Danske Bank (Buy, TP: DKK190.00) - Still-excessive BV discount
Helped by further NII tailwinds, we expect Danske Bank to report a Q1 ROE of 10.0%, despite somewhat soft fee income. With its 17.8% end-2022 CET1 ratio leaving ample headroom to its >16% internal target, we see scope for generous distributions (combined 2023–2025e dividend/buyback yield ~36%). We have made only minor changes to our 2024–2025e EPS. With the Estonia case settled and prospects of continued NII momentum contributing to 2024–2025e ROEs of ~10%, we find the ~33% discount to the 2023e BV excessive. We reiterate our BUY and DKK190 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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