Nordea Is a Nordic Universal Bank With a Narrow Moat

Nordea has found its bearing and is driving good returns for shareholders via dividends and share buybacks, after years of shedding assets. Management’s strategic repositioning has successfully addressed the declining income and slowing profitability of its recent past. Nordea now largely looks toward investments in private banking in Norway and Sweden and regaining momentum on mortgages to drive top-line growth. We are more enthusiastic about the former than the latter. Mortgage markets in the Nordics are becoming increasingly competitive by the day as challenger banks with different business models and funding structures undercut established players. Nordea has been on the receiving end of this, and we doubt it will be able to make easy inroads in this area without conceding on either volume or margins.