On March 18, 2025, Nordea’s Chief Financial Officer Ian Smith participated in a fireside chat with Morgan Stanley analyst Gulnara Saitkulova at Morgan Stanley’s 2025 European Financials Conference. The wide-ranging discussion covered several topics, including Nordea’s plans for its capital, opportunities for income growth, and cost development.
The conversation began with an acknowledgement of the increase in geopolitical instability around the world, which had led to a “seesaw in sentiment” in recent months. Despite the turbulence, Smith said Nordea remained committed to delivering its target of a return of equity of above 15% for full-year 2025, supported by continued good execution.
“Consistently, over the last three or four years, the strongest markets for us in terms of [mortgage] loan growth have been Sweden and Norway, and we expect that to continue to be the case,” Smith said, noting that Nordea’s market shares in these markets were at lower than in Denmark and Finland and thus offered ample room for growth.
Smith said the Nordic banking markets were fiercely competitive, with aggressive pricing by some peer banks. Nordea’s response would be to focus on customer experience: “The way you combat that threat is with first-class products and first-class customer service.”
On the corporate side, Smith said lending remained slow, with clients watching for signs of improving consumer confidence that could support domestic consumption. “That’ll be delivered by lower [interest] rates and, we hope, greater political stability. Our customers need to feel better about the world before making substantial investments in properties or other assets.”
At the same time, Smith said Nordic economies were open, export-oriented markets with trading partners across the EU. Businesses would therefore also be looking at broader bloc-wide economic developments and, in particular, Germany’s recovery.
How was the turbulent market environment affecting appetite for savings and investments? “Customers are now facing much more of a choice between deposit products and market-based investments, and are opting for those market-based investments,” Smith said. He highlighted the good year-on-year pick-up in Nordea’s fee income in the fourth quarter of 2024, but said that momentum had not carried over into the new year, as anticipated.
“Our expectation was for better levels of activity in 2025 given the return to economic growth. What we’re seeing is a slow start to the year. You can see that through the Dealogic data. In Europe, M&A, ECM (equity capital markets) and DCM (debt capital markets) are all down on last year.”
On capital distribution, Smith said that Nordea was the strongest dividend payer in the sector and would continue to use share buy-backs as a way to return excess capital to shareholders. “If we can’t find profitable uses for excess capital, we don’t plan to sit on it…You can expect that Nordea will continue to use buy-backs but smaller scale, a little more frequently.”
Asked about Nordea’s capital requirements, which are among the highest in Europe, Smith said they reflected how the bank was subject to several buffers set by the European Central Bank and the respective national financial supervisory authorities in each of its Nordic home markets.
“Nordea is objectively one of the most profitable and lower-risk banks in Europe, yet we’re subject to higher capital requirements.” Notwithstanding those very high capital requirements, Nordea was delivering strong returns, but Smith said the Group was “very keen seen to see a more holistic view of capital and capital requirements deployed across Europe…A level playing field is absolutely key and we’ll continue to push very hard for that."
On costs, Smith said Nordea had stepped up investment in technology and risk management over 2023 and 2024, with investment levels reaching a peak during the second half of last year. In 2025, costs are expected to grow by a modest 2% to 2.5%, which in practice would mean “relatively high cost growth in the first half of the year” before “a significant levelling off in the second half”.