Increasing revenues while keeping a lid on costs is key to achieving the turnaround plan Nordea unveiled 18 months ago which targets a 10% return-on-equity and 50% cost-to-income ratio by the end of 2022.
Nordea also repeated its cost target for the year despite increased expenses for the first quarter as the bank was hit by adverse exchange rates.
“Our performance improved on the back of high levels of business and customer activity, and results in the quarter were strong,” Chief Executive Frank Vang-Jensen said in a statement.
First-quarter net profit rose to 788 million euros ($956 million) from 460 million euros a year ago, beating the mean forecast of 632 million euros seen by analysts according to Refinitiv data.
Loan loss provisions, a figure closely watched in the wake of the economic slump due to the pandemic, fell to 52 million euros from a year-ago 155 million euros, much better than a forecast of 116 million euros seen by analysts.
Fee and commission income rose to 827 million euros from 765 million euros a year ago, just beating the 802 million euros expected by analysts, as the bank grew assets under management by 33% to an all-time high of 372 billion euros.
Interest income, which includes income from mortgages, increased 9% to 1.21 million euros from 1.11 billion a year ago, just over the 1.19 billion seen by analysts.
Mortgage lending increased by 6% in the Nordic region, the bank said, amid a booming property market.
Total expenses increased to 1.32 billion from 1.25 billion a year-ago. Nordea repeated its cost target of 4.6 billion for the year, but said the figure was becoming demanding due to a boom in business activity.
The bank said it saw opportunities for share buy-backs as a tool to distribute excess capital while authorities continue to restrict dividends during the pandemic. $1 = 0.8247 euros Reporting by Colm Fulton; Editing by Niklas Pollard and Edmund Blair