Translation: Original published in Finnish on 3/29/2026 at 3:42 pm EET.

Although increased uncertainty has once again clouded the economic outlook, we do not currently expect this to significantly harm Nordea, as the anticipated rise in interest rates supports net interest income. Against our forecasts, the stock's expected return is attractive, so we reiterate our Accumulate recommendation. At the same time, we lower our target price to EUR 16.0 per share (was EUR 17.5), mainly due to the dividend payout. 

Market situation has contradictory effects

Uncertainty regarding inflation is again high after a relatively stable period, which has been reflected in a sharp rise in market interest rates. We have therefore raised our net interest income forecasts to reflect this. On the other hand, we estimate that the growth of the credit portfolio will be slightly more moderate this year than our previous estimate, which somewhat dampened this effect. We also slightly revised upwards our loan loss estimates, as rising oil prices and interest rates are expected to negatively impact the operating environment of the bank's customers.

At the same time, we slightly lowered our AUM growth forecast for early 2026, as asset values have mostly been under pressure in recent weeks, and we expect uncertainty to slow new sales in the short term. Overall, our earnings forecasts for the coming years remained fairly unchanged, which reflects our assessment of the stability of the bank's earnings development.

Earnings growth outlook is still stable

We expect Nordea's results to continue declining at a 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. The rise in market interest rates should also provide additional support for net interest income. 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 moderate.

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

Valuation is 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 15.1–16.9. In light of the decreased share price, we consider the return potential attractive. In our calculations, the annual return expectation for the coming years is 12–15%, consisting of profit distribution (8–9%) and share price appreciation (4–5%). Furthermore, it is noteworthy that Nordea is already priced at multiples comparable to its peer group, which we do not consider justified given the company's better profitability outlook. Thus, in our opinion, the recent share price decline has punished Nordea unduly.