Nordnet marks steep rise in profit in Q2 2020

Maria Nikolova

The digital bank registered profit after tax of SEK 301.9 million in the quarter to end-June 2020, up 311% from a year earlier.

Nordnet, a digital bank for investments and savings with operations in Sweden, Norway, Denmark and Finland, today reported its financial metrics for the second quarter of 2020.

Operating income in the quarter to end-June 2020 increased by 75% from the equivalent period a year earlier, amounting to SEK 650.3 million. Net interest income increased by SEK 23.2 million, with income from Nordnet’s stock lending program being a contributing factor. Net interest income improved due to increased volumes in residential mortgages and increased deposits.

A high level of trading activity and a strong interest in investments in foreign markets have led to an increase in transaction-related income. Combined with increased mutual fund volumes, this has contributed to net commission income increasing by SEK 180.4 million and to the net result of financial transactions increasing by SEK 74.5 million compared with the same period last year.

Operating expenses before credit losses were 2% lower than in the second quarter last year and amounted to SEK -271.2 million. This is due mainly to decreased expenses for consultants and other external services.

Net profit for the second quarter of 2020 was burdened with non-recurring expenses of slightly more than SEK 11 million, attributable to an adjusted assessment regarding the Nordnet Group’s right to deduct opening VAT.

Credit losses are in line with previous years, although credit loss provisions have been reinforced somewhat due to the increased risk caused by the ongoing coronavirus pandemic. The total expense for credit losses in the second quarter amounted to SEK 10.0 million.

Operating profit increased by 350% to SEK 369.1 million, and the operating margin was 57%. Profit after tax for the second quarter of 2020 rose by 311% to SEK 302.0 million, resulting in a profit margin of 46%.

Operating income excluding transaction-related net commission income for the quarter rose by 43% compared with the same quarter in the preceding year.

Consolidated cash and cash equivalents at the end of June amounted to SEK 2,737 million, of which restricted assets amounted to SEK 150 million.

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