“In the first quarter of 2020, we have witnessed the global outbreak of COVID-19, which is affecting all of us. This pandemic has turned into a societal and economic crisis, which will have severe economic consequences and could lead to long-term structural changes in our societies.
We are encouraged that Nordic governments and authorities embraced the seriousness of this pandemic early through a variety of actions to limit the effects on society. Although we see early signs of some countries opening up, the duration and extent of the economic impact of COVID-19 remain highly uncertain, and it is too early to predict the shape of the recovery.
The actions we are taking are focused on doing all we can to support our customers, keeping our employees safe and ensuring business continuity. For example, we are providing instalment-free periods for which we have received more than 60,000 requests from our customers. In March alone, we had new credit requests for more than EUR 13bn from our corporate customers. Over 70% of our employees are currently working remotely which is enabling us to be fully operational during this crisis and maintain a high activity level, even with the temporary closure of branch offices in some of our home markets. I am proud of all the excellent work and extraordinary efforts by our employees to support our customers and societies in these difficult times.
Despite the challenging market conditions, we are following our plans to deliver our financial targets, and I am satisfied with the result this quarter. We posted a solid result with net interest income up 5% and net commission income up 4%, compared to the first quarter of 2019. Overall revenues decreased by 5%, due to net fair value being adversely affected by the recent turmoil in the financial markets. We are delivering on our cost plans, with costs declining 8%, leading to an unchanged cost to income ratio of 57%.
During the past few years, we have significantly de-risked our balance sheet, and we remain focused on the credit quality of our existing loan book and new business opportunities. Our portfolio is well diversified with low exposures to industries expected to be immediately affected by COVID-19. Net loan loss provisions amounted to EUR 154m in the quarter, of which EUR 120m was an additional management judgement to provide coverage for the likely near-term increase in loan losses. Nordea now has a total management judgement of EUR 327m taking the total amount of allowances to EUR 2.4bn. At this point, it is too early to conclude on the longer-term outlook for loan loss provisions. We will make further assessments in Q2, following updated macro assumptions.
Our recent investments in IT have allowed us to quickly ensure that employees can serve customers remotely, wherever their location. The intensity in customer interactions remains high. During the first weeks of the crisis, we held over 30% more corporate customer meetings than average, and we have doubled the level of remote meetings from 40% to 80%. Our digital capabilities enabled us to act as a strong and personal financial partner for our customers anywhere and anytime.
Our liquidity position is robust with a liquidity buffer of over EUR 100bn and a liquidity coverage ratio of 182%.
Despite this, we have chosen to participate in selected central bank liquidity facilities to ensure additional capacity to support our customers and their funding needs. We have also issued in the USD capital market as well as all domestic covered bond markets at competitive rates.
Common equity tier 1 (CET1) ratio was broadly stable at 16%. This strong capital position together with the reduction in macroprudential buffers by authorities leads to a total CET1 buffer above requirement of 5.8%-points, corresponding to EUR 8.8bn. This allows us to extend credit to meet corporate and household demand while also having the capacity to absorb potentially higher loan losses and credit migration. Return on equity was 7.1%.
In light of the COVID-19 pandemic, the Board of Directors of Nordea Bank Abp has decided to postpone the Annual General Meeting to 28 May 2020. The Board of Directors has further communicated that it intends to follow the recommendation adopted by the ECB and refrain from deciding on a dividend payment before 1 October 2020 subject to the Annual General Meeting’s authorisation.
In Personal Banking, we have seen continued growth in lending volumes with improving customer satisfaction. Compared to the first quarter of 2019, net interest income grew 1% and net commission income increased 2%. Costs decreased by 11%, leading to an improvement in the cost to income ratio from 56% to 54%.
In Business Banking, customer activity remained high with double-digit revenue growth in Norway and Sweden. Total lending volumes increased 5% in local currencies compared to the first quarter in 2019 with all revenue lines improving. Revenues increased by 12%, and costs decreased by 5%, leading to a 7-percentage points improvement in the cost to income ratio of 46%.
The re-positioning of Large Corporate & Institutions is progressing. Compared to the first quarter of 2019, economic capital was down EUR 500m, the number of staff down 12% and total costs decreased by 11%. Lending was up 14%, and despite a challenging net fair value result, total revenues were up 3%, leading to an improvement in the cost to income ratio from 63% to 52%.
Asset & Wealth Management was affected by the financial turmoil in the latter part of the quarter. Assets under management decreased by 14%, driven mainly by lower asset prices. The market turbulence also caused negative flow, which was partly offset by higher deposits. Compared to the first quarter of 2019, revenues increased by 2% while costs were down 14%, leading to a reduction in the cost to income ratio of 9-percentage points to 48%.
We remain committed to delivering on our financial targets in 2022. It is too early to conclude on the economic consequences of COVID-19, but we are ready to take mitigating steps over time. Our immediate priorities are clear; the continued support of our customers, the safety of our employees and ensuring business continuity during these extraordinary times.”
President and Group CEO
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