Finnish bank Nordea's quarterly profit, deferred buyback disappoint
Nordea Q2 results slightly below expectations
Share buyback delay disappoints investors
Shares down 5%, underperforming peers
Recasts, updates share move, adds detail throughout
By Elviira Luoma and Jesus Calero
July 15 (Reuters) -Finnish bank Nordea NDAFI.HE reported second-quarter operating earnings just below expectations on Monday and further disappointed investors by deferring a share buyback.
Shares in the company, the Nordic region's biggest lender, fell 5% at 10.44 euros by 1030 GMT, underperforming other regional banks.
Operating profit eased 2% from a year earlier to 1.68 billion euros ($1.83 billion), against a mean forecast of 1.71 billion euros in an LSEG poll of analysts. Nordea said higher income partly offset increased expenses and net loan losses.
The bank also said it had begun talks with the European Central Bank (ECB) to resume share buyback programmes from early 2025, which brokers Jyske Bank and J.P.Morgan said was a disappointment.
Jyske bank said investors had expected capital to be returned to them this year.
Net interest income rose 4% year on year to 1.9 billion euros, driven by improved lending and deposit margins, higher deposit volumes and rising treasury income, compared with a poll forecast of 1.92 billion euros.
Net fee and commission rose 6% in the quarter following increased savings and investments and strength in debt capital markets.
"Inflation and continued significant investments in technology, data and risk-management capabilities resulted in a cost increase of 6%, in line with Nordea's plan," the company said.
Net loan losses and related financial adjustments for the quarter were 68 million euros, driven by new provisions for small corporate customers, despite good credit quality overall and an improved macroeconomic outlook.
Return on equity (RoE) was 17.9% and the bank reiterated guidance for full-year RoE of more than 15% despite falling interest rates.
The ECB has signalled rate cuts may continue this year if price pressures ease, but officials have also said the pace of any cuts could be slow if inflation surprises.
In a call with analysts, CFO Ian Smith said Nordea's provision for possible fines related to an investigation into anti-money laundering controls is adequate and will not affect its capital return.
Danish police charged Nordea in July with violating Denmark's anti-money laundering act several times between 2012 and 2015.
($1 = 0.9182 euros)
Reporting by Elviira Luoma and Jesus Calero
Editing by Anna Ringstrom, Mrigank Dhaniwala, David Goodman and Barbara Lewis
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