Nordea’s profits down but better than expected

First quarter results at Sweden’s Nordea bank beat expectations despite worries over possible mounting loan defaults amid worsening global economic conditions.

From January to March, the bank posted a net profit of €627 million ($826 million) compared to €687 million in the first quarter of 2008, a fall in profits of almost nine percent.

Analysts surveyed by Dow Jones Newswires had forecast Nordea profits to drop by 30 percent to €484 million and credit defaults to be closer to €363 million.

“The worsening of the macroeconomic trends has however increased uncertainty for loan losses for the remaining part of the year,” Nordea’s quarterly report said.

Loan losses, a useful indicator of how the economic downturn is impacting on banks and financial institutions, amounted to €356 million.

That compares to €320 million in the previous quarter and €21 million in the first quarter of 2008.

“Higher loan losses are inevitable when the economy is contracting at an unprecedented speed,” said Nordea’s chief executive Christian Paulsen in a statement.

Nordea said its outlook for 2009 remained unchanged and that its profits for the full year would be “at approximately the same level as in 2008.”

The bank posted a €2.67 billion net profit last year.

At 0820 GMT on the Stockholm exchange, the price of Nordea shares were up 5.25 percent to 56.10 kronor in a market up by 1.24 percent.


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