Nordea sees sales volumes of structured products increase by 75% in the third quarter due to strong performance, particularly in Sweden.
Nordea reported debt securities in issue stood at €187 billion at the end of the third quarter of 2018, up €6 billion from the previous quarter, but down €21 billion year-on-year.
The bank sold 19 structured products worth an estimated €100m during the third quarter, up from 15 products with combined sales of €57m in the same period last year, according to SRP data. In Sweden, the bank had an exceptionally good quarter, collecting €45m from just six products (third quarter 2017: €2m from two products). Nordea had a 22% share of the Swedish market in the third quarter of this year, second behind SEB, which had a 25% market share (€52m from 22 products). Mega Kreditbevis Europa Investment Grade 3-13 B777, a five-year credit-linked note tied to the Markit iTraxx Europe S29, was the bank’s best-selling product in the quarter, accumulating €13m during the subscription period.
Other markets where the bank was active included Denmark, where it launched five products with sales of €34m between July 1 and September 30 (third quarter 2017: €15 from two products); Finland (€4m from two products); Norway (€17m from five products); with one product, Europe High Yield EUR 2023 II (€1m), which was issued via Nordea Bank Luxembourg and listed in Dublin, was targeted at private banking investors.
The bank issued approximately €4.6 billion in long-term funding in the third quarter, excluding Danish covered bonds, of which €2.4 billion represented the issuance of Swedish and Norwegian covered bonds in domestic markets. Nordea continued issuing senior non-preferred debt in the third quarter with a US$1 billion five-year fixed to floating rate note and a NOK2 billion floating rate note, both issued by Nordea Bank AB. The bank’s long-term funding portion of total funding, at the end of the third quarter, was 79%.
Despite a total operating profit of €866m, the third quarter was challenging, according to Casper von Koskull (pictured), chief executive officer, commenting on the results. ‘We are not satisfied with the revenue development,’ said Koskull, in a release. ‘Net interest income was stable, while fees and commission and specifically net fair value were weak, mainly due to difficult market conditions and lower corporate activity,’ he said.
Click the link to view the full interim management statement, the factbook and the presentation for third quarter 2018.