Nordea is set to benefit from higher policy rates across the region, the Finland-headquartered bank said in its earnings conference call on October 20.
The lender’s net interest income was already up 15% in the third quarter of this year compared to the same period last year.
Net interest income among Nordic banks is estimated to increase between €1bn and €1.3bn next year, solely thanks to the impact of rate changes. By 2024, Nordea expects rising policy rates to add between €1.5bn and €2bn to its annual net interest income.
Such impact will outweigh higher wholesale funding costs and the rolling off of deposit hedges.
Central banks in the Nordics are increasing interest rates as in many other countries. In September, the Swedish central bank hiked its benchmark rate by a full percentage point to 1.75%, while the Norwegian central bank increased its rate from 1.75% to 2.25%.
Nordea Group is the biggest Nordic bank with a Tier 1 capital position of $32.97bn at the end of 2021, as reported in The Banker's Top 30 Nordic Banks 2022 ranking.
The lender has seen a slight decrease in net interest income between 2018 and 2019. However, at the end of 2021 the figure recovered to $5.5bn.
OP Financial Group and Savings Bank Group, two smaller Finnish banks, have had a mostly flat net interest income since 2017.
