Nordea Earnings: Closed Out a Strong Year Despite Its Above-Peer Cost/Income Ratio

Nordea reported fourth-quarter 2023 operating profit of EUR 1.415 billion, closing out a strong year for the Nordic universal bank. Income generation was good as further widening deposit margins more than offset lower volumes and lending margins across the group. Net fee and commission income also performed well, supported by a strong quarter in brokerage and advisory on the back of higher customer activity. Higher intangible write-offs due to a change in the accounting treatment of development costs and the absorption of inflation pushing up wage costs did drive the cost/income ratio up to 51% versus 44% a year ago, which is higher than Nordic peers we cover. That said, profitability was still good at a return on equity of 14.1%. We maintain our SEK 152 per-share fair value estimate and no moat rating.