Avanza Bank (Hold, TP: SEK170.00) - The price for higher NII
We have raised our NII estimates on a higher Swedish policy rate assumption, but lower commission income estimates mean our 2023–2024e EPS is little changed. We expect the deterioration in the macro environment to lead to lower customer growth and activity over the next few years. The shares are trading at a 2023e P/E of c16x, a discount of c40% to the 5-year average, which is justified in our view on higher interest rates and a poorer growth outlook. We have cut our target price to SEK170 (175), but reiterate our HOLD.Avanza Bank Holding is the holding company of the Avanza Bank Group. Co.'s offerings comprise of: brokerage services, which enable investments in Swedish and foreign equities, bonds, funds, derivative financial instruments including futures, warrants and options, investment advisory services, pension products, pension insurance, as well as capital insurance services. Co. targets private individuals, high net-worth customers, corporate customers, day traders, fund managers and institutions.
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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