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Nordea braces for challenging 2017 as Q4'16 profit rises YOY

Nordea Bank AB (publ) raised its dividend as it reported increases in profits for both the fourth quarter and full year 2016, which CEO Casper von Koskull described as an "eventful year" that saw the creation of a new legal structure amid continued negative rates and regulatory uncertainty.

"We also expect 2017 to be eventful, and we are well-prepared to deal with the challenges," the CEO said. The bank's board of directors proposed a dividend of 65 cents per share, up from 64 cents per share for 2015. The payout ratio was reduced to 70% from 71% a year earlier.

The bank reported fourth-quarter 2016 net profit of €1.10 billion, up from €848 million in the year-ago period. EPS for the quarter stood at 27 cents, compared to 21 cents a year earlier. The S&P Capital IQ consensus normalized EPS estimate for the quarter is 19 cents.

Net interest income for the quarter stood at approximately €1.21 billion, compared to €1.20 billion in the same period in 2015. Net fee and commission income rose to €867 million from €821 million.

Net loan losses for the period declined on a yearly basis to €129 million from €142 million.

For the full year 2016, net profit rose to €3.77 billion from €3.66 billion. ROE reached 12.3%, compared to 12.2% in 2015.

The bank's common equity Tier 1 capital ratio, excluding Basel I floor, was 18.4% as of Dec. 31, 2016, compared to 16.5% at 2015-end. Including Basel I floor, the CET1 ratio was 11.5% at the end of 2016, compared to 10.8% at the end of 2015.

Dividend payments are scheduled for March 27, with the record date set at March 20.