Interim Report January-June 2024
Nordea Kredit Realkreditaktieselskab
Grønjordsvej 10, 2300 Copenhagen S, Denmark
Business registration number 15134275
1
Contents
2
We are part of a universal bank
with a 200-year history of
supporting and growing the
Nordic economies – enabling
dreams and aspirations
for a greater good.
Every day, we work to
support our customers’
financial development,
delivering best-in-class
omnichannel customer
experiences and driving
sustainable change.
The Nordea share is listed
on the Nasdaq Helsinki,
Nasdaq Copenhagen and
Nasdaq Stockholm exchanges.
Read more about us at nordea.com.
3
8
8
9
Statement of changes in equity
10
17
2
Financial summary
Key financial figures (DKKm)
Jan-Jun
2024
Jan-Jun
2023
Change %
Income statement
Total operating income
1,572
1,554
1
Total operating expenses
-920
-703
31
Profit before impairment losses on loans and receivables
652
851
-23
Impairment losses on loans and receivables
-74
4
-1,914
Profit before tax
578
855
-32
Net profit for the period
428
640
-33
30 Jun 2024
31 Dec 2023
Change %
30 Jun 2023
Change %
Balance sheet
Receivables from credit institutions and central banks
30,082
31,998
-6
45,042
-33
Loans and receivables at fair value
384,715
390,669
-2
381,551
1
Loans and receivables at nominal value
1
415,044
421,030
-1
427,211
-3
Debt to credit institutions and central banks
10,503
8,117
29
14,589
-28
Bonds in issue at fair value
385,431
394,356
-2
386,054
0
Equity
21,635
22,356
-3
21,845
-1
Total assets
422,221
429,937
-2
426,805
-1
Ratios and key figures
Jan-Jun
2024
Jan-Jun
2023
Return on equity, %
2
3.9
5.8
Cost/income ratio
58.5
45.2
Write-down ratio, basis points
2
3.8
-0.2
Common equity tier 1 capital ratio, %
3
28.8
28.7
Tier 1 capital ratio, %
3
28.8
28.7
Total capital ratio, %
3
31.0
30.8
Own funds, DKKm
3
22,226
22,222
Tier 1 capital, DKKm
3
20,676
20,672
Risk exposure amount, DKKm
71,769
72,125
Average number of employees (full-time equivalents)
98
112
1
2
3
3
Management
’s
report
Nordea Kredit Realkreditaktieselskab is a wholly owned
subsidiary of Nordea Bank Abp.
Throughout this report the term “Nordea Kredit” refers to
Nordea Kredit Realkreditaktieselskab, “Nordea” refers to the
Nordea Bank Abp Group and “Nordea Bank” refers to the
parent company Nordea Bank Abp.
Modest lending activity and continued strong
lending book in the first half of 2024
Following the increased sales activity for especially
apartments towards end-2023, which was driven by the
introduction of new property taxes on 1 January 2024, activity
in the housing market was modest in the beginning of 2024.
Lending for change of ownership, top-up lending and
remortgaging activity was modest at Nordea Kredit throughout
the first half of 2024 resulting in a decrease in total lending at
nominal value to DKK 415bn at end-June 2024 (end-2023:
DKK 421bn).
LTVs (loan to value) remained stable at a low level.
Furthermore, arrears and loan losses were at a slightly higher
but still low level in a historical perspective. The credit quality
remained solid for both household and corporate customers in
the first half of 2024.
Results summary January-June 2024
Profit before tax decreased by 32% to DKK 578m (DKK
855m) (the comparative figures in brackets refer to the first
half of 2023).
Operating income
Net interest income increased by 2% to DKK 2,025m (DKK
1,976m), driven by the higher return on own funds, which was
positively affected by the increase in interest rate levels during
the second half of 2023. Administration margins decreased by
DKK 82m following lower lending volumes and average
margins, driven by lower LTV ratios for the loans
remortgaged.
Fee and commission income was down by 24% to DKK 152m
(DKK 199m), mainly driven by lower lending activity.
Fee and commission expenses decreased by 1% to DKK
598m (DKK 606m), mainly related to the lower lending activity
for household customers. The decrease was partly offset by
higher liquidity support fees following the use of the liquidity
facility.
Staff and administrative expenses
Total staff and administrative expenses increased by DKK
217m to DKK 920m (DKK 703m), driven by the increased
fees for sales and distribution services provided by Nordea
Bank.
Staff costs decreased by DKK 7m to DKK 51m (DKK 58m).
The average number of full-time equivalent employees
decreased to 98 (112) partly driven by increased outsourcing
to Nordea Bank.
Impairment losses on loans and receivables
Impairment losses on loans and receivables amounted to a
net loan loss of DKK 74m (net reversal of DKK 4m), mainly
due to higher model-calculated provisions compared with the
first half of 2023.
Overall, the loan portfolio of Nordea Kredit is well diversified
with robust collateral.
The 25% first loss guarantee coverage from Nordea Bank
significantly reduces the risk of impairment losses on loans at
Nordea Kredit. The first loss guarantees covered an
unchanged share of 99% (99% at end-2023) of all loans at
Nordea Kredit.
The write-down ratio of the loan portfolio increased to 3.8bp (-
0.2bp) compared with the first half of last year, reflecting
higher model-calculated provisions following changes in the
macro forecasts and negative migration between stages.
Tax
Income tax expense was DKK 150m (DKK 216m) and the
effective tax rate increased to 26% (25.2%) following the
increased tax rate for financial institutions from 25.2% in 2023
to 26% in 2024.
Net profit for the period
Net profit for the period decreased to DKK 428m (DKK 640m),
corresponding to a return on equity in the first half of 2024 of
3.9% annually (5.8% annually).
Comments on the balance sheet
Assets
Total assets decreased to DKK 422.2bn (DKK 429.9bn at
end-2023).
Receivables from credit institutions and central banks
decreased to DKK 30.1bn (DKK 32.0bn at end-2023) due to
an decrease in excess liquidity from lending activities.
Loans and receivables at nominal value after loan losses
decreased by 1% to DKK 415bn (DKK 421bn at end-2023)
and by 3% compared with 30 June 2023. The decrease was
mainly related to owner-occupied dwellings, which were down
by DKK 4bn nominal as a result of the lower activity level.
Commercial properties were at the same level and agriculture
decreased by DKK 2bn nominal. Fair value decreased to DKK
384.7bn (DKK 390.7bn at end-2023) due to the above-
mentioned decrease in nominal lending.
The arrears rate for owner-occupied dwellings and holiday
homes (the 3.5-month arrears rate) for the March 2024
payment date increased slightly to 0.17% (0.16% at the
December 2023 payment date) The arrears rate for the sector
was 0.15%. The development has been influenced by a
pause of legal collection at Nordea Denmark since the first
quarter of 2023. Legal collection was partly resumed from
May 2024 including legal collection for loans at Nordea Kredit.
4
-2
-1
0
1
2
3
4
5
6
7
8
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
Long-term DKK rate
Short-term DKK rate
Interest rate, %
Accumulated loan loss provisions increased by DKK 59m to
DKK 581m (DKK 522m at end-2023) mainly following
increased model-calculated provisions. Accumulated loan loss
provisions regarding stages 1, 2 and 3 amounted to DKK 87m
(DKK 72m at end-2023), DKK 226m (DKK 227m at end-2023)
and DKK 268m (DKK 223m at end-2023), respectively.
Assets held temporarily remained at a low level and consisted
of a total of 9 repossessed properties at the end of June 2024
(9 at end-2023) with a carrying amount of DKK 5m (DKK 5m
at end-2023).
Debt
Debt to credit institutions and central banks increased by DKK
2.4bn to DKK 10.5bn (DKK 8.1bn at end-2023), mainly due to
increased repurchase agreements with Nordea Bank following
the refinancing auctions in the second quarter of 2024.
Bonds in issue at fair value were down by DKK 9bn to DKK
385.4bn (DKK 394.4bn at end-2023) after offsetting the
portfolio of own bonds. The decrease was mainly due to the
decrease in loans at nominal value.
Equity
Including the net profit for the period, total equity amounted to
DKK 21.6bn at the end of June 2024 compared with DKK
22.4bn at end-2023 and DKK 21.8bn at the end of June 2023.
The property market
The economy
In recent years, the global economy has been recovering from
the COVID-19 pandemic and high energy prices. Both the US
and Europe have experienced high inflation, leading to
monetary tightening. This has reduced economic activity, but
indications are that the economy is heading for a so-called
soft landing.
Inflation in the US has fallen significantly over the past year.
Measured by the PCE, the Federal Reserve's preferred
inflation measure, inflation in June 2024 was 2.5%, with core
inflation at 2.6%. This is 0.7% point and 1.6% points lower,
respectively, than in June 2023.
Interest rates
The development of inflation and expectations for monetary
policy significantly impact the bond market, including the
interest rates on Danish mortgage bonds.
At the end of the first half of 2024, the effective rate on 30-
year fixed-rate loans was 4.3%, compared with 5.2% at the
same time last year.
Short-term interest rates have also fallen. At the end of the
first half of 2024, the F3 and F5 rates were 3.2% and 3.1%,
respectively, which is lower than last year when the F3 and F5
rates were 3.8% and 3.7%, respectively.
We expect that monetary policy interest rates will fall further in
the coming year as inflation approaches central banks' targets
of around 2% in the US and the Euro area.
However, there is a risk of higher interest rates for a longer
period if inflation does not develop in line with monetary policy
goals. Especially in the US, inflation appears persistent, partly
due to high inflation in services driven by a tight labour market
and relatively large wage increases. If the period of slightly
higher inflation affects expectations, it could become self-
reinforcing.
Figure 1. Interest rates
Property prices and market activity for owner-occupied
dwellings and holiday homes
House prices increased by 5.0% on average from June 2023
to June 2024. The price increase is partly due to the property
tax reform that came into effect on 1 January 2024, resulting
in reduced overall property taxes for eight out of ten
homeowners.
Furthermore, household money at disposal have increased in
recent years, partly due to high wage increases, which are a
delayed result of rising inflation in 2022. Employment has also
continued to rise.
We expect continued rising house prices for the remainder of
2024 and into 2025, partly due to the prospect of further
interest rate declines.
Commercial properties
Residential rental properties
The market for residential rental properties has low vacancy
rates and a stable yield level. However, transaction volumes
are expected to stay low until we reach a lower interest rate
level.
Office and retail properties
There is still good demand for modern and well-located office
properties in the larger cities due to high employment. Rent
levels are stable, and vacancy rates are low and mostly
related to older and not well-located properties.
The transaction volume for retail properties has seen a large
decrease with downward pressure on the rent level especially
in smaller cities. Besides that, the vacancy rate has
increased too. However, the market for grocery stores is well
maintained.
Warehouses and logistics properties
There is still solid demand for modern and well-located
properties with good infrastructure, and stable yield and rent
levels are seen.
5
Agricultural properties
The agricultural sector has been in a positive trend in recent
years and this has continued into 2024, though with
differences between the sectors. Milk prices have stabilised
and there are satisfactory earnings in the sector. In the pig
sector, the picture is more divided, where piglet producers
have good earnings, while pig fattening producers are
affected by high piglet prices and slaughter prices that cannot
keep up. Crop producers have experienced falling prices
since 2022, and earnings are now at a less satisfactory level.
Robustness has generally increased considerably in recent
years, and the agricultural sector is generally in a good
position. It is also positive that the agreement from the green
tripartite negotiations shows that it is possible to carry out the
coming green transition in a way that looks acceptable and
economically sustainable for the agricultural sector.
Trading activity in land and crop properties has been good for
several years, with rising prices due to better earnings in
general and demand for land for other purposes, e.g. energy
projects and nature projects. The turnover of properties with
livestock production is more restrained, but well-maintained
properties with good location and future-oriented production
facilities are traded satisfactorily. Trading activity is expected
to be unchanged for the coming year.
Nordea Kredit’s lending
The loan portfolio
At the end of June 2024 total lending at nominal value after
loan losses amounted to DKK 415bn (DKK 421bn at end-
2023).
Lending activity on the mortgage market was fairly modest in
the first half of 2024. The low activity at Nordea Kredit in the
first half of 2024 was equally driven by low remortgaging of
existing loans and limited demand for lending for change of
ownership and top-up loans.
Gross new lending in the first half of 2024 amounted to DKK
19bn (DKK 26bn in the first half of 2023), of which DKK 13bn
(DKK 19bn in the first half of 2023) was for owner-occupied
dwellings and holiday homes.
Figure 2. Total loan portfolio by loan type
The split between fixed-rate, adjustable-rate and floating-rate
mortgage loans has been stable for the last year. By end-
June 42% (42% at end-2023) of the mortgage portfolio was
fixed-rate loans.
52% of the new lending to household customers were fixed-
rate loans in the first half of 2024. Most household customers
who chose loans with variable rates in the first half of 2024
chose loans based on shorter rates, F3 and Kort Rente, while
fewer chose the formerly most popular variable-rate loan type
F5. This development was likely driven by expectations of
lower short-term rates in the second half of 2024 and the
years to come.
Floating-rate products (for example Cibor6 and Cibor6 Green
loans) are the most popular loan types among corporate
customers, accounting for 50% of the lending portfolio.
Lending in the green mortgage product Cibor Green for
corporate customers continues to increase and accounted for
DKK 16bn by end-June 2024. Nordea Kredit’s market share of
green mortgage lending was approximately 19% by end-June
2024.
Interest-only loans in general accounted for 54% (53% at end-
2023) of the loan portfolio by end-June 2024. The 30-year
interest-only product Frihed30 targeted at experienced
homeowners with a maximum LTV ratio of 60% accounted for
DKK 49bn for owner-occupied dwellings by end-June 2024.
Frihed30 was very popular in the period 2020 to 2022, but the
total volume has been stable since mid-2022.
LTV ratios
The LTV ratio for total lending at Nordea Kredit was 49% at
the end of June 2024 (49% at end-2023). The LTV ratio is
stable and close to the lowest level observed since the
introduction of SDO/SDRO in 2007.
The LTV ratio for owner-occupied dwellings and holiday
homes increased by 1% point to 53% in the first half of 2024
(52% at end-2023), while the LTV ratio for rental properties,
agricultural properties and other commercial properties was
43% (44% at end-2023), 43% (43% at end-2023) and 42%
(41% at end-2023), respectively, by end-June 2024.
6
Supplementary collateral for loans financed through
covered mortgage bonds
Mortgage institutions issuing loans based on covered
mortgage bonds (SDROs) must provide supplementary
collateral out of their own funds if the statutory LTV limit for
the individual property has been exceeded. The
supplementary collateral required based on the LTV ratios for
the individual loans in capital centre 2 (SDRO bonds) was
DKK 3bn at end-June (DKK 3bn at end-2023).
Funding
Bond issuance
Nordea Kredit adheres to the specific balance principle and
exclusively match-funds its lending by the issuance of bonds.
In general, the bonds issued are highly marketable and the
refinancing auctions demonstrate satisfactory demand.
Gross bond issuance amounted to DKK 56bn nominal in the
first half of 2024 (DKK 62bn in the first half of 2023). The
decrease was driven by lower turnover in the housing market
due to uncertainty about the new property taxes effective from
January 2024. Furthermore, remortgaging activity was also
somewhat lower with borrowers waiting for interest rates to
decrease in the near future. This expectation is also
noticeable in borrowers’ choice of loan type as issuance in
long callables with fixed rate decreased from 50% in 2023 to
43% in first half 2024.
At the end of June 2024 the total nominal value of bonds
issued to finance mortgage loans, before offsetting the
portfolio of own bonds, increased to DKK 445bn (DKK 431bn
at end-2023). At end-June 2024 the fair value of the total
outstanding volume of bonds was DKK 385bn (DKK 394bn at
end-2023) after offsetting the portfolio of own bonds.
Foreign investors continued their pattern by selling low-
coupon callable bonds and buying high-coupon bonds
throughout the first half of 2024. Despite fine demand for high-
coupon bonds, foreign accounts had decreased their holdings
of Danish callable bonds to 27.5% in May 2024 (30% in July
2023).
The refinancing auctions in February 2024 were characterised
by low refinancing (around 30%) in maturing 5-year
adjustable-rate mortgages (ARM), which again was an
indication that borrowers expect lower interest soon and
thereby refrain from committing to longer fixed-rate periods.
At the refinancing auctions in May 2024 Danish mortgage
banks sold a record large amount of floating-rate bonds. The
overall volume amounted to DKK 115bn, of which Nordea
Kredit accounted for DKK 25bn. Despite the large volumes,
the auctions were well received with high bid-to-covers and
tighter spreads than expected prior to the auctions.
Rating
The mortgage bonds issued by Nordea Kredit are rated by the
rating agency Standard & Poor’s.
The bonds are issued through capital centre 1 and capital
centre 2 and have all been assigned the highest rating of
AAA.
Capital adequacy and solvency
The Tier 1 capital ratio excluding the net profit for the period
was 28.8% (28.5% at end-2023). The Tier 1 capital ratio
increased due to a decrease in the risk exposure amount
(REA) of DKK 0.7bn to DKK 71.8bn (DKK 72.4bn at end-
2023). The decrease in the REA was mainly related to credit
risk and exposures calculated according to the Internal Risk
Based approach.
The total capital ratio excluding the net profit for the period
increased by 0.3% point to 31.0% (30.7% at end-2023). The
total capital ratio increased due to the above-mentioned
decrease in the REA.
Under Danish legislation Nordea Kredit must publish its
adequate capital base as well as its individual solvency need
on a quarterly basis. Information about individual solvency
needs is available on
Debt buffer
The debt buffer requirement was DKK 7.7bn at the end of
June 2024 (DKK 7.8bn at end-2023). The debt buffer
requirement is fulfilled using Tier 1 and Tier 2 capital
instruments not used for capital requirements and by
unsecured senior debt.
Liquidity and funding ratios
The common European LCR requirement for Nordea Kredit is
100% of net liquidity outflows over a 30-calendar day stress
period, as specified by the Delegated Act (LCR DA). In
addition, Nordea Kredit has an LCR Pillar 2 add-on, which is a
Danish liquidity requirement applicable to all mortgage
institutions and implemented to capture entity-specific liquidity
risk. Nordea Kredit reports both an LCR DA and an LCR
including Pillar 2 add-on. The latter will always be the most
restrictive and thus binding requirement. At the end of June
2024 the LCR DA was 346% and the LCR including Pillar 2
add-on was 194%.
The net stable funding ratio (NSFR) measures long-term
liquidity risk. The NSFR requirement for Nordea Kredit is
100% according to the CRR. At 30 June 2024 Nordea Kredit’s
NSFR was 922%.
Supervisory diamond for mortgage institutions
At the end of June 2024 Nordea Kredit complied with the five
benchmarks of the supervisory diamond for mortgage
institutions.
Table 1. The supervisory diamond
30 June 2024
Limit
1. Lending growth
1
●
-3%
15%
●
3%
15%
●
-4%
15%
●
-5%
15%
2. Borrower’s interest rate risk
2
11%
25%
3. Interest-only lending
3
5%
10%
4. Short-term funding
4
●
6%
25%
●
12%
12.5%
5. Large exposures
5
36%
100%
1
2
Loans for owner-occupied dwellings and holiday homes and residential rental properties
where the LTV ratio exceeds 75% of the lending limit and the interest rate is fixed for less
than two years are limited to 25%.
3
Interest-only lending for owner-occupied dwellings and holiday homes where the LTV ratio
exceeds 75% of the lending limit is limited to 10%.
4
Yearly/quarterly refinancing is limited to 25%/12.5% of the total portfolio.
5
The 20 largest exposures less CRR deductions are limited to 100% of CET1.
7
New regulation on capital requirements
Nordea Kredit is identified as a systemically important
financial institution (SIFI). Currently Nordea Kredit is subject
to a 1.5% other systemically important institutions requirement
(O-SII). The requirement based on the confirmation from 27
June 2024 will be announced later in 2024 and will be valid for
2025.
On 3 October 2023 the Systemic Risk Council in Denmark
announced that the Council recommended the Danish
Minister of Industry, Business and Financial Affairs to activate
a systemic risk buffer (SyRB) of 7% for exposures to property
companies applicable from 30 June 2024. The Minister of
Industry, Business and Financial Affairs decided on 26 April
2024 to follow the recommendation with the adjustment that
the part of the exposure in the LTV bucket up to 15% is
excluded.
On 9 July 2024 Nordea Kredit received approval from the
authorities for new retail IRB models. The IRB models will be
implemented in the Q3 2024 reporting.
Basel III is a global regulatory framework for bank capital
adequacy, stress testing and liquidity risk. In December 2017
the finalised Basel III framework, often called the Basel IV
package, was published. The Basel IV implementation in the
EU was adopted by the EU Council as the final step of the
legislation process in the first half of 2024. The regulation will
be applicable from 1 January 2025, with some transition rules
until 2032. The directive has to be implemented in national
legislation by 10 January 2026 at the latest and come into
force by 11 January 2026 at the latest.
The effect of the above mentioned is included in the capital
planning for Nordea Kredit.
Risks and uncertainties
See Note 7 for information about risks and uncertainties.
8
Income statement
Note
Jan-Jun
2024
Jan-Jun
2023
Full year
2023
DKKm
Interest income
7,050
6,053
12,987
Interest expenses
-5,025
-4,077
-8,944
Net interest income
2
2,025
1,976
4,043
Fee and commission income
152
199
420
Fee and commission expenses
-598
-606
-1,194
Net interest and fee income
1,579
1,569
3,269
Value adjustments
3
-6
-14
-30
Other operating income
0
-1
0
Staff and administrative expenses
-920
-703
-1,685
Depreciation of tangible assets
-
0
0
Other operating expenses
-
-
-1
Impairment losses on loans and receivables
4
-74
4
-19
Profit from equity investment in associated undertaking
-1
-
1
Profit before tax
578
855
1,535
Tax
-150
-216
-386
Net profit for the period
428
640
1,149
Statement of comprehensive income
Jan-Jun
2024
Jan-Jun
2023
Full year
2023
DKKm
Net profit for the period
428
640
1,149
Other comprehensive income, net of tax
-
-
-
Total comprehensive income
428
640
1,149
9
Balance sheet
Note
30 Jun 2024
30 Dec 2023
30 Jun 2023
DKKm
Assets
Cash in hand and demand deposits with central banks
7,144
7,017
0
Receivables from credit institutions and central banks
30,082
31,998
45,042
Loans and receivables at fair value
5
384,715
390,669
381,551
Loans and receivables at amortised cost
0
0
0
Investment in associated undertaking
21
22
23
Tangible assets
-
0
0
Deferred tax assets
3
3
3
Current tax assets
7
76
-
Assets held temporarily
5
5
6
Other assets
218
138
136
Prepaid expenses
26
9
43
Total assets
422,221
429,937
426,805
Debt
Debt to credit institutions and central banks
10,503
8,117
14,589
Bonds in issue at fair value
385,431
394,356
386,054
Current tax liabilities
-
-
109
Other liabilities
3,101
3,557
2,657
Deferred income
1
0
1
Total debt
399,036
406,030
403,410
Subordinated debt
Subordinated debt
1,550
1,550
1,550
Equity
Share capital
1,717
1,717
1,717
Other reserves
21
23
24
Retained earnings
19,897
19,467
20,104
Proposed dividends
-
1,149
-
Total equity
21,635
22,356
21,845
Total equity and debt
422,221
429,937
426,805
Contingent liabilities
Guarantees etc.
0
0
0
Credit commitments
1,497
1,037
1,563
Total contingent liabilities
1,497
1,037
1,563
10
Statement of changes in equity
DKKm
Share capital
1
Other reserves
2
Retained
earnings
Proposed
dividends
Total equity
Balance at 1 Jan 2024
1,717
23
19,467
1,149
22,356
Net profit for the period
-
-2
430
-
428
Other comprehensive income, net of tax
-
-
-
-
-
Share-based payments
-
-
0
-
0
Dividends paid
-
-
-
-1,149
-1,149
Balance at 30 Jun 2024
1,717
21
19,897
-
21,635
DKKm
Balance at 1 Jan 2023
1,717
24
19,464
1,075
22,280
Net profit for the year
-
-1
1,150
-
1,149
Other comprehensive income, net of tax
-
-
-
-
-
Share-based payments
-
-
2
-
2
Dividends paid
-
-
-
-1,075
-1,075
Proposed dividends
-
-
-1,149
1,149
-
Balance at 31 Dec 2023
1,717
23
19,467
1,149
22,356
DKKm
Balance at 1 Jan 2023
1,717
24
19,464
1,075
22,280
Net profit for the period
-
-
639
-
639
Other comprehensive income, net of tax
-
-
-
-
-
Share-based payments
-
-
0
-
0
Dividends paid
-
-
-
-1,075
-1,075
Balance at 30 Jun 2023
1,717
24
20,104
-
21,845
1
2
11
Glossary
The following definitions apply for ratios and key
figures.
Common equity tier 1 capital ratio
Common equity tier 1 capital ratio is calculated as common
equity tier 1 capital as a percentage of risk exposure amount.
Cost/income ratio
Total operating expenses divided by total operating income.
Lending growth
The change in loans and receivables at nominal value during
the period divided by loans and receivables at nominal value
beginning of the period.
Leverage ratio
The leverage ratio is the institution’s capital as tier 1 capital
net after deductions divided by that institution’s total leverage
ratio exposure and expressed as a percentage.
Loans/equity ratio
Loans and receivables at fair value divided by equity end of
the period.
Operating income
Total of net interest and fee income, value adjustments, other
operating income and profit from equity investment in
associated undertaking.
Operating expenses
Total of staff and administrative expenses and depreciation.
Own funds
Own funds include the sum of the tier 1 capital and the
supplementary capital consisting of subordinated loans, after
deduction of the potential deduction for expected shortfall and
other items.
Return on equity
Net profit for the period as a percentage of average equity for
the period. Average equity is including net profit for the period
and dividend until paid.
Risk exposure amount (REA)
Total assets and off-balance sheet items valued on the basis
of the credit and market risks, as well as operational risks in
accordance with regulations governing capital adequacy,
excluding carrying amount of shares which have been
deducted from the capital base and intangible assets.
Tier 1 capital
The tier 1 capital of an institution consists of the sum of the
common equity tier 1 capital and additional tier 1 capital of the
institution. Common equity tier 1 capital includes
shareholders’ equity excluding proposed dividend, deferred
tax assets and the full expected shortfall deduction (the
negative difference between expected losses and provisions).
Tier 1 capital ratio
Tier 1 capital as a percentage of risk exposure amount.
Total capital ratio
Own funds as a percentage of risk exposure amount.
Write-down ratio
Impairment losses on loans and receivables during the period
as a percentage of the closing balance of loans and
receivables before impairment losses on loans and
receivables.
12
Note 1
Basis for presentation
The interim report of Nordea Kredit is prepared in accordance with the requirements of the law, including the Danish Financial
Business Act and the Danish Financial Supervisory Authority’s Executive Order on Financial Reports for Credit Institutions and
Investment Firms etc.
The accounting policies and methods of computation are the same as for the annual report for 2023. For more information see
Note 1 in the annual report for 2023.
All figures are rounded to the nearest million Danish kroner (DKK), unless otherwise specified. The totals stated are calculated
on the basis of actual figures prior to rounding. Therefore the sum of individual figures and the stated totals may differ slightly.
Figures rounded to zero are reported as 0. If a figure is zero it is reported as “-”.
The financial statements have not been reviewed or audited.
Note 2
Net interest income
DKKm
Jan-Jun
2024
Jan-Jun
2023
Full year
2023
Interest income
Receivables from credit institutions and central banks
586
434
1,007
Loans and receivables at fair value
4,815
3,888
8,560
Administration margins
1,645
1,727
3,412
Other interest income
4
4
8
Total interest income
7,050
6,053
12,987
Interest expenses
Debt to credit institutions and central banks
-160
-155
-316
Bonds in issue at fair value
-4,816
-3,882
-8,539
Subordinated debt
-49
-40
-89
Total interest expenses
-5,025
-4,077
-8,944
Net interest income
2,025
1,976
4,043
Note 3
Value adjustments
DKKm
Jan-Jun
2024
Jan-Jun
2023
Full year
2023
Mortgage loans
1,362
3,528
20,290
Bonds
-
-
0
Foreign exchange gains/losses
0
0
0
Interest rate derivatives
-4
-2
-3
Bonds in issue
1
-1,364
-3,540
-20,318
Total
-6
-14
-30
1
13
Note 4
Impairment losses on loans and receivables
DKKm
Jan-Jun
2024
Jan-Jun
2023
Full year
2023
Stage 1
New and increased impairment charges
-17
-3
-5
Reversals of impairment charges
2
2
3
Impairment losses on loans and receivables, non-credit impaired
-15
-1
-2
Stage 2
New and increased impairment charges
-85
-31
-160
Reversals of impairment charges
86
31
155
Impairment losses on loans and receivables, non-credit impaired
1
0
-4
Stage 3, credit impaired
Realised loan losses
-14
-9
-18
Decrease in impairment charges to cover realised loan losses
12
7
13
Recoveries on previous realised loan losses
1
2
3
New and increased impairment charges
-73
-30
-51
Reversals of impairment charges
15
36
40
Impairment losses on loans and receivables, credit impaired
-60
5
-13
Impairment losses on loans and receivables
-74
4
-19
Note 5
Loans and receivables at fair value
DKKm
30 Jun 2024
30 Dec 2023
30 Jun 2023
Mortgage loans, nominal value
Value at beginning of period
421,553
434,277
434,277
New loans (gross new lending)
19,071
51,765
26,522
Foreign exchange revaluations
2
7
5
Redemptions and prepayments
-20,695
-56,047
-28,897
Net new lending for the period
-1,623
-4,275
-2,370
Scheduled principal payments
-4,304
-8,449
-4,187
Mortgage loan portfolio at end of period
415,626
421,553
427,719
Mortgage loans, fair value
Nominal value
415,626
421,553
427,719
Adjustment for interest rate risk etc.
-30,430
-30,463
-45,741
Adjustment for credit risk (see below)
-581
-522
-508
Mortgage loan portfolio
384,614
390,568
381,470
Mortgage arrears
101
101
81
Loans and receivables at fair value
384,715
390,669
381,551
Movements of allowance account for credit risk value changes
DKKm
Stage 1
1, 2
Stage 2
2
Stage 3
2
Total
Balance at 1 January 2024
72
227
223
522
Transfer between stages
0
8
17
25
Changes due to changes in credit risk (net)
35
99
45
179
Changes due to repayments
-20
-108
-5
-133
Write-off through decrease in allowance account
-
-
-12
-12
Balance at 30 June 2024
87
226
268
581
DKKm
Stage 1
1, 2
Stage 2
2
Stage 3
2
Total
Balance at 1 January 2023
70
223
228
520
Transfer between stages
0
11
16
28
Changes due to changes in credit risk (net)
3
8
7
18
Changes due to repayments
-1
-15
-14
-30
Write-off through decrease in allowance account
-
-
-13
-13
Other changes
-
-
0
0
Balance at 31 December 2023
72
227
223
522
DKKm
Stage 1
1
Stage 2
Stage 3
Total
Balance at 1 January 2023
70
223
228
520
Transfer between stages
0
3
5
8
Changes due to changes in credit risk (net)
2
4
-4
2
Changes due to repayments
0
-8
-8
-17
Write-off through decrease in allowance account
-
-
-7
-7
Balance at 30 June 2023
71
222
214
508
1
2
14
Note 5
Forward-looking information
Forward-looking information is used for both assessing significant increases in credit risk and calculating expected credit losses.
Nordea Kredit uses three macroeconomic scenarios: a baseline scenario, a favourable scenario and an adverse scenario. For
the first half of 2024, the scenarios were weighted into the final expected credit losses (ECL) as follows: baseline 50%, adverse
40% and favourable 10% (baseline 50%, adverse 40% and favourable 10% at the end 2023). The weight of the adverse
scenario was kept at an elevated level, reflecting continued uncertainty about the macroeconomic outlook.
The macroeconomic scenarios are based on the Oxford Economics Model. The forecast is a combination of modelling and
expert judgement, subject to thorough checks and quality control processes. The model has been built to give a good
description of the historical relationships between economic variables and to capture the key linkages between those variables.
The forecast period in the model is ten years. For periods beyond, a long-term average is used in the ECL calculations.
The macroeconomic scenarios reflect Nordea’s view of how the Nordic economies might develop in light of the conflict in the
Middle East and the war in Ukraine. This includes consideration of continued high inflation, reinforced by a renewed surge in
energy prices, and how high interest rates impact financial markets and economic activity. When developing the scenarios and
determining the relative weighting between them, Nordea took into account projections made by the central bank and Nordea
Research.
The baseline scenario foresees soft landings for the Danish economy and slightly higher unemployment in the coming years as
the pass-through of higher rates and elevated inflation continue to weigh on economic activity. In 2024 relatively high growth is
expected driven by the pharmaceutical sector and a reopening of gas extraction from the North Sea. A modest recovery in
home prices is expected in 2024 and beyond supported by rising household purchasing power. The risks around the baseline
forecast are tilted to the downside.
Nordea’s two alternative macroeconomic scenarios cover a range of plausible risk factors which may cause growth to deviate
from the baseline scenario. Persistent and high inflation, reinforced by higher energy prices, may lead central banks to adopt a
higher for longer strategy, triggering a deeper recession due to falling private consumption and investments. In addition, home
prices may see a decline due to higher interest rates, a squeeze in household purchasing power and weak confidence.
Normalising inflation and lower interest rates, on the other hand, may lead to a stronger recovery than assumed in the baseline
scenario.
The model adjustments to model-based provisions amounted to DKK 311m, at the end of the first half of 2024. The
management judgement covers expected credit losses not yet covered by the impairment model in stage 1, 2 and 3 as well as
expected losses on loans in stage 1 covering rating migration not yet identified in the rating.
Scenarios
2024
2025
2026
Probability weight
Favourable scenario
GDP growth, %
3.0
2.2
1.7
10%
Unemployment, %
2.8
2.6
2.5
Change in household consumption, %
1.8
1.5
1.4
Home prices, %
4.5
2.8
2.9
Baseline scenario
GDP growth, %
2.4
1.4
1.3
50%
Unemployment, %
3.0
3.1
3.1
Change in household consumption, %
1.6
1.1
1.0
Home prices, %
3.7
1.6
2.4
Adverse scenario
GDP growth, %
0.7
-0.6
1.1
40%
Unemployment, %
3.6
4.7
4.7
Change in household consumption, %
1.2
0.4
0.5
Home prices, %
0.5
-3.7
0.8
15
Note 6
Capital adequacy
Summary of items included in own funds
DKKm
30 June 2024
1
31 Dec 2023
30 Jun 2023
1
Calculation of own funds
Equity
21,207
22,356
21,206
Proposed/actual dividend
-
-1,149
-
Common equity tier 1 capital before regulatory adjustments
21,207
21,207
21,206
IRB provisions shortfall (-)
-278
-280
-259
Other items, net
-254
-273
-275
Total regulatory adjustments to common equity tier 1 capital
-531
-553
-534
Common equity tier 1 capital (net after deduction)
20,676
20,654
20,672
Tier 1 capital (net after deduction)
20,676
20,654
20,672
Tier 2 capital before regulatory adjustments
1,550
1,550
1,550
IRB provisions excess (+)
-
3
-
Total regulatory adjustments to tier 2 capital
-
3
-
Tier 2 capital
1,550
1,553
1,550
Own funds (net after deduction)
22,226
22,206
22,222
1
Minimum capital requirement and risk exposure amount (REA)
30 Jun
30 Jun
31 Dec
31 Dec
30 Jun
30 Jun
2024
2024
2023
2023
2023
2023
DKKm
Minimum
capital
requirement
Minimum
capital
requirement
Minimum
capital
requirement
Credit risk
5,367
67,084
5,439
67,990
5,417
67,699
56
701
1
16
73
915
IRB
4,844
60,556
4,950
61,873
4,878
60,976
- corporate
1,810
22,622
1,870
23,376
1,834
22,921
1,810
22,622
1,870
23,376
1,834
22,921
- retail
3,006
37,576
3,055
38,181
3,020
37,750
2,977
37,209
3,026
37,821
2,980
37,254
29
367
29
361
40
496
- other
29
358
25
315
24
305
Standardised
522
6,528
489
6,117
539
6,723
- central governments or central banks
1
6
1
6
1
7
- institutions
515
6,434
482
6,019
530
6,623
- secured by mortgages on immovable properties
5
67
6
70
6
70
- equity
2
21
2
22
2
23
Operational risk
373
4,658
352
4,400
352
4,400
Standardised
373
4,658
352
4,400
352
4,400
Additional risk exposure amount related to Swedish RW
floor due to Article 458 CRR
2
27
2
30
2
26
Total
5,741
71,769
5,794
72,419
5,771
72,125
16
Note 6
Capital adequacy, continued
Minimum capital requirement, Pillar 2 requirement and capital buffers
Capital buffers
30 Jun 2024 (%)
capital
require-
ment
require-
ment
2
CCoB
CCyB
O-SII
SRB
Capital
buffers
total
1
Total
Common equity tier 1 capital
4.5
1.5
2.5
2.5
1.5
-
6.5
12.5
Tier 1 capital
6.0
2.0
2.5
2.5
1.5
-
6.5
14.5
Own funds
8.0
2.6
2.5
2.5
1.5
-
6.5
17.1
30 Jun 2024 (DKKm)
Common equity tier 1 capital
3,230
1,060
1,794
1,787
1,077
-
4,658
8,947
Tier 1 capital
4,306
1,414
1,794
1,787
1,077
-
4,658
10,377
Own funds
5,741
1,885
1,794
1,787
1,077
-
4,658
12,284
1
2
30 Jun
31 Dec
30 Jun
Common equity tier 1 available to meet capital buffers (percentage points of REA)
2024
2023
2023
Common equity tier 1 capital
22.8
22.5
22.7
30 Jun
31 Dec
30 Jun
Capital ratios (%)
2024
2023
2023
Common equity tier 1 capital ratio
28.8
28.5
28.7
Tier 1 capital ratio
28.8
28.5
28.7
Total capital ratio
31.0
30.7
30.8
30 Jun
31 Dec
30 Jun
Leverage ratio
3
2024
2023
2023
Tier 1 capital, DKKm
20,676
20,654
20,672
Leverage ratio exposure, DKKm
422,335
429,910
427,014
Leverage ratio, %
4.9
4.8
4.8
3
Note 7
Nordea Kredit’s main risk exposure is credit risk. Nordea Kredit only assumes limited market risks, liquidity risks and
operational risks.
See the risk and liquidity management note in the annual report for 2023 for further information on Nordea Kredit’s
management of risks.
There are significant risks related to the macroeconomic environment due to geopolitical developments and broader
inflationary pressures. Reduced consumer spending and cost increases may particularly impact small and medium-sized
enterprises in certain industries. Depending on future developments, there may be increased credit risk in Nordea Kredit’s
portfolio. Potential future credit risks are addressed in Note 5.
Nordea Kredit is not involved in legal proceedings or disputes which are considered likely to have any significant adverse
effect on Nordea Kredit or its financial position.
Note 8
The Danish Financial Supervisory Authority's ratio system
Jan-Jun
2024
Jan-Jun
2023
Full year
2023
Total capital ratio
31.0
30.8
30.7
Tier 1 capital ratio
28.8
28.7
28.5
Pre-tax return on equity, %
2.6
3.9
6.9
Post-tax return on equity, %
1.9
2.9
5.1
Income/cost ratio
1.6
2.2
1.9
Foreign exchange exposure as % of tier 1 capital
1.0
0.9
1.0
Loans/equity ratio
17.8
17.5
17.5
Lending growth for the period, %
-1.4
-1.5
-2.9
Impairment ratio for the period
0.0
0.0
0.0
Return on assets, %
0.1
0.2
0.3
The key figures have been computed in accordance with the Danish Financial Supervisory Authority’s definitions, see the
Executive Order on Financial Reports for Credit Institutions and Investment Firms etc.
17
Statement by the Board of Directors and the
Executive Management
The Board of Directors and the Executive Management have considered and adopted the interim report of Nordea Kredit
Realkreditaktieselskab for the half-year ending 30 June 2024.
The interim report has been prepared in accordance with the requirements of the law, including the Danish Financial
Business Act and the Danish Financial Supervisory Authority’s Executive Order on Financial Reports for Credit Institutions
and Investment Firms etc.
It is our opinion that the financial statements give a true and fair view of the company’s financial position at 30 June 2024
and of the results of the company’s operations for the half-year ending 30 June 2024.
Further, in our opinion, the Management’s report provides a fair review of the development in the company’s operations and
financial matters, the results of the company’s operations and financial position and describes the material risks and
uncertainties affecting the company.
Copenhagen, 30 August 2024
Board of Directors
Mads Skovlund Pedersen Anne Rømer Anders Frank-Læssøe
(Chair) (Vice Chair)
Anders Holkmann Olsen Anita Ina Nielsen Helene Bløcher
Peder Birkebæk Bach Thomas Vedel Kristensen Tina Helen Sandvik
Executive Management
Morten Boni Claus H. Greve
(Chief Executive Officer) (Deputy Chief Executive Officer)