Translation: Original published in Finnish on 10/16/2026 at 9:00 am EEST.

Nordea’s Q3 was in line with our expectations, with both the loan book and assets under management continuing to grow. The earnings growth outlook is also good, supported by rising interest rates. We lower our target price to EUR 17.0 (from EUR 17.5), however, to reflect elevated regulatory risk.  Following the share price decline, we raise our recommendation to Accumulate (prev. Reduce), as dividends and earnings growth already offer a sufficient expected return.

Earnings development continued on its expected path

Nordea’s Q3 result was closely in line with our expectations. Net interest income grew quarter-on-quarter as anticipated, and lending demand remained robust. Total income rose 2% year-on-year, driven by growth in assets under management. Operating expenses and loan losses came in slightly below our expectations, lifting operating profit around 2% above our forecast. Alongside the report, Nordea reiterated its profitability guidance but paused share buybacks pending an upcoming update to its credit risk models.

Profitability outlook is strong

Our earnings forecast for the current year decreases, mainly because fair value changes came in weaker than we expected in Q3. For the coming years, we slightly lower our loan loss estimates on the improved economic outlook and raise our net interest income forecasts on the higher interest rate level. Overall, our earnings forecasts are broadly unchanged.  Our distribution forecasts fall, however, as we no longer expect share buybacks this year, and we do not see them resuming in earnest until 2028.

We expect Nordea’s comparable earnings to return to moderate growth in 2026, supported in particular by fee and commission income.  Beyond that, we forecast stable earnings growth (~5% annually on average), driven by rising income and good cost control.  We believe net interest income has already bottomed and will be supported by the higher rate level, while fee and commission income should continue to grow – driven primarily by asset management, which we expect to keep outpacing 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 sit below Nordea’s targets, which we view as ambitious (EPS of ~EUR 2 and return on equity well above 15% 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 expect shareholder distributions to remain generous (dividend payout of 65–70%), with share buybacks resuming no earlier than H2'27.

Expected return once again sufficient

Based on our forecast return on equity of 15–16% and a required return of 9.5%, we consider a P/B of 1.8–1.9x acceptable for Nordea, which, applied to the bank’s current equity, implies a share price of EUR 16.4–17.7. Our target price sits close to the midpoint of the range, as we view Nordea’s overall profitability outlook as strong despite the uncertainties. A more positive stance would require regulatory risks to ease (the credit risk model update and legal proceedings in Denmark). Following the share price decline on the day of the earnings release, however, the valuation (P/B 1.7x) is not demanding, and the expected return for the coming years (~10–12%) comprises dividends and share price appreciation driven by earnings growth. Relative to peers, the valuation is not stretched either, given Nordea’s superior profitability outlook – even though valuation levels across the banking sector have risen significantly.