Nordea’s asset management business hit an all-time high level of inflows through 2016, according to fourth quarter and full year figures published today by the banking group.
“Fee and commission income was up 1% in local currencies compared to 2015, mainly driven by Asset Management, where revenues were up 9% on the back of higher volumes,” Nordea reported.
“In H2 2016 we saw improved momentum on a 12-month rolling basis. Inflow reached an all-time high of €19.3bn in 2016, although the fourth quarter was lower due to outflow from the Wholesale Distribution.”
“Asset Management maintained its strong momentum in sales and revenues in all customer segments. Notably, Nordea was ranked number one in Europe based on net flow YTD by Morningstar as of end of November. Wholesale Distribution reported a net outflow of €1.6bn, affected by the soft-closure of the Nordea1 Stable Return fund, and general market uncertainty caused by the US election and Italian referendum.”
“In the fourth quarter, Asset Management was named MultiAsset Manager of the year. It also won an award for the best ESG investment process in Europe three years in a row by cfi.co. Investment performance was strong in 2016 with 81% of composites outperforming benchmarks. The 3-year performance remains strong and above target with 85% of all composites outperforming their benchmarks”
“Asset Management income was €239m in the fourth quarter, up 11% from the previous quarter and up 17% from the same quarter last year. The increase was due to an growth in average AUM. Operating profit was €175m, up 15% from the previous quarter and up 22% from the same quarter last year. Strong business momentum led to an improved cost/income ratio of 27%, improved 2%- points compared to both the previous quarter, and the same quarter last year.”
The growth in the asset management business came despite the overall group reporting an annual 2% fall in total operating income to €9.754bn, while total expenses increased by 4%, compared to the previous year. That contributed to a fall in operating profit of some 9% to €4.366bn.
However, the group also reported an improvement in its CET1 ratio, which jumped 190 bps in 2016 to 18.4%.
Also noted in respect of the asset management business is that the group has amended the way it classifies related commission.
“Commission income in connection with initial public offerings (IPOs) have in addition been reclassified from ”Custody and issuer services” to ”Brokerage, securities issues and corporate finance” (impact full year 2015 €27m), and commission expenses connected to asset management activities from “Other” to “Asset management commissions” (impact full year 2015 €80m). These reclassifications have been made to better reflect the purpose of services performed/received.”
Casper von Koskull, president and Group CEO (pictured), summed up 2016 by noting that: “2016 was probably the most eventful year in the history of Nordea. Continued negative rates, regulatory uncertainty and digital transformation have been in focus for the sector. The unexpected outcome of both the referendum in the UK and the US presidential elections created short term turmoil on financial markets, although it seems like investors have become accustomed to dealing with geopolitical uncertainties.”