Nordic Banks Q1 2024: Good Results QOQ and Lower Cost of Risk But Signs of Deterioration in Swedish CRE Exposures

Morningstar DBRS has released a commentary discussing the Q1 2024 results on Nordic banks (Nordea, Danske, Swedbank and SEB). Summary highlights from the commentary include:

-- Overall higher financial performance QOQ driven by higher non-core revenues, lower operating costs and lower LLPs.
-- Asset quality unstable with large deterioration in the Swedish CRE exposures. NPL ratios remain best in class due to the very low starting point.
-- Despite the increase NPLs in the Swedish CRE exposures, overall CRE sector metrics have hold up for another quarter.

“Looking into coming quarters, we expect different performance levels depending on the jurisdiction as balance sheet sensitivities and market dynamics are different in every region” notes Maria Parra, Vice President, Global FIG at DBRS Morningstar. “Nevertheless, we anticipate overall solid profitability on the basis of stable customer spreads, larger credit lending growth, strict cost control and higher but well-contained cost of risk”.