June 10, 2023


Complete News World

Economy and money | There is one thing in particular that worries the bank manager

(The newspaper online): High price growth and high interest rates, may be difficult times for many families with high debt in the future. But Nordea CEO Snorre Storset paints a picture of how much families are suffering.

– We can divide clients into three groups. One group is having a hard time, many clients are doing well, and some are starting to see opportunities. We see that the number of those willing to discuss saving has increased by 50 percent, Storst tells Netavien.

But it gets worse for borrowers. The interest rate on the Bank of Norway’s policy will rise to 3.75-4 percent. In this case, a home loan of NOK 3 million would be NOK 30,000 more expensive per year, before tax.

Stubborn price growth

– Aren’t you worried about this rise in interest rates?

– As I said, there are also different groups among our clients. For those already in difficulty, the situation will not improve if interest rates go up. But inflation is the biggest challenge.

The interest rate is set to lower inflation, but inflation is very stubborn. Many handle the situation well, but it requires challenging priorities, Storst replies.

Nettavisen wrote last winter that there had been a clear increase in the number of Nordea customers requesting premium freedom. It points to more difficult economic times.

at pre-pandemic levels

– We saw a sharp increase at the beginning of the year, but now it is calmer. The number of people requesting premium waivers remains at lower levels than before the pandemic.

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– But many clients contact us to discuss the daily economy and cost of things. In our mobile bank, we have a budgeting tool, and this creates a great deal of interest, the bank manager answers.

– Aren’t you afraid of the wave of debt collection?

– We see that the number of bankruptcies has increased slightly, but this number is also at lower levels than it was before the Corona pandemic. We might have been expecting a wave within the restaurant industry, but it seems hard to get a table, Storset explains.

Aren’t there certain industries that are struggling?

To a very small extent. But what we’re seeing is that growth prospects are much quieter in some industries, such as consumption-driven industries like retail. Here the uncertainty became greater. Storset responds to how changing the buying pattern is, in turn, affecting companies.

Saving during a pandemic

He says they see customers benefiting more from the credits than the money saved, but a lot of extra money was also saved during the corona pandemic, in excess of NOK 200 billion. The Nordea boss believes many people have more to go on in total, but again refers to the three-way customer segmentation.

– So you don’t see any clouds in the sky?

Banks are often looking for things that can go wrong. But at the moment, there is good activity in the Norwegian economy, and unemployment is at a low level.

The municipalities will soon enter into a salary settlement. The framework in the industry was 5.2 percent, and with a small wage slippage, total wage growth this year could be 5.5 percent. With current estimates of price growth, the trend is towards an improvement in real wages. That will keep consumption high, says Storst.

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Nordea Markets also releases its new economic forecast on May 9.

There are no loan losses

For now, Storst says, there is no sign of significant losses in Nordea lending this year. In the first quarter, Nordea Norge made net refunds of NOK 67 million. This means that reversals of previous loss allowances are greater than losses for new loans.

– We have very few individual losses and have reduced the external portfolio. Then we see that unnecessary provisions are made, says Storst.

– It is possible to see ourselves in the rearview mirror, but we have a lot of dialogue with our customers. Yes, the prospects are weak, but there is no crisis atmosphere, the Nordea president reassures.

Strong lending growth

In the first quarter, Nordea increased its lending to households by 3.5 percent, calculated as annual growth. But the growth in corporate lending in Norway was a whopping 10.4 percent, if the growth continues for the rest of the year.

How would you summarize the first quarter?

— It’s a quarter with continued deposit and lending growth as we take market shares in both the personal market and the business market. We have established good cooperation with Econa, who have become good clients of the bank.

DNB had record profits in the first quarter. Nordea Norge does not provide its own numbers as part of a large international group. Storst will only say that they have had a positive development in Norway. In line with the rising rate of interest, they have increased their earnings on deposits.

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The best in 16 years

– At the group level, Nordea has to go back to 2007 to find such good numbers, says Storst.

– But there is, in any case, stiff competition for mortgages. As for deposit margins, they are naturally higher than they were a year ago and have become more normal. Slightly higher interest rates are better for banks in terms of profits.