Can Nordea’s newfound success be sustained?
Scandinavia’s biggest bank is at last outperforming European banks in the way that smaller Nordic lenders did in the 2010s. The jury is out on whether or not this can continue when its more nationally focused Nordic peers regain momentum.
Alongside Lloyds and UBS, Nordea is the only large European bank likely to earn a double-digit return on equity in 2021. No other bank with more than €500 billion of assets will do so, according to analyst consensus compiled by Berenberg. And no other similarly large lender, including UBS and Lloyds, trades above book value.
Even in Scandinavia – a rare bright spot in European banking over the last 10 years – Nordea has been the best-performing bank stock over the last six months.
Many analysts now see Nordea’s first-quarter results, including a 21% rise in revenues, as a sign of what it will achieve as it catches up with smaller and more nationally focused firms, whose profitability Nordea previously trailed.
Under chief executive Frank Vang-Jensen, formerly CEO of Svenska Handelsbanken, Nordea is proving itself capable of more than just cutting costs.
Over the first three years of this decade, UBS predicts that Nordea will show higher pre-provision profit growth than any other Scandinavian bank. This growth, moreover, will be higher than any other European firm of more than €500 million in assets except Deutsche Bank, which is coming back from much deeper trouble.