Growth opportunities improving with Norway in focus

Research evidence excerpt

Growth opportunities improving with Norway in focus

trong: 2Q saw strong corporate lending

volumes for both Nordea and its Nordic peers. Nordea commented that the 'pie is getting

bigger' rather than market share gains. The strength in corporates is broad based across the

countries with management seeing the growth being driven by the theme of resilience - with

growth in sectors such as defence, energy, security, technology and engineering. An example

of this is Nordea's own Empower Europe fund which has attracted EUR 870m of net inflows

and one of its strongest fund launches in recent years (LINK). Going into 2H26, management

highlighted a strong pipeline and elevated activity levels, supporting confidence that corporate

lending growth can remain robust with management seeing more room for Nordic corporates

to grow here.

Capital allocation - profitable growth remains the priority : Currently profitable growth offers

a better return on capital than buybacks. With the stock trading at c2x tangible book and

generating c16% ROEs capital is being prioritised towards organic growth and potential bolt-

on M&A opportunities. Bolt-ons have historically been in the range of 20-40bp of capital or

two quarters of net capital generation. The CFO commented that they are looking at more

opportunities now than they were a year ago with pricing in a much better place but as the

CEO said on the earnings call right now they have 'nothing to share'. Buybacks will continue

to be a tool to distribute excess capital.

NII - lending pressure driven by retail with a constructive outlook: Nordea remain

constructive on the NII outlook. While retail mortgage pricing pressure persists in Sweden,

Norway and Denmark, corporate margins remain stable and management expect much of the