Swedbank (Hold, TP: SEK265.00) - NII set for a hard landing
Following the Q4 results, we have downgraded to HOLD (BUY) and slightly reduced our 2025–2026e EPS, but reiterate our SEK265 target price. After the strong recent share price performance, the stock has re-rated to a 2025e P/E of 10x, in line with its historical average and almost to the peer group average. We expect the recent positive NII timing effects to reverse in the coming quarters, and forecast a c20% total NII decline in 2025–2026 from 2024; more than consensus expects. Despite the raised payout ratio to 60–70%, we expect its capital distributions to remain below peers’.Swedbank provides financial services and products in its home markets of Sweden, Estonia, Latvia and Lithuania. Co. has four segments: Swedish Banking, which is responsible for all its Swedish customers except corporates and financial institutions; Large Corporates and Institutions, which is responsible for large corporates, financial institutions and banks as well as for trading and capital market products; Baltic Banking, which operates in Estonia, Latvia and Lithuania; and Group Functions and Other. At Dec 31 2013, Co. had 731 branches and 1,396 automated teller machines. Also as of such date, Co. had total assets of SEK1.82 trillion and deposits of SEK620.85 billion.
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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