Danske Bank (Buy, TP: DKK130.00) - Set for a challenging Q2
After Danske Bank yesterday pre-announced Q2 net profit of cDKK1.7bn, hampered by a combined loss of cDKK0.5bn from trading income and income from the insurance business, we forecast a Q2 ROE of 3.9%. While lowering its 2022 net profit guidance to DKK10bn–12bn, driven by lower capital markets-related revenues, the bank still sees scope for solid core banking income, and expects a YOY uptick. We have trimmed our 2023–2024e EPS by ~1% on slightly higher costs, but continue to find the valuation attractive at a 2023e P/E of 5.5x. Thus, we reiterate our BUY and DKK130 target price.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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