Nordea says sharply higher interest rates may weigh on consumer confidence

Nordea Warns Higher Interest Rates Could Impact Consumer Confidence and Loans

Nordea Bank's Quarterly Performance and Market Outlook

Oct 15 (Reuters) - Finland's Nordea Bank said on Thursday that higher interest rates could affect consumer mood in the coming months, weighing on their appetite for loans, after its quarterly operating profit missed market expectations.

Quarterly Financial Results

The Nordic region's biggest lender said its operating profit fell 4% to €1.54 billion ($1.73 billion) in the third quarter, while analysts had expected €1.63 billion on average, LSEG data showed.

CEO's Statement on Interest Rates

"We are mindful of the recent sharp rises in forward interest rates and the potential for higher rates to affect consumer confidence in the months to come," Nordea CEO Frank Vang-Jensen said in a statement.

Lending Volumes and Market Segments

Third-quarter lending volumes in Nordea's personal banking unit grew 1% in constant currencies, with mortgages rising 2% mainly on strength in Sweden and Norway. Corporate lending increased 8%.

Impact of Interest Rate Hikes

As European banks kick off earnings reporting, investors will be looking for clarity on how quickly interest rate hikes could start feeding into their net interest income and profits.

Central Bank Actions in the Nordic Region

The European Central Bank raised interest rates for the second time this year in September, a move that should support Nordea in its euro zone markets, notably Finland. Norway's central bank has also hiked rates and said it may hike again to contain inflation, while Sweden's Riksbank has so far kept rates unchanged.

Competitive Landscape in Sweden

Sweden is Helsinki-listed Nordea's biggest individual market, where key rivals SEB, Handelsbanken and Swedbank are set to report their quarterly results later in October.

Net Interest Income and Financial Targets

Nordea's net interest income, a key metric measuring banks' income from lending and deposits, was up 1% at €1.80 billion despite lower lending margins, the bank said, broadly meeting analysts' expectations. Rising interest rates typically boost lending margins.

Nordea reiterated its financial targets for 2026.

Additional Information

($1 = 0.8917 euros)

(Reporting by Elviira Luoma in Gdansk, editing by Milla Nissi-Prussak)