Danske Bank (Buy, TP: DKK260.00) - Attractive yield prospects
Supported by still-solid core revenues and strong asset quality, we expect a Q1 ROE of 12.4%. With a DKK5.0bn buyback programme announced in December, we forecast a ~20bp QOQ CET1 ratio uptick to 18.0%, implying solid 2.0% headroom to its >16% target. Thus, we see potential for further generous capital distributions with >13% combined yields over our forecast horizon. We have trimmed our 2026–2027e EPS by ~1%. That said, the stock is trading at a 2026e P/E of ~7.2x. Thus, we find the valuation attractive and reiterate our BUY, but have lowered our target price to DKK260 (266).Danske Bank is a diversified financial services firm. Through its subsidiaries, Co.'s activities include the provision of banking, mortgage finance, insurance, real estate brokerage, asset masnagement and trading in fixed income products, foreign exchange and equities. Co. operates international retail bank operations in 15 countries, with an emphasis in the Nordic region. Co. divides its operations into five segments: Banking Activities, Danske Markets, Danske Capital, Danica Pension and Other Activities. As of Dec 31 2011, Co. had total assets of DKK3,424,403,000,000 and total deposits of DKK848,994,000,000.
DNB Markets is the investment banking arm of DNB Bank ASA and is focused primarily on the Nordic region, as well as internationally on niches such as global shipping, energy and related services, and seafood. DNB Markets offers services in FICC, Equities and Investment Banking advisory from offices in Oslo, Stockholm, London, Singapore and New York. Equity research coverage is offered on c250 Nordic companies. DNB was ranked no.2 in Extel Nordic Research 2017. The DNB Markets’ Credit and FICC Macro & FX Research teams are repeatedly highly rated by Prospera Nordic Institutional Investor Surveys.
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