Nordic Banks Q2 2024: Core Profitability Slightly Weaker, but Results Solid Overall

Morningstar DBRS has released a commentary discussing the H1 2024 results on Nordic banks (Nordea, Danske, Swedbank, and SEB). Summary highlights from the commentary include:

-- Net interest income is starting to reduce, while expenses are increasing.
-- This is partly offset by strong fee income and releases of loan loss reserves at some banks. Profitability remains strong.
-- Asset quality is stable overall and for CRE specifically.

"As interest rates decline, we expect the banks' revenue performance to diverge more as a result of different balance sheet sensitivities in each Nordic market", said Sonja Forster, Senior Vice President from the Morningstar DBRS Global Financial Institutions team. "However, we expect all Nordic banks to remain solidly profitable, as a gradual erosion in margins is expected to be partly offset by moderate loan growth and healthy fee generation".