluted earnings per share, EUR

0.26

0.18

44

0.25

4

0.95

0.55

73

EPS, rolling 12 months up to period end, EUR

0.95

0.55

73

0.87

9

0.95

0.55

73

Share price1, EUR

10.79

6.67

62

11.24

-4

10.79

6.67

62

Proposed/actual dividend per share, EUR

 

 

 

 

 

0.694

0.39

77

Equity per share1, EUR

8.51

8.35

2

9.06

-6

8.51

8.35

2

Potential shares outstanding1, million

3,966

4,050

-2

4,050

-2

3,966

4,050

-2

Weighted average number of diluted shares, million

3,978

4,039

-2

4,042

-2

4,025

4,039

0

Return on equity, %

11.8

8.9

 

11.3

 

11.2

7.1

 

Return on tangible equity, %

13.2

10.0

 

12.6

 

12.6

8.1

 

Return on risk exposure amount, %

2.7

1.9

 

2.6

 

2.5

1.4

 

Return on equity with amortised resolution fees, %

11.3

8.4

 

10.8

 

11.2

7.1

 

Cost-to-income ratio, %

45

55

 

47

 

48

55

 

Cost-to-income ratio with amortised resolution fees, %

47

57

 

49

 

48

55

 

Net loan loss ratio, incl. loans held at fair value, bp

7

3

 

-3

 

1

26

 

Common Equity Tier 1 capital ratio1,3, %

17.0

17.1

 

16.9

 

17.0

17.1

 

Tier 1 capital ratio1,3, %

19.1

18.7

 

18.9

 

19.1

18.7

 

Total capital ratio1,3, %

21.2

20.5

 

21.0

 

21.2

20.5

 

Tier 1 capital1,3, EURbn

29.0

29.1

0

28.8

1

29.0

29.1

0

Risk exposure amount1, EURbn

151.9

155.4

-2

152.6

0

151.9

155.4

-2

Return on capital at risk, %

17.3

12.1

 

17.2

 

16.5

9.2

 

Return on capital at risk with amortised resolution fees, %

16.6

11.5

 

16.4

 

16.5

9.2

 

Number of employees (FTEs)1

26,894

28,051

-4

27,126

-1

26,894

28,051

-4

Economic capital1, EURbn

23.2

23.5

-1

23.1

0

23.2

23.5

-1

 

1. End of period.
2. See here for more detailed information regarding ratios and key figures defined as alternative performance measures.
3. Including the result for the period.
4. Approximate amount based on the estimated number of shares that will be in issue at the estimated dividend decision date.

Outlook (new)

Financial target for 2025
Nordea's financial target for 2025 is a return on equity above 13%.

The target will be supported by a cost-to-income ratio of 45-47%, an annual net loan loss ratio of around 10bp and the continuation of Nordea's well-established capital and dividend policies.

Financial outlook for 2022
Nordea expects a return on equity of above 11% and a cost-to-income ratio of 49-50% for 2022.

Capital policy
A management buffer of 150-200bp above the regulatory CET1 requirement.

Dividend policy
Nordea's dividend policy stipulates a dividend payout ratio of 60-70%, applicable to profit for the financial year. Nordea will continuously assess the opportunity to use share buy-backs as a tool to distribute excess capital.

Outlook (old)

Key priorities to meet 2022 financial targets
Nordea's business plan focuses on three key priorities to meet its 2022 financial targets: 1) to optimise operational efficiency, 2) to drive income growth initiatives, and 3) to create great customer experiences.

Financial targets for 2022
Nordea's financial targets for 2022 are:

a return on equity above 10%
a cost-to-income ratio of 50%

Costs (operating expenses)
Total costs for 2021 are expected to be around EUR 4.6bn.

Capital policy
A management buffer of 150-200bp above the regulatory CET1 requirement, from 1 January 2021.

Dividend policy
Nordea's dividend policy stipulates a dividend payout ratio of 60-70%, applicable to profit generated from 1 January 2021. Nordea will continuously assess the opportunity to use share buy-backs as a tool to distribute excess capital.

Credit quality
Net loan losses in 2021 are expected to be significantly below the 2020 level.

Dividend for 2021
On 31 December 2021 Nordea Bank Abp's distributable earnings, including profit for the financial year, amounted to EUR 18,878m, and other unrestricted equity amounted to EUR 4,602m.

The Board has decided to propose that the Annual General Meeting (AGM) on 24 March 2022 authorise it to decide on a dividend payment of a maximum of EUR 2,682m* in the aggregate. This corresponds to 70% of the net profit for the year, in line with upper range of the dividend policy. The intention is for the Board to decide on a dividend payment in a single instalment based on the authorisation immediately after the AGM. The dividend will not be paid for shares held by Nordea on the dividend record date. A full dividend payment decided immediately after the AGM is expected to amount to approximately EUR 0.69** per share.

* A maximum of EUR 2,681,667,380. ** Approximate amount based on the estimated number of shares that will be in issue at the estimated dividend decision date

 

Regulatory developments
Nordea received the Supervisory Review and Evaluation Process (SREP) decision on 2 February 2022, which includes the decision to maintain the current Pillar 2 requirement of 1.75% (of which 0.98% is to be met with CET1 capital).

2021 publications
Nordea's Annual Report for the financial year 2021, which includes the Audited Financial Statements, the Board of Directors' Report and the Corporate Governance Statement as well as the sustainability reporting, will be published in week 9 by way of stock exchange release and will also be available at www.nordea.com.

This release is a summary of Nordea's fourth-quarter and full-year results 2021 report. The complete report is attached to this release and can also be found on the below link on our website.

Nordea Group Q4 2021 Report

http://www.rns-pdf.londonstockexchange.com/rns/5842A_1-2022-2-3.pdf

For further information:
Frank Vang-Jensen, President and Group CEO, +358 503 821 391
Ian Smith, Group CFO, +45 5547 8372
Matti Ahokas, Head of Investor Relations, +358 405 759 178
Ulrika Romantschuk, Head of Brand, Communication and Marketing, +358 10 416 8023

The information provided in this stock exchange release was submitted for publication, through the agency of the contact persons set out above, at 07.30 EET (06.30 CET) on 3 February 2022.

 

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.


End of Media Release

Language:

English

Company:

Nordea Bank Abp

Smålandsgatan 17

105 71 Stockholm

Sweden

ISIN:

FI4000297767

Valor:

A2N6F4

Listed:

Regulated Unofficial Market in Berlin, Dusseldorf, Frankfurt, Hamburg, Hanover, Munich, Stuttgart; SIX Swiss Exchange

EQS News ID:

1276065


 

End of News

EQS News Service

show this
show this