Nordea says sharply higher interest rates may weigh on consumer confidence

By Reuters News

Oct 15 (Reuters) - Finland's Nordea Bank NDAFI.HE said on Thursday that higher interest rates could affect consumer mood in the coming months, weighing on their appetite for loans, after its quarterly operating profit missed market expectations.

The Nordic region's biggest lender said its operating profit fell 4% to €1.54 billion ($1.73 billion) in the third quarter, while analysts had expected €1.63 billion on average, LSEG data showed.

"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," Nordea CEO Frank Vang-Jensen said in a statement.

As European banks kick off earnings reporting, investors will be looking for clarity on how quickly interest rate hikes could start feeding into their net interest income and profits.

The European Central Bank raised interest rates for the second time this year in September, a move that should support Nordea in its euro zone markets, notably Finland. Norway's central bank has also hiked rates and said it may hike again to contain inflation, while Sweden's Riksbank has so far kept rates unchanged.

Nordea's net interest income, a key metric measuring banks' income from lending and deposits, was up 1% at €1.80 billion despite lower lending margins, the bank said, meeting analysts' expectations.

($1 = 0.8917 euros)

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