Translation: Original published in Finnish on 1/30/2026 at 9:09 am EET.

Nordea's steady earnings development continued in Q4. There was strong development in both new sales in asset management and demand for lending. However, after the rather unsurprising earnings report, the changes in estimates remained moderate. We reiterate our EUR 17.5 target price, but following the slight decline in the share price, we raise our recommendation back to Accumulate (was Reduce).

Q4 result offered no surprises

Nordea’s result in Q4 developed largely in line with our expectations. Net interest income decreased by approximately 5% year-on-year due to lower interest rates, though growth in the loan portfolio offset some of this impact. Net fee and commission income continued to develop excellently, driven by asset management, and assets under management grew nearly 5% from the previous quarter. Costs continued to develop moderately, and loan losses also remained fairly modest. Overall, Q4 EBIT exceeded our forecast by a narrow margin of approximately 3%. Earnings per share were EUR 0.34, and return on equity was 14.5%. Nordea proposed a dividend of EUR 0.96 per share, which is in line with our forecast. Additionally, the company will distribute 50% of its H1/2026 net profit as dividends in the summer.

Meanwhile, guidance for 2026 indicates stable development of profitability, as Nordea expects its return on equity to exceed 15%.

The bottom of net interest income is at hand

We have made only marginal changes to our forecasts, and overall, our earnings expectations for the coming years have remained virtually unchanged.

We expect Nordea's results to continue declining at a very moderate rate in 2026 before returning to steady growth, driven by rising returns and effective cost control. We anticipate that the interest margin will continue to decline for a few quarters. However, this effect should be offset by credit portfolio growth by the end of the first half of 2026. Consequently, in addition to fee and commission income, we also expect net interest income to gradually start supporting earnings development. Growth in fee and commission income is primarily driven by asset management, which we expect will continue to grow faster than other banking activities. Additionally, the reversal of existing loan loss provisions will clearly support the results in our forecasts in 2026 as well. Even when adjusted for this, we expect loan losses to remain very moderate.

Our earnings and profitability estimates are below the company's new targets, which we find very ambitious. However, we expect Nordea's profitability to remain above 15% and gradually improve, which we consider an excellent level in the competitive banking sector. We estimate that shareholder distributions will remain generous, as the bank supplements its dividend distributions with regular share buyback programs (total shareholder distribution ~85% of the result).

Expected return once again sufficient

Based on our forecasts of a 15–16% return on equity and a required return of 9.5%, we have approved a P/B ratio of 1.7–2.0x for Nordea, which, given the bank's current equity capital, justifies a share price of EUR 16.3–18.9. Our target price is around the midpoint of the range because our base-case scenario estimates require fairly strong development from the company and the market. In light of the slight decline in the share price, we consider the expected return sufficient for a positive recommendation. In our projections, the expected annual return for the coming years is 10–12%, consisting of profit distribution (7–8%) and a moderate increase in the share price (3–4%). Although Nordea is already valued at a premium to its peer group, we consider this justified, given the better profitability outlook.