The uncertainty following Russia’s invasion of Ukraine has seemingly brought the European markets to their knees with raging energy prices and high inflation. Despite such a background premier lenders in the European states have been solid performers when such a backdrop is taken into account.
Nordea Hypotek AB (OTCPK: NRDBY), a financial firm that offers corporate and private banking, mortgage, asset management, insurance, and loans service released its half-year results for 2022, on August 29, delivering a strong quarter overall.
The operating profit decreased by 22.3% compared to the same period last year, mostly affected by net interest income deterioration, net results from financial items at fair value declined, increased operating expenses, and resolution fee increase.
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On the other hand, lending to the public increased by 3.5%, similarly lending to the retail market rose by 3.5% as well as lending to legal entities increased by 3.1%. Further, net loan losses amounted to SEK -29 million (~$2.72 million) for the period attributable to increased model-based loan provisions.
Finally, operating expenses at the end of the period were SEK -2,472 million (~$0.23 million), mostly attributable to higher distribution costs and the new bank tax introduced in January 2022.
Strong quarter in a challenging environment
As the firm operates on the Swedish market and grants loans, primarily of a long-term nature, to households, sole business proprietors, municipalities, and other legal entities, it seems to be positioned well for the rate hiking environment with its formidable deposit position.
Frank Vang-Jensen the president and CEO of the group, elaborated on the results in a Nordea interview, stating the strong points.
“It’s a strong quarter! We have continued to deliver growth across the board, and that goes with both for households and for corporates. Our profit is on a very high level and our return on equity is also on a very good level. So all in all a strong quarter from our side in a very challenging environment.”
Overall, the bank sees the transition from the expansive monetary policy to the now more restrictive one as a challenge that needs to be taken head-on, to create a solid foundation for future growth.
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