Nordea Bank AB (NDA.SK) on Thursday posted a 26% drop in second-quarter net profit after earnings were boosted last year by a disposal, and said it would make a decision on whether to switch where the bank is domiciled in September.
Net profit at the Stockholm-based bank fell to 743 million euros ($855.7 million) in the three months ending June 30, from EUR996 million in the same period a year earlier, missing expectations of a EUR817 million profit, according to a FactSet poll. Earnings were boosted in the second quarter last year by a EUR151 million gain from the sale of its stake in Visa Europe.
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Earlier this year the bank raised the prospect of quitting Sweden in response to Swedish proposals to increase the fee banks pay to help cover the cost of supporting financial institutions that get into trouble. But in a statement Thursday the bank said that recent initiatives in Scandinavia to explore joining the European banking union means it will process this information before making a final decision in September.
"In the second quarter of the year, we have seen evenly distributed growth throughout our four Nordic home markets," Chief Executive Casper von Koskull said.
"The overall economic situation remains very solid although the geopolitical environment is increasingly unstable. However, we are closely monitoring the trends specifically in the Swedish, Norwegian and Danish real-estate markets, where we in some areas see price levels that could be unsustainable."
Net interest income was steady at EUR1.18 billion from EUR1.17 billion a year ago.
Demand for corporate loans is low, and Nordea said it there is continued high activity in its corporate advisory services, with assets under management reaching an all-time-high of EUR332 billion. Customer activity in the capital markets was lower this quarter due to low volatility, it added.
On the back of its transformation projects, aimed at freeing-up resources, Nordea raised its cost guidance for the year. It now expects costs in 2017 to rise 3%-5% above 2016 levels before dropping back to 2016 levels in 2018. The bank previously guided for 3% cost growth.
The common equity Tier 1 ratio--a key measure of financial strength--stood at 19.2% at the end of the quarter, up from 16.8% a year ago.
-Write to Dominic Chopping at email@example.com; Twitter: @domchopping @WSJNordics
(END) Dow Jones Newswires
July 20, 2017 03:12 ET (07:12 GMT)