Danske Bank (Buy, TP: DKK190.00) - Post-settlement upside potential
While our ~10% 2024e ROE already implies a solid improvement from the adjusted ~7% 2022 level, we see upside potential to our estimates from maintained high interest rates, cost-cutting initiatives, lower loan losses and/or improved capital efficiency, with the resolution of the Estonia case leaving scope for an enhanced profitability focus. We have raised our 2023–2024e EPS by ~1–7%, after including DKK8.0bn of total buybacks. Moreover, at a 2024e P/E of 6.9x, we continue to find the valuation attractive. We have raised our target price to DKK190 (175) and reiterate our BUY.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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