Nordea Reports Decent Second Quarter; We Raise Our FVE on Strong Savings Income Performance

Nordea reported a decent second quarter with an operating profit of EUR 1.3 billion, supported by small loan-loss reversals and stable income generation at group level. Net interest income increased 2% versus the prior quarter, driven primarily by a higher day count in the quarter, however. A slight positive contribution from volumes was offset by a touch weaker margins. Net fee and commission income has shown a great performance year to date, carried by savings and investment commission income. Compared with the previous quarter, this line item grew 6% to EUR 878 million, and is therefore well ahead of our previous assumptions. We have adjusted our medium forecast as a result of this performance, and in particular believe the good performance in asset management and savings products is sustainable. Our fair value estimate increases to SEK 93 from SEK 85 per share. Shares are slightly overvalued.