Nordea CEO Wins Over Investors With Deep Cost Cuts; Shares Gain

Nordea Bank Abp’s chief executive drew praise from one of the Nordic region’s most outspoken activist investors, after unveiling a set of results that revealed a dramatic slump in costs.

Frank Vang-Jensen, CEO of the biggest Nordic bank, has managed to deliver “far above market expectations,” Cevian Capital AB Managing Partner Christer Gardell told Bloomberg. Nordea is making “rapid” inroads “towards -- and past -- competitors’ profitability,” he said. Shares in the bank gained almost 4% on Thursday morning.

Nordea published first-quarter results that beat analyst expectations, with costs plunging to 48% of income from 57% a year earlier. In an interview with Bloomberg Television, Vang-Jensen said he thinks the bank can reduce spending even further. Part of that will come in the form of a smaller travel budget, after the pandemic made clear how much business can be conducted virtually, he said.

“Sometimes you need a wake-up call and something extraordinary needs to happen to make you change your habits,” Vang-Jensen said. There was a realization last year that when business trips ground to a halt, it actually “worked well.” So in future, there “will definitely be much less traveling and it will also be [about] meeting in a different way,” he said.

Nordea also managed to deliver top-line growth. The bank’s first-quarter results showed that net interest income rose to 1.21 billion euros ($1.47 billion), about 2.5% more than analysts had predicted. Net loan losses were less than half as bad as expected, at 52 million euros, as Nordea’s clients weathered the pandemic better than feared.

“The credit quality is strong,” Vang-Jensen said.

Nordea has spent the past years driving down costs and finding ways to become more profitable amid intense pressure from shareholders to beef up returns on equity. Its return on equity was 11% at the end of March, significantly better than in previous quarters.

Meanwhile, Nordea’s biggest owner Sampo Oyj has revealed plans to sell more than a half of its roughly 16% stake as it moves away from banking and focuses holdings on insurance. Nordea shareholders in February agreed to let the bank buy back stock, though any such purchases are on hold until the European Central Bank allows such moves again. The bank used its first-quarter report to reiterate its plans to move ahead with buybacks as soon as it’s permitted.

Nordea also said its assets under management soared 33% to 372 billion euros, as customer inflows continued and markets bounced back.

Nordea CEO Wins Over Investors With Deep Cost Cuts; Shares Gain

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