Nordea Bank Abp Q4 2024 Earnings Call Transcript

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

Question: Magnus Andersson - ABG Sundal Collier - Analyst : Yes. Two questions. First of all, on capital. You stated there you are in talks with ECB about another share buyback program, although you have one month left of the current one, which is good. But I was just wondering, when do you intend to be at your 150-basis point management buffer. You are still quite significantly above that, for how long really do you think you will remain in this position? And secondly, just on costs there and the cost guidance, how we should think about the headcount outlook, whether there are any synergies to be realized from the acquisition you made in Norway, for example? That's my two questions.

Question: Andreas Hakansson - SEB - Analyst : First question, if I look on the divisions, the loan losses actually moved up quite sharply in Retail Banking, Finland and also Business Banking in Denmark, and could you tell us a little bit about was it anything in particular in Denmark? Did we see any green projects that causes problem? Or what's driving that? That's my first question.

Question: Andreas Hakansson - SEB - Analyst : Okay. And then if I look at your -- if I'm looking at slide 20 where you give us some color on your hedge, and you had a meeting -- a public meeting on December 20, when you gave some guidance or steering to the NII of 2025. Could you maybe help us a little bit with outlook for NII? And I read on the bottom of page 20, is it correct that you assume that Finnish rates are going to be 2.25% by the end of 2025. So do you expect ECB to stop at 2.25%? I mean we expect 1.5%. So just clarify that.

Question: Andreas Hakansson - SEB - Analyst : That's perfect. Just following up on what you said there that Norway is helping you. Is it fair to say that the Norwegian loan book that actually came over finally was a bit smaller than you expected in the beginning?

Question: Andreas Hakansson - SEB - Analyst : No, it was quite monoline when it was at Danske for sure.

Question: Namita Samtani - Barclays Investment Bank - Analyst : My first question is, which part of the Nordea franchise do you think is struggling? And what are you doing to fix it? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JANUARY 30, 2025 / 9:00AM, NDAFI.HE - Q4 2024 Nordea Bank Abp Earnings Call

Question: Namita Samtani - Barclays Investment Bank - Analyst : And my second question, I just wanted to ask on the risk-weighted assets. So consensus has been growing 8% in 2026 versus the 2024 reported number. I know there's Basel IV, but doesn't that seem like quite a lot of growth considering you might also get some offset from the corporate model or has the thinking on that changed?

Question: Hari Sivakumaran - Keefe, Bruyette, & Woods, Inc. - Analyst : I've got two questions on Slide 20, the rate sensitivity. I can see you're using a power shift assumption in the rate sensitivity. I'm wondering, just because it's possible for the first time in a while that we may actually have a steeper yield curve and a higher long end, how might that impact the sensitivity? I imagine it's helpful for the deposit hedge. Maybe year one is too early, but possibly for years two to three. So any color on that would be helpful. And then my second question is just on the country allocation of the deposit hedge. How are you doing that? Is that related to the retail transaction accounts? So any help with that would be great.

Question: Riccardo Rovere - Mediobanca - Analyst : On loan growth, the volumes across the group seems to be fairly stable over the past few quarters aside from the acquisitions in Norway. Is there any particular rate level that you think could fuel again loan growth 2% or whatever number you may have in mind? And how is your thinking about the potential threats of US reducing tariffs across the board? This is my first question. And the second question I have is, is there any area of the group where you think you might eventually be, if I may say, subscale that you would love to get bigger than you are today? Thanks.

Question: Riccardo Rovere - Mediobanca - Analyst : Thanks, Frank. Just a quick follow-up, if I may. Do tariffs or a tariff scenario have any -- or are they somehow embedded in any of your expected loss PDs and GDs and things like that at the moment in your internal models? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JANUARY 30, 2025 / 9:00AM, NDAFI.HE - Q4 2024 Nordea Bank Abp Earnings Call

Question: Martin Ekstedt - Handelsbanken - Analyst : So just following up on Andreas's question on the acquisition of Danske's Norwegian business. And just to put some numbers on this. So page 11 in the presentation states that you have a EUR2.2 billion increase in RWA mainly due to the Norwegian acquisition. But Danske, I believe, initially announced what equates to roughly EUR5 billion of RWA being in scope. So some of these effects in between here due to differences in risk-weighting approaches, et cetera? Or is this all customer-driven, i.e., in excess of 50% of the volume disappeared between signing and closing? That was my first question. Thank you.

Question: Martin Ekstedt - Handelsbanken - Analyst : Okay. And then secondly, if I could linger in Norway a little bit, please. So you mentioned this acquisition as being supportive of NII in Norway. Going forward, if I look at the Personal Banking segment in Norway, NII is down 15% on Q2 and 8% on Q3, I believe. And if I look at a close large cap banking peer in Norway, they don't seem to see the same dynamic at the moment at least for Q3. Does this come down to differences in funding mix? Or is it more around customer behavior in Norway? And then how helpful do you think the acquisition that you did for Danske business now will be in the near term and stabilizing this development? 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. JANUARY 30, 2025 / 9:00AM, NDAFI.HE - Q4 2024 Nordea Bank Abp Earnings Call

Question: Shrey Srivastava - Citigroup, Inc. - Analyst : My first one, and apologies if you covered this earlier, I joined a bit late, how much of the EUR24 million quarter-on-quarter treasury gain is one-off? And could you like size this up to other one-off impacts in the quarter, including the Norwegian one you just mentioned? Thanks.

Question: Shrey Srivastava - Citigroup, Inc. - Analyst : Understood. Thank you. And my second question, a bit more conceptual. Has the change in the UniCredit total credit agreement in Denmark affected your proclivity to look at M&A opportunities in the region?

Question: Bettina Thurner - BNP Paribas Exane - Analyst : I had two quick ones on -- one on the structural hedge. Thanks a lot for the new disclosure. It's really helpful. I just wondered on the impact that you show for '25 and '26 for the help that you get from the deposit hedge, if rate cuts would come in faster than expected, how much of a change would that be to that sensitivity, not in numbers, but just to give a feeling whether quite a lot of your structural hedge is maybe at the shorter end of the curve allocated? And then on the second question on M&A, I was just interested whether you -- the areas that you have in mind for bolt-on acquisitions are the ones that you highlighted as maybe being slower growing or whether you just look at everything that comes to the table at the moment?