Large Nordic Banks H122 Results: Stable Profits With Cost of Risk Still Below Normalised Levels

DBRS Morningstar has released a commentary discussing the H1’22 results of the six large Nordic banks (Svenska Handelsbanken, Swedbank, SEB, Nordea, Danske Bank and Nordea). The Banks reported overall stable results in H1 2022 compared to the year before mostly driven by the still relatively low level of cost of risk.

Key highlights include:
• In H1 2022, the average Return-on-equity (ROE) of the Nordic Banks was 10.6%, a reduction from 11.3% in H1 2021.
• Net interest income (NII) increased on average by 10% YoY in H1 2022 reflecting strong lending growth as well as a positive impact from lending and deposit margins.
• The average CET1 ratio stood at 17.9% at end-H1 2022 which is lower than the 18.6% at end-2021 but still well above the minimum requirements.

“While the cost of risk remained generally below normalised levels, we note that the Nordic Banks maintained overall a cautious approach to provisioning. Post-model adjustments built up in 2020 have remained broadly unchanged in order to cover potential risks from the secondary effects of the deteriorating macroeconomic outlook. In addition, Nordic Banks have been able to maintain resilient asset quality metrics so far“, said Mario De Cicco, Vice President, Global Financial Institutions at DBRS Morningstar.