Banks report record results for 2005; Nordea's profit EUR three billion

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Banks in Finland recorded exceptional profits last year. Nordea, the largest banking corporation in the Nordic region, announced an operating profit of over EUR three billion for the year 2005 on Wednesday.
      "This is the best result in the bank's history", enthused Nordea's Swedish President and Group Chief Executive Officer Lars G. Nordström. Nordström believes that more success will follow this year.
      Nordea's Finnish competitors are also holding their own. Last week, the OP Bank Group with its central bank the OKO Bank, as well as the Sampo Group, announced record profits for 2005.
     
According to Markku Pohjola, Deputy CEO of Nordea, these are exceptional times for the financial sector. "It is difficult to recall a similar situation in history."
      The banking sector upswing can be attributed to the rapid growth of the Nordic economies. Companies are doing well, which saves financial institutions from recording credit losses.
      In fact, last year Nordea recorded positive net loan losses worth EUR 137 million, thanks to refunds for and cancellations of old losses that far exceeded the booked new losses. Nordea has not recorded negative net loan losses since the first quarter of 2004.
     
The Chairman and CEO of the OP Bank Group Antti Tanskanen summarises that the banks are doing as well as their clients are.
      "There is a strong positive correlation between the successes of banks and national economies. The present trend has continued throughout the decade", Tanskanen notes.
      The banks have learned from the crisis of the 1990s. Nordström points out that today banks are better prepared to keep their expenses under control.
      On the practical level, this shows, for example, in the way the banks achieve their results with a considerably smaller staff than before.
     
The banks' performance has also been noted in the stock market, where their appreciation has risen considerably. In a year, the Nordic bank index has risen by 26 percent and the European bank index by no less than 36 percent.
      Tanskanen sees the growing national debt of the United States as the worst threat looming on the horizon for the banks' present development. Eventually it could cause economic difficulty on a global scale.
      Nordström lists wars and serious terrorist attacks as another risk factor that could shake the global economy, the stock markets, and banks alike.
      "And these, of course, are difficult to make much provision for", the Nordea boss concludes.


Previously in HS International Edition:
  HS study: Largest Finnish corporations enjoyed 10 percent growth last year (22.2.2006)

Links:
  Nordea: Year-end results 2005
  OP Bank Group Financial Statement Bulletin 2005
  OKO Bank Annual Report Bulletin 2005
  Sampo Group results for 2005

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