Activist investor Cevian Capital AB called on Nordea Bank Abp to boost its profitability ambitions as the Nordic region’s biggest bank prepares new financial targets.
(Bloomberg) — Activist investor Cevian Capital AB called on Nordea Bank Abp to boost its profitability ambitions as the Nordic region’s biggest bank prepares new financial targets.
Nordea Chief Executive Officer Frank Vang-Jensen should vow to return at least 15% on equity “regardless of the macroeconomic environment,” Cevian Partner Gustav Moss said in an interview. The bank’s current profitability should even be “well above” that threshold because markets are very favorable, he said.
The comments set a clear bar for Vang-Jensen who said in July that he will present new financial goals in February. At the time he also lifted the profitability outlook for this year to “comfortably above” 15%. The Helsinki-based lender’s existing ROE target is more than 13%.
Cevian owns about 4.4% in Nordea, making it the bank’s second-biggest shareholder, according to the lender’s website. The investment firm, which bought into Nordea almost five years ago, has been the bank’s most vocal shareholder of late.
Like most other banks, Nordea has received a strong revenue boost from rising interest rates set by central banks. Net interest income surged by almost 1 billion euros in the first six months of the year, a 37% jump.
Read More: Nordea Sees Highest Profitability in 15 Years on Rates Boost
Nordea still has “a lot” of work to do on improving efficiency, Cevian’s Moss said in the interview in Stockholm. He signaled that he would like to see Nordea cut its cost-to-income ratio — which divides expenses by revenue — to about 40% over time. The metric was at 47.5% last year.
Cevian bought into Nordea in late 2018, when the bank lagged peers on profitability. The investment firm supports Vang-Jensen and is of the view that the lender has “the best management team” among Nordic banks, Moss said.
Cevian trimmed its stake in Nordea recently, data compiled by Bloomberg indicates. Moss declined to comment on the changes.
–With assistance from Kati Pohjanpalo.
More stories like this are available on bloomberg.com
©2023 Bloomberg L.P.