Shares of Nordea, the Nordic bank, tumbled to the bottom of the Stoxx Europe 600 index following their latest earnings report. At 0940 GMT, shares in the Helsinki-listed bank were down 4.8% at EUR10.79.
Nordea reported a fourth-quarter net profit attributable to shareholders of 1.11 billion euros ($1.19 billion), which fell short of analysts’ expectations of EUR1.2 billion. The decrease in profit was primarily due to weaker trading income.
In a note, UBS analyst Johan Ekblom described the numbers as “somewhat disappointing,” explaining that the majority of the miss can be attributed to trading and should not be extrapolated.
The dividend payout for the quarter was also slightly lower than expected at EUR0.92, compared with the consensus estimate of EUR0.96. This was due to the earnings miss in the fourth quarter and a payout ratio of 66%, which exceeded the bank’s target range of 60%-70%, according to Ekblom.
Looking ahead, Nordea announced that it has already paid out EUR6 billion in dividends and EUR4 billion in buybacks for 2022-23. Additionally, they have allocated a further EUR7 billion to EUR8 billion for dividends and buybacks in the coming years.
Barclays analysts Namita Samtani and Saif Shaikh noted that consensus estimates were anticipating a total figure of EUR9 billion. This implies a potential downside risk of EUR1.5 billion to consensus numbers, equivalent to approximately 4% of market capitalization.
Although Nordea’s latest earnings report disappointed investors, it is important to note that the majority of the decline can be attributed to weaker trading income. The bank’s dividend payout was slightly lower than expected due to the earnings miss in Q4 and a higher-than-targeted payout ratio. Looking ahead, Nordea has outlined significant dividends and buybacks for the coming years, providing potential opportunities for recovery.