Scandinavian giant Nordea has posted a 43% drop in Q4 net profits, following lower-than-expected activity in the capital markets and a cutting off of exposure to the shipping, offshore and oil services.

The Stockholm-based bank saw its net profit fall to €624 million ($770 million) for the three months ending 31 December, down from €1.1 billion ($1.37 billion) for the same period last year. Net interest income at the bank also fell, from €1.21 billion ($1.5 billion) to €1.11 billion ($1.38 billion).

“We are not satisfied with the development in profit during the latter part of 2017,” Nordea chief executive Casper von Koskull said in a statement. “For 2018 we are confident that net profit will grow, and we expect to see slightly higher revenues, lower costs and a stable credit quality.”

The bank is in the middle of a de-domiciliation process, having decided to move its base of operations from Sweden to Finland. Nordea blamed strict regulatory constraints for its move, which it said were stopping it from competing properly with its rivals.

Related: Nordea to slash 6,000 jobs in cost reduction play

Nordea is expected to move into its new home by the second half of 2018. It has set a tentative date of 1 October.

“For 2018 we are confident that net profit will grow, and we expect to see slightly higher revenues, lower costs and a stable credit quality,” added von Koskull. “Nordea today stands much more robust and resilient and I am thus confident that we stand prepared to handle both the risks and challenges, and capitalise on future opportunities in our home markets.”

Nordea’s core banking switchover – still in process – will not be hit by the drop in profits, according to the bank. It selected Temenos in September 2015, in what was at the time the largest European core banking deal in history.

The bank is looking to automate its largely manual processing protocols (which at the time of the deal required input from 5,000 staff) and replace ageing systems such as Misys (now Finastra)’s Midas and Tieto’s Core Banking Suite.

The bank pledged to rip and replace its systems back in 2014, and the Temenos implementation is not expected to complete for a few years yet.

by Alex Hamilton
Alex is Senior Reporter at IBS Intelligence, follow him on Twitter or contact him at: alexanderh@ibsintelligence.com
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