Danske Bank (Buy, TP: DKK220.00) - Set for excess capital distribution
Boosted by further rate hike benefits, low loan losses and a reduced tax expense, we expect Danske Bank to report a strong Q4 ROE of 13.6% (results due at 07:30 CET on 2 February). Moreover, we see scope for generous distributions ahead, with our H2e DPS of DKK7.75, implying a ~60% payout ratio. We have raised our 2024–2025e EPS by ~3%, driven by higher NII, and increased our target price to DKK220 (212). With the stock trading at a 2024e P/E of ~7.2x, we continue to find the valuation attractive 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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