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Nordea Bank Abp NDA SE

Rating as of

Morningstar’s Analysis

Valuation
Currency in SEK
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1-Star Price

PREMIUM

5-Star Price

PREMIUM

Economic Moat

PREMIUM

Capital Allocation

PREMIUM

Nordea Delivers in European Stress Test

Niklas Kammer, CFA Equity Analyst

Analyst Note

| Niklas Kammer, CFA |

Nordea showed a solid performance in the 2021 European Central Bank's stress test. Its common equity Tier 1 ratio stayed 3.2 percentage points above its minimum requirement of 10.2%. Even if we were to include a countercyclical buffer (around 2%), Nordea would have passed this exercise. The decline of its common equity Tier 1 ratio (21.6%) can be broken down into 4.1% risk-weighted asset inflation and its capital base shrinking 18.4%. The culprits of the capital draw are easy to find. In this harsh scenario, credit losses more than tripled in 2021 from already elevated levels in 2020. Net interest income generation and net fee and commission income--albeit to a lesser extent--also saw a meaningful negative impact. That being said, Nordea only made a hypothetical loss in one year out of three, with the other two breaking even. In our book, that is a solid performance given the severity of the stress scenario. We maintain our SEK 93 per share fair value estimate and no moat rating.

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Company Profile

Business Description

Nordea is a universal Nordic bank which generates most of its income (63%) through vanilla lending products such as mortgages, household loans and corporate loans. The bank is also a leading equity and debt underwriter and issuer specialized in the Nordics, generating roughly one tenth of the group’s income. Nordea also offers life and pension, savings and asset management, as well as private banking services to high-net-worth individuals. It operates primarily in Sweden, Denmark, Finland, and Norway.

Contact
Hamnbanegatan 5
Helsinki, 00020, Finland
T +358 20070000
Sector Financial Services
Industry Banks - Regional
Most Recent Earnings Jun 30, 2021
Fiscal Year End Dec 31, 2021
Stock Type
Employees 27,510

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