Translation: Original published in Finnish on 4/22/2026 at 7:20 pm EEST.

Nordea's operational development in Q1 continued as anticipated. The macro concerns we highlighted in our preview comment are not yet visible in the bank's customer base, and demand has developed well also at the beginning of Q2. In addition, the rise in interest rates provides support for earnings development in our forecasts. We revise our target price to EUR 16.5 (was EUR 16.0) and reiterate our Accumulate recommendation.

The Q1 report was in line with expectations regarding operational development

Nordea’s result in Q1 developed largely in line with our expectations. Net interest income decreased year-on-year due to lower interest rates, but healthy growth in the credit portfolio offset some of this impact. Net fee and commission income grew significantly from the comparison period, driven by fee income from both asset management and banking operations. However, asset management AUM decreased by ~1% from the previous quarter due to negative value changes. Net subscriptions for customer assets generating recurring fee income were positive. Cost development remained moderate, and actual loan losses also remained quite modest. However, the company released the remainder of its management judgment buffer, which pushed Q1 earnings clearly above our forecast. Nordea also reiterated its profitability guidance for 2026 and expects its return on equity to exceed 15%.

Profitability outlook is strong

We slightly raised our credit portfolio growth forecast for the current year and revised down our loan loss estimates after the company already released the management judgment buffer in Q1. In other respects, the forecast changes were minor. Overall, our earnings forecasts for the next few years rose by 1–2%.

We expect Nordea's comparable earnings to remain broadly flat in 2026 and then turn to steady growth due to increasing income and good cost control. We estimate that the bottom of the net interest margin on a quarterly basis is already behind, so credit portfolio growth and higher interest rates should turn net interest income to growth from Q2 onwards. Growth in fee and commission income is primarily driven by asset management, which we expect will continue to grow faster than other banking activities. We expect loan losses to remain moderate and approximately at the normal level estimated by the company (0.10% of the credit portfolio annually).

Our earnings and profitability estimates are below the company's new targets, which we find very ambitious (~2€ EPS and significantly over 15% return on equity by 2030). 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).

Valuation remains attractive

Our forecasts of a 15–16% return on equity and a 9.5% required return lead to a P/B ratio of 1.8–1.9x for Nordea. Applied to the bank's current equity capital (adjusted for dividend distribution), this implies a justified share price of EUR 16–17. 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 current share price, we consider the expected return attractive. In our projections, the expected annual return for the coming years is a solid 10%, consisting of profit distribution (~8%) and a moderate increase in the share price (~3%). Although Nordea is already valued at a premium to its peer group, we consider this justified, given the better profitability outlook.