Nordea Bank Abp Q3 2024 Earnings Call Transcript

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

Question: Gulnara Saitkulova - Morgan Stanley & Co. International Plc - Analyst : Hi, good morning. This is Gulnara from Morgan Stanley and thank you for taking my questions. My first question is on competition. How would you describe the evolution of the competitive environment across your key markets and especially in Sweden and Norway when it comes to the pricing of loans and savings products? Do you see any changes in the competitive behavior among banks versus what you've seen in the second quarter and versus what you've seen with the start of the year? And which levers Nordea's pulling to keep up with the competition? And the second question on the NII, can you please talk about the outlook for lending and deposit margins for the coming quarters across your different markets? We saw that the contribution from the lending margin was slightly negative over the last quarters. When would you expect some visible improvements in the asset margins to come through and when do you think the pressure on the deposit margins could potentially subside? Thank you.

Question: Gulnara Saitkulova - Morgan Stanley & Co. International Plc - Analyst : Yes, thank you.

Question: Gulnara Saitkulova - Morgan Stanley & Co. International Plc - Analyst : Thank you very much.

Question: Magnus Andersson - ABG Sundal Collier - Analyst : es, for effect here for just the first question on our cost structure, certainly won't come back with a more explicit cost guidance for full-year '25 in conjunction with the Q4 report. But there was just wondering when I read your CEO stage month in the report, you say that you expect a lower cost growth in 2025, significantly lower than you had in '24. Should I read that as assets should still expecting a positive cost growth on a like-for-like basis and 25 versus 24, excluding the Fiat and excluding the consolidation of Norway? That's that's the first question. Secondly, just on the hedge, I question whether you have considered at telling us what the impact of the 25 of which carry interest rate scenario. And finally, just on loan losses, we continue to release your management overlay. I think consensus expectation still have quite high at going forward. At Wendy, I think we'll have really released for most of the overlay given the current macro scenario. Thanks.

Question: Magnus Andersson - ABG Sundal Collier - Analyst : Yes, yes. Okay. Thank you.

Question: Magnus Andersson - ABG Sundal Collier - Analyst : Okay. Thank you very much.

Question: Shrey Srivastava - Citi - Analyst : Yes, hi, and thanks for taking my question. I have here today. And so the first one is, what do you see as the key drivers for the step-up in ROA guidance for 2024 for greater than 16%? Would you say this is mainly a lower provisions than you expected? Or if not, what specific line items do you see as driving this increase? And by the second one is on your deposit edge. Again, there seems to be the fourth consecutive quarter where the deposit hedge notional has declined. What's behind this? Is it is it continued mix shift that you're seeing from non-interest bearing or more of a conscious decision on your part? And where can we say floors for the national here? Thanks.

Question: Shrey Srivastava - Citi - Analyst : Cool, thanks very much in it. And if I could, if I could have one more that it's shifting gears slightly to private banking. So the net flow numbers are notable step-up for any quarter in the last few years. And once this headwind you have from wholesale distribution receipts, what do you think the sustainable? So sort of net flows percentage per at an asset and wealth management?

Question: Shrey Srivastava - Citi - Analyst : Got it. Thanks very much.

Question: Nicolas McBeath - DNB Markets - Analyst : Thank you, sir. First question on the capital and buybacks. So now you resume buybacks in October, which is a bit earlier than you previously indicated. So just wondering if anything has changed, I guess here earlier was thinking about early next year and unrelated to that difficult also, please update and remind us about your expectations for changes in your capital requirements, a certain region risk weight floor or the desk acquisition and the impact on those. And I think changed in terms of capital impact since you provided outlook in Q2. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. OCTOBER 17, 2024 / 8:00AM, NDAFI.HE - Q3 2024 Nordea Bank Abp Earnings Call

Question: Nicolas McBeath - DNB Markets - Analyst : All right. Thank you. And then a second question on the NII outlook, o appreciate the comments you made about the and I Autoverse deposit margin pressure of potential higher lending margins to lower hemoglobin deposits. And so when you take all of this virus in care channel, do you think that the net effect of those should suggest that the pressure off sequentially on the net interest margin should be substantially higher or lower than the pressure? We saw the net interest margin here in Q3.

Question: Nicolas McBeath - DNB Markets - Analyst : Okay, that's clear. Thank you. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. OCTOBER 17, 2024 / 8:00AM, NDAFI.HE - Q3 2024 Nordea Bank Abp Earnings Call

Question: Patrick Nelson - Goldman Sachs - Analyst : Hi, thank you. I just had a follow-up on the capital picture as well. Are you saying that you announced the buyback today, which is a bit earlier than previously communicated, but it was a bit smaller than than what you previously have done if this, because you want to maintain this sort of a quarterly quarterly run rate in terms of the buybacks, or is there anything else we can expect in terms of distributions and frequency going forward? Hi, Patrick. I'm what we said before. And I think what we're doing today is very much consistent with what we said before is, as you know, we acted quickly to deal with our spot access, if you like, into that sort of on the excess capital and got out in front of everybody else in Europe and in terms of dealing with that and and returning it to shareholders.

Question: Patrick Nelson - Goldman Sachs - Analyst : Yes, very clear. Thank you.

Question: Namita Samtani - Barclays Capital - Analyst : Morning and thanks for taking my question. Is firstly, just on your net interest income to be a trough at certain points in 2025 ish rate fall to around 2% and technique, or do you think we'll have to April 2026, you see the local Inc. and I think trying to you previous decelerate competitive current trends, 20 trial and I see the stable America trickery, it felt like that is really the case anymore given the pace of rate cut Hicks, bank AMI. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. OCTOBER 17, 2024 / 8:00AM, NDAFI.HE - Q3 2024 Nordea Bank Abp Earnings Call And secondly, my second question, I just wonder why you are more aggressive on M&A, especially versus other European banks link that Dan cross-border M&A, other than using the Danish Compromise, any buybacks are really accretive given your valuation? And it does that show bolt-on Nordic strategy? Or do you think expanding that mandate, especially in certain areas, for example, your insurance revenue is a quite small versus other revenue line can be helpful.

Question: Namita Samtani - Barclays Capital - Analyst : That's helpful. Thanks very much. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. OCTOBER 17, 2024 / 8:00AM, NDAFI.HE - Q3 2024 Nordea Bank Abp Earnings Call

Question: Sofie Peterzens - J.P. Morgan Securities plc - Analyst : Yeah, hi, and this is Sofie from JPMorgan. Thanks for taking my questions. So I'm just going back on on the capital headwinds saying you got the 50 basis point improvement this quarter from the LGD floors removal in Norway. So is it fair to assume that over the next six quarters we should expect around 100 basis points capital headwinds, which would be 15 basis points from the share buyback? 40 basis points from Dallas gas, 30 basis points is the Norwegian our real estate risk. And then in addition, now 20 basis points from bottle or so, if you can just clarify that got our expected potential capital headwinds are around 100 basis points, everything takes six months. And then the second question would be what Eric in your report. I can see that there is always the 300 million, the NIRB. capital shortfall deducted from capital. Can you just discuss what is IRB shortfall leased and out why have depressed our fall? And then the final question would be on going back to net interest income. If I could have annualized the hedge impact done and that is roughly 30 billion that I think you're right, our three-month average for the third quarter of 3.5% and then the five year swap rate of around 1.3%. I get that Denmark in market of the hedge, we'd be somewhere around 400 media it or potentially slightly less drag. The net interest income kind of annualized in the third quarter. Is this correct? And how should we think about that net interest income impact if rates go well below 2% in '25 or '26?

Question: Sofie Peterzens - J.P. Morgan Securities plc - Analyst : Sorry, (inaudible) that's what you wrote in your second quarter as a nation that that was minus 30 basis points, but that's not happening?

Question: Sofie Peterzens - J.P. Morgan Securities plc - Analyst : Okay, thank you. And what the about IRB shortfall up at EUR300 million deducted?

Question: Sofie Peterzens - J.P. Morgan Securities plc - Analyst : Okay, thank you.

Question: Andreas Hakansson - SEB Enskilda Equities - Analyst : Morning, everyone, or good afternoon, almost. Two question -- let me start with the comments. I wanted to ask about your why not do Pan European M&A. And let me just say thanks very much for staying in the Nordic region, and I hope that's going to be this strategy also in the coming clone. But then if I just follow up, I mean, we've covered most and M&I, but, Frank, you made an interesting comment that you are aware until today that pricing irrationally across the board. And I think you referred to retail banking at end. Can I just ask the same play or given that they seem to have a strategy to grow also not very much on the large corporate side. Do you see that they start to act irrationally also on that side?

Question: Andreas Hakansson - SEB Enskilda Equities - Analyst : J ust following up sales, you're buying one operation from one of those banks that are for the only other bankers really pan-Nordic do think that the upside in, you know, where your retail business that you limit yourself being, is that pricing a little bit more on a disciplined way or the cross selling, which performed? All never really seem to have done there?

Question: Andreas Hakansson - SEB Enskilda Equities - Analyst : Thanks for that, Frank. And sorry, just one quick question for Ian. You mentioned the corporate IRB models and an update of the size of the potential benefits that you expect in 2026. And the update on that?

Question: Andreas Hakansson - SEB Enskilda Equities - Analyst : That's fine. Thanks, have a good day.