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Investing.com -- Nordea (CSE:NDADK) on Thursday reported a 6% decline in second-quarter net profit to €1.22 billion, citing pressure from lower policy rates and financial market volatility.
The bank maintained a return on equity of 16.2% and announced a €250 million share buy-back program, which began in June and is expected to be completed by the end of September 2025.
Operating profit was €1.6 billion, down 5% from a year earlier. Diluted earnings per share fell to €0.35 from €0.37.
Total (EPA:TTEF) operating income decreased 4% to €2.91 billion, with net interest income down 6% to €1.8 billion due to reduced deposit and lending margins. Volume growth and deposit hedge contributions partially offset the decline.
Net fee and commission income remained flat at €792 million. Lending and guarantee fees rose 12%, and payment and card fees increased 3%, while brokerage and advisory income dropped 26%.
Exchange rate effects added €9 million. Insurance income fell 8% to €58 million, primarily from higher claims in Denmark and Norway. Fair value income rose 3% to €254 million.
Total operating expenses increased 4% to €1.33 billion, reflecting salary inflation, strategic investments, and integration costs from the Norwegian acquisition.
The cost-to-income ratio with amortised resolution fees rose to 46.1%, compared with 42.6% a year earlier.
The bank reported a €21 million reversal in net loan losses, including a €60 million release from management judgment allowances.
Excluding the release, net losses amounted to €39 million. The Stage 3 coverage ratio fell to 32% from 34%, due to increased exposures with strong collateral.
Loans to the public excluding repurchase agreements rose 5% year over year to €335.2 billion.
Personal and Business Banking saw increased lending in Sweden and Norway. Lending in Large Corporates & Institutions grew 4% in euro terms and 6% adjusted for currency effects.
Customer deposits excluding repurchase agreements rose 5% to €218.5 billion. Retail deposits increased 7%, partly due to the Norway acquisition, while Business Banking deposits rose 10%. Deposits in the corporate segment fell 2%.
Assets under management increased 9% year over year to €437.1 billion, supported by €4.5 billion in net inflows.
Private Banking accounted for €2 billion and Life & Pension for €1.2 billion. Net flows from international institutions were negative at €-0.4 billion.
The Common Equity Tier 1 capital ratio was 15.6%, down from 17.5% a year earlier, but 1.9 percentage points above the regulatory requirement.
The Tier 1 capital ratio was 17.5% and total capital ratio was 20%. The risk exposure amount stood at €158.6 billion.
Total assets were €636.8 billion, up from €606.8 billion a year earlier. The liquidity coverage ratio was 163%, and the net stable funding ratio was 123.4%.
Long-term funding made up 79% of total wholesale funding. The bank issued €5.1 billion in long-term debt during the quarter.
Nordea maintained its 2025 full-year guidance of delivering a return on equity above 15%.