The biggest bank in the Nordics, said it would review its financial targets in coming months, as the region’s lenders struggle with weak growth at home and rising compliance costs from money laundering scandals overseas.
Nordic banks have reported weak quarterly results across the board against the backdrop of low interest rates and tough competition.
Danish peer Danske Bank’s (DANSKE.CO) quarterly pre-tax profit also missed expectations on Thursday, hurt by low rates and higher costs associated with compliance following a money-laundering scandal at its Estonian bank.
It reported a 15.4% rise in costs from a year earlier, which it said was mainly down to investing in more staff and technology to deal with the Estonia case.
Nordea’s net profit fell 11% from a year earlier to 681 million euros ($765 million) in its second quarter ended June 30, missing analysts’ average expectation of 739 million euros in a poll.
Net interest income, the bank’s most important income line, fell 4% to 1.07 billion euros due to fierce competition in mortgages and household loans across the region.
Jefferies analysts said the second quarter result “suggests downgrades to consensus led by net interest income”.
Nordea shares were down 6.6% at 1003 GMT, pulling other Nordic banks lower, with SEB, Swedbank (SWEDa.ST) and Handelsbanken (SHBa.ST) all down more than 1%. Danske shares dipped 0.9%, having already fallen sharply after the bank gave preliminary data on its earnings on July 8.
“As our performance is not satisfactory, further actions are needed to strengthen the financial results,” Nordea Chief Executive Officer Casper von Koskull said in a statement, without elaborating.
The bank said it planned to present new financial targets, including the capital and dividend policies, after third-quarter results.