CEO blog: Staying the course, standing by our customers

Frank Vang-Jensen, President and Chief Executive Officer.
20-07-17 12:23 | About Nordea | Frank Vang-Jensen

The impacts of the COVID-19 pandemic became increasingly evident during the second quarter and the pandemic continues to severely affect individuals, businesses and societies. It is good to see that the Nordic countries are taking gradual steps to reopen societies, but it is still too early to conclude on the full long-term economic consequences of the crisis.

For us at Nordea, these past few months have shown what is truly at the core of our business – supporting our customers through good times as well as challenging times.

The challenging societal and economic conditions have tested the resilience of our business model. And we came out well of that test. Our high activity level kept revenues largely unchanged. We saw increasing customer volumes for lending and also experienced strong deposit growth. Net interest income increased by 2%, supported by sound volume growth in all markets. Net fair value recovered and was up 12%. But naturally, the lockdowns of societies and the market turbulence had a negative impact, mainly affecting our fee income and loan loss provisions.

During the quarter, we also assessed the longer-term economic impact of the crisis. As we communicated in April, we have now updated our macroeconomic scenarios, including our longer-term view of the expected impact of the economic downturn. Furthermore, we have completed a thorough review of our loan book. Based on the updated assumptions and our analysis, we project that total net loan losses for the full year 2020 will be below 1 billion euro.

All in all, our conclusion is that the underlying credit quality of our loan book remains strong. Our underlying net loan losses were EUR 310m. On top of that, we made additional management judgement allowances of EUR 388m. Including our earlier actions, we now have a total buffer of EUR 650m to cover estimated future loan losses and IFRS 9 model improvements.

We entered the COVID-19 crisis with a strong financial position, which we have maintained. As a bank, we have a clear direction going forward. We remain committed to our plan, financial targets and key priorities: optimise operational efficiency, drive income growth initiatives and create great customer experiences.

Our financial strength and capabilities give us the tools to support our customers in multiple ways. But at the end of the day, it is people who make the difference.

Thanks to the dedication and commitment of our employees, we have stayed true to our purpose: enabling dreams and everyday aspirations for a greater good. Now with societies step by step opening up, we will reach out to our customers and continue to show that we are their strong and personal financial partner.

I wish everyone a safe summer

/Frank Vang-Jensen, President and Group CEO

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