(The online newspaper): High price growth and higher interest rates, it could be tough times for many households with high debt in the future. But Nordea CEO Snorre Storset nuances the picture of how much households are struggling.
– We can divide the customers into three groups. One group is having a tough time, many customers are doing well, and some are starting to see opportunities. We see that the number who want to discuss saving has increased by 50 per cent, says Storset to Nettavisen.
But it gets worse for borrowers. Norges Bank’s policy rate will rise to 3.75-4 per cent. In that case, a home loan of NOK 3 million will be up to NOK 30,000 more expensive a 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 customers. For those who are already having a hard time, the situation will not improve if interest rates go up. But inflation is the biggest challenge.
– The interest rate is set to bring down inflation, but inflation is quite stubborn. Many handle the situation well, but it requires tough priorities, replies Storset.
Nettavisen wrote last winter that there has been a clear increase in the number of Nordea customers requesting freedom from installments. It indicates tougher economic times.
At pre-pandemic levels
– We saw a sharp increase at the beginning of the year, but now it is quieter. The number of people requesting exemption from installments is still at lower levels than it was before the pandemic.
– But many customers are in contact with us to discuss the everyday economy and what things cost. In our mobile bank, we have a tool for setting up budgets, and that creates a great deal of interest, replies the bank manager.
– You don’t fear a debt collection wave?
– We see that the number of bankruptcies has increased slightly, but this number is also at lower levels than before the corona pandemic. We could perhaps have expected a wave within the restaurant industry, but it seems that it is difficult to get a table, illustrates Storset.
– Are there no particular industries that are struggling?
– To a very small extent. But what we see is that the growth prospects are more subdued in some industries, such as in consumption-dependent industries such as retailing. Here the uncertainty has become greater. How much the buying pattern changes, in turn affects the companies, Storset replies.
Saving up during the pandemic
He says that they see customers draw more on the credits from saved funds, but a lot of extra was also saved during the corona pandemic, well over NOK 200 billion. The Nordea boss believes that many people have more to go on in total, but again refers to the threefold division of customers.
– So you don’t see any clouds in the sky?
– The 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 the salary settlement. The framework in industry was 5.2 per cent, and with a little wage slippage, the total wage growth this year may be 5.5 per cent. With the current estimates for price growth, the trend is towards an improvement in real wages. That will keep consumption up, replies Storset.
Nordea Markets will also come out with its new economic forecasts on 9 May.
No loan losses
Storset says that at the moment there is nothing to point to major losses on lending for Nordea this year. In the first quarter, Nordea Norge had net refunds of NOK 67 million. This means that reversals of previous loss provisions are greater than new loan losses.
– We have very few individual losses and have reduced the offshore portfolio. Then we see that provisions have been made that are not needed, says Storset.
– It is possible that we see ourselves in the rear-view mirror, but we have a lot of dialogue with our customers. Yes, there are subdued prospects, but no crisis atmosphere out there, reassures the Nordea boss.
Strong lending growth
In the first quarter, Nordea increased lending to households by 3.5 per cent, calculated as annual growth. But the growth in lending to companies in Norway was a whopping 10.4 per cent, if the growth holds for the rest of the year.
– How would you summarize the first quarter?
– It is a quarter with continued growth in deposits and lending, where we are taking market shares in both the personal market and the business market. We have established a good collaboration with Econa, who have become good customers of the bank.
DNB has record earnings in the first quarter. Nordea Norge does not provide its own figures as part of a large international group. Storset is content to say that they have a positive development in Norway. In line with a rising interest rate, they have increased their profit on deposits.
Best in 16 years
– At group level, Nordea has to go back to 2007 to find such good figures, says Storset.
– But there is, in any case, very tough competition for mortgages. As for the deposit margins, they are naturally higher than a year ago and have become more normalised. Slightly higher interest rates are better for the banks in terms of earnings.
2023-04-29 19:26:48
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