Nordea (Buy, TP: SEK165.00) - Yield outlook remains reassuring
Despite some near-term capital headwinds, we expect resumed buybacks coupled with generous dividends to generate total yields of c11% for 2025–2026. We see the ROE remaining healthy in 2025–2026, albeit slightly below the 15% target due to cost headwinds and interest rate cuts. We have reduced our 2024–2026e EPS by 2–3% on higher costs and lower buybacks, and our target price to SEK165 (170). However, we find a 2025–2026e P/E of c7.5x attractive, and reiterate our BUY.Nordea Bank is a financial services group based in Sweden. Co. has three business areas: retail banking, wholesale banking, and wealth management. Retail banking conducts a full service banking operation and serves household and corporate customers in the Nordic markets as well as the Baltic countries. Wholesale banking provides banking and other financial solutions to large Nordic and international corporate, institutional and public companies. Wealth management provides investment, savings and risk management products. It also manages customers' assets and provides financial advice to individuals and institutional investors.
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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