Nordea is pausing its share buybacks until the effect on its risk exposure amount has been clarified, the bank said.
The bank said it has held an active dialogue with the European Central Bank (ECB) on the design of its models. According to Nordea, the latest discussions indicate the model results must be treated with additional caution, which would increase its risk exposure amount.
Nordea does not expect to make buyback decisions before 2027 while it awaits the outcome of the ECB discussions, it said in an earnings presentation. Analysts had expected the bank to launch a new buyback programme before the end of this year.
Nordea shares fell 5% in early Helsinki trading after the pause and a lower-than-expected third-quarter operating profit. Operating profit fell 4% to €1.54 billion, against an average analyst expectation of €1.63 billion, according to LSEG data. Chief executive Frank Vang-Jensen said: "We are mindful of the recent sharp rises in forward interest rates and the potential for higher rates to affect consumer confidence in the months to come".
As background, Nordea applied to the ECB last year for approval of new internal capital models for corporate lending. The bank has not announced a new buyback programme since last year's programme ended. On the Wednesday before, it emerged that Sweden's Finansinspektionen had temporarily raised SEB's risk exposure amount by about SEK 150 billion, Placera reported.
Related: Nordea’s Third-Quarter Operating Profit Fell 4% as Lending Grew Across Markets