Danske Bank (Buy, TP: DKK233.00) - Set for continued solid distributions
Expecting still-solid NII, modest YOY cost inflation and low loan losses, we forecast a Q4 ROE of 11.5%. After having distributed an extraordinary DPS of DKK6.5 in December (following the divestment of its Norwegian retail portfolio), we expect the bank to announce an H2 DPS of DKK8.5, indicating a full-year payout ratio (including buybacks) of ~100%. We have cut our 2025–2026e EPS by ~0–3%, but with the stock trading at 2025e P/E of ~7.5x (adjusted for undistributed dividends for 2024e) and prospects for continued generous capital distributions, we still find the valuation attractive. Thus, we reiterate our BUY and DKK233 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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