Sweden's Nordea sees Q3 profit drop by 43 percent

AP News
Posted: Oct 19, 2011 3:25 AM
Sweden's Nordea sees Q3 profit drop by 43 percent

Nordea AB, the largest bank in the Nordic region, blamed the financial turmoil in Europe for a 43 percent drop in third quarter profits.

Nordea reported Wednesday a net profit for the quarter of euro404 million ($554 million), down from euro709 million in the same period a year ago.

Net interest income, the bank's main source of income, rose by 5 percent to euro1.38 billion from euro1.31 billion, while net fee and commission income increased to euro582 million from euro525 million.

Nordea CEO Christian Clausen said the market turmoil in Europe had a negative impact on Nordea's result, even though it has no direct exposure to the troubled economies of Portugal, Ireland, Italy, Greece and Spain.

"The intensified focus on sovereign debt, turbulent markets, lower than expected interest rates and reduced confidence in the future among households and companies affected European banks in the quarter," Clausen said.

"The most important effects were increased credit spreads and volatility in the interest rate markets, lower interest rates and weak equity markets," he added.

However, he said the bank's customer-related business performed well.

In August, Nordea announced it will lay off around 2,000 employees in 2011 and 2012, to maintain its position despite increased costs of new global bank regulations.

Clausen on Wednesday said the process to reduce the number of employees is proceeding according to plan.