Oslo-listed lender Nordea has boosted profit in the second quarter amid a reversal of loan losses, but some shipping and offshore clients were still adding to the provision total.
The bank wrote back impairments of €30m ($35m) to 30 June, against loan losses of €698m in the same period of 2020.
"The performance of our credit portfolio remained strong in the quarter, despite the ongoing pandemic," the lender said.
Nordea added it has an adequate reserve to cover potential credit losses related to Covid-19.
"Individual provisions and write-offs were very low, apart from some additional individual provisions on the shipping, oil and offshore portfolio," the bank said.
Net loan losses on individual exposures in stage three restructuring — the last stop before default — amounted to €50m.
But collective provisions in stages one, two and three were reduced by €80m in total.
Of this, €50m was released to reflect more favourable macroeconomic scenarios and credit portfolio development, and €30m related to model updates on IFRS 9 accounting standards.
Net interest income rose to €1.23bn from €1.09bn year-on-year, with net profit up at €1.02bn from €243m in 2020.
The bank said the strong result was driven by high income growth, firm cost control and low loan losses.
Provisions to fall further
Nordea added that loan impairments over the whole of 2021 are expected to be significantly below the 2020 level.
New provisions remain at low levels, while stage three loans edged down to 1.41% of the total portfolio, compared to 1.53% at the end of the first quarter.
Nordea told TradeWinds in March that it was open for new shipping business and was actively pursuing fresh projects.
The shipping portfolio remained relatively stable in 2020 at €8bn. Offshore lending made up €1.5bn of this, mainly involving drilling rigs and offshore support vessels.
Loan losses for shipping were close to zero in 2020, as well as in 2019.
Helsinki-headquartered Nordea is ranked by Petrofin as a top-10 shipping lender.
