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Banks (Finance)

Moody's Affirms Nordea Bank Abp's Long-term Deposit and Senior Unsecured Debt Ratings

Strategic Insights

— 2 min read

Nordea Bank Abp, one of the largest financial institutions in the Nordic region, has maintained its strong credit ratings as affirmed by Moody's Investors Service. The ratings, which include the a3 Baseline Credit Assessment (BCA) and Adjusted BCA, reflect the bank's diversified regional footprint, healthy asset quality, and robust capital. Moody's also maintained the bank's Counterparty Risk Ratings (CRR) and Counterparty Risk (CR) Assessments at Aa2/P-1 and Aa2(cr)/P-1(cr), respectively.

Key Takeaways:

  • Nordea's a3 BCA reflects the bank's diversified regional footprint in the Nordic region, healthy asset quality, and robust capital.
  • The BCA also reflects Moody's view that Nordea will manage the ongoing macro-economic uncertainties well, due to a track record of stable through the cycle asset risk performance and a diversified loan book, robust capitalization, and sound recurring profitability.
  • The bank's long-term deposit and senior unsecured debt Aa3 ratings incorporate the large volumes of loss-absorbing liabilities protecting senior creditors in case of failure, as per Moody's Advanced Loss Given Failure (LGF) analysis.
  • The bank's junior senior unsecured debt holders face a moderate loss given failure, resulting in a rating aligned with the issuer's Adjusted BCA of a3.
  • Moody's has a positive outlook on the long-term senior unsecured debt and deposit ratings, reflecting upward pressure on the BCA, reflecting the bank's diversified geographic presence and low concentration risks across its lending portfolio.
  • Factors that could lead to an upgrade of the ratings include maintaining strong and stable profitability, maintaining a tangible common equity to risk-weighted assets ratio above 16%, and demonstrating resilience to the economic slowdown.
  • The senior unsecured debt and long-term deposit ratings could be upgraded if Nordea issues higher volumes of senior unsecured non-preferred debt leading to higher buffers protecting senior creditors in case of failure.

Statistics:

  • Nordea's net income to tangible assets ratio was 0.85% in 2024, receding slightly from 0.9% in 2023.
  • The bank's large volumes of loss-absorbing liabilities protect senior creditors in case of failure, resulting in a two-notch uplift in the relevant ratings.
  • Nordea's junior senior unsecured debt holders face a moderate loss given failure, resulting in a rating aligned with the issuer's Adjusted BCA of a3.

Sources:

  • Moody's Ratings, [List of Affected Credit Ratings] (https://www.moodys.com/viewresearchdoc.aspx?docid=PBC_ARFTL506547)
  • Moody's Investors Service, [Rating Methodologies] (https://ratings.moodys.com/rmc-documents/432741)
  • Moody's Investors Service, [Rating Methodologies] (https://ratings.moodys.com)

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