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€1.3B one-off items push Nordea to Q3 loss

Finland-based Nordea Bank Abp booked a loss for the third quarter, driven by several one-off charges totaling €1.3 billion.

The bank reported third-quarter group net loss attributable to shareholders of €332 million, compared to a profit of €724 million a year ago. Nordea booked a loss per share of 8 cents for the period, compared to EPS of 18 cents a year earlier. Return on equity stood at negative 4.4%, compared to the year-ago 9.2%.

Net interest income amounted to €1.08 billion, down from €1.12 billion a year earlier, while net fee and commission income rose year over year to €756 million from €703 million.

Total operating expenses rose year over year to €2.18 billion from €1.14 billion. The €1.3 billion one-off hit comprises an impairment charge for IT intangibles of €735 million, a restructuring provision of €204 million, an additional loan loss provision of €282 million and Luminor Group AB-related sale expense of €75 million.

Depreciation, amortization and impairment charges of tangible and intangible assets widened on a yearly basis to €885 million from €87 million.

For the nine months ended Sept. 30, attributable profit came in at €766 million, down from the year-ago €2.57 billion. EPS for the period stood at 19 cents, down from 64 cents a year earlier.

The bank's common equity Tier 1 capital ratio stood at 15.4% at September-end, compared to 14.8% at the end of June and 20.3% at the end of September 2018.

Newly appointed CEO Frank Vang-Jensen said the bank now aims to achieve ROE of above 10% and a cost-to-income ratio of 50% in 2020. It also expects to reach a cost base of below €4.7 billion, with planned continued net cost reductions beyond 2020.

The CEO added that Nordea's new capital policy includes a dividend payout ratio of 60% to 70% beginning in 2020. For 2019, the bank targets a dividend of 40 cents per share.