Nordea Bank Abp at Bank of America Financials CEO Conference Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Tarik El Mejjad - Bank of America - Analyst : Let's make a start with top down first. I mean, you are the largest Nordic bank with the leading presence in most of the Nordic countries. I think it's really interesting for audience to start with an overview on your outlook on the key economies, monetary policies, and then take it from there.

Question: Tarik El Mejjad - Bank of America - Analyst : Very clear. I mean, as you said, there are some differences between the countries and similarly on the monetary policies yesterday or two days before Riksbank signal potentially faster rate cuts or rate amortization. DNB is the other way around, it would be less cuts and delayed. Denmark is more ECB. So how do you manage actually this different monetary policies and your appetite to grow each or the other of the countries?

Question: Tarik El Mejjad - Bank of America - Analyst : Norway is the country that you increased your size by acquiring a business. So what's your acceleration plan there? And how do you think you can transform what's been seen as an average business? And extracting synergy and so on. If you can go through this be very helpful for us.

Question: Tarik El Mejjad - Bank of America - Analyst : I'll ask you, I mean, maybe it's cheeky question, but when you move to Finland and chose to pay a cost to have a new regulator, a new supervisor, new country. I mean, it comes at a cost and not only as P&L but as management. So my natural thinking was okay, then maybe look for growth REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. SEPTEMBER 26, 2024 / 9:15AM, NDAFI.HE - Nordea Bank Abp at Bank of America Financials CEO Conference within the Eurozone, right? And then you find some -- and you leverage a bit on this upfront cost. But I understand that your strategy is still focused pretty much not. Has anything changed? Have you discovered that actually opportunities are still much better for you given your presence and your history there in DNA or I'm really interested to see and maybe I can bundle that with the M&A discussions we have at the moment without lugging you into any specific stuff?

Question: Tarik El Mejjad - Bank of America - Analyst : Very clear. Focus is important.

Question: Tarik El Mejjad - Bank of America - Analyst : Thank you. Let's now dig into a country specifics, Sweden, and specifically on the mortgages. You've been a big market share winner in actually a low growth environment, but also you've been expanding your market when growth was solid. Yet your mortgage prices are not the lowest. So what's the secret, what -- how do you do to deliver that?

Question: Tarik El Mejjad - Bank of America - Analyst : And as rates come down, activity pick up, retail prices go up. Do you expect the markets will remain -- will come back a bit more rational. And you still protect your leader market again or --

Question: Tarik El Mejjad - Bank of America - Analyst : And talking about lending growth recovery. You've touched on Norway already. Maybe you can have a word on the other geographies, Denmark and Sweden. How do you see actually the normalization rate cycle feeding through the lending activity and in timing?

Question: Tarik El Mejjad - Bank of America - Analyst : Thank you. Very clear. If you move to the deposit side, how do you see the competition actually turning here? I mean, do you see social normalization, deposit rates to fit through with the low rates or the competition will remain sustained there?

Question: Tarik El Mejjad - Bank of America - Analyst : Yeah. I'll come to the fees but just in -- to wrap up the NII discussion considering all what you just said and you are one of the two Nordic banks that can actually put in place some hedges, protect your rates on deposit movement. So are you comfortable to actually once the contribution from the hedge starts being positive and things to protect your NII and grow it from this level or still be challenging?

Question: Tarik El Mejjad - Bank of America - Analyst : So absolutely. But I think the market likes to see revenue growth. So yes, you are here more in a position to defend stable high NII level, but looking at the growth then go to the fees and we spend a lot of time as a team to work on this topic and for you as Nordea, where do you see really your, your strategy going into? Do you have defined strategy to shift the mix of your revenues towards more fees, in such general manner to be bulletproof to the cycles? And what are the measures you're taking to develop that revenue line? It's becoming more and more important.

Question: Tarik El Mejjad - Bank of America - Analyst : Thank you. Moving to the costs. I mean, you've been always very clear about your strategy to keep cost under control. And you guided for draws that are actually still positive this year, but slightly less than last year. So what are the areas where you can actually well, obviously keep work on efficiency and investments full to contain a bit the cost inflation. And in which all geographies, you see this exercise most difficult.

Question: Tarik El Mejjad - Bank of America - Analyst : Yes. So 44%, 46% cost income in '25 still confident to deliver that cost of risk. You gave rare banks actually in order to give a through the cycle number 10 basis points. You've been running well below that. So is there any pockets of your portfolio where you see maybe some stress or some risk to where you would convert to all your 10 basis points or is all and then I will follow up on the theory something that you will not highly exposure. So we can talk about maybe more easily.

Question: Tarik El Mejjad - Bank of America - Analyst : So on the theory, I really want to spend a couple of minutes on this. I think for this cycle property prices going up, I mean rates coming down. I think that the scare is behind us and there's no stress there. Now, few of the domestic Swedish banks actually exited this cycle with a higher exporter to move management than the answer and difficult from the outside to see what the quality of this exporter has been. Do you think that, now we know sharper cycle red cycles, closer cycles. So question mark about next cycle actually? And what do you see on the ground from the supervisor regulator? Is there any work to actually prepare for next cycle? Because this bank would enter it with a high exposure, probably weaker exposure, and then we could have potentially some more cost office than we've seen in this one. I don't know if you followed my thinking. But do you see any work that would be done or Swedish FSA imposed to the banks to make sure that they are more solid for the next cycle on the real estate.

Question: Tarik El Mejjad - Bank of America - Analyst : Very clear. Let's move maybe to the capital topic. Very important. So in Q2, you gave very helpful bridge of your capital, different moving parts headwinds, but also tailwinds. I mean, there are many so I'll not ask you to go back to this and it's on IR website presentation. But my question here is more -- you sound confident about the quantum of this headwinds and tailwinds and the timing. But yet, would you feel comfortable to start to run down the excess capital and resume the buybacks until all these have actually materialized or you're confident enough about your estimates so you can get it.

Question: Tarik El Mejjad - Bank of America - Analyst : Can you be more specific about the timing for resuming? Not as, I mean, as a quarter, but what's actually still holding you a little bit in terms of maybe the process on the models with ECB, where are you in the discussions with this?

Question: Tarik El Mejjad - Bank of America - Analyst : Thank you. On the capital, you are the -- we have discussed the growth Europe versus Nordics and so on. But in terms of opportunities for bolt on M&A to strengthen your business here and there. What are -- if you look around in the regions where you want to grow the four big countries, what are the priorities? And what of businesses you would like to accelerate by non-organic.

Question: Tarik El Mejjad - Bank of America - Analyst : I'll just turn the room if there's any question. No. So I will conclude with the question and maybe give an opportunity to expand this. I mean, as an investment case, Nordea is solid bank diversified, high profitability, promising types of distribution in the short-medium term. But you have to pick one angle on why investors should look at Nordea and what's the investment case and the differentiating element in the next 12 to 24 months

Question: Tarik El Mejjad - Bank of America - Analyst : That's a very good. Thank you very much Frank.