Nordea (Buy, TP: SEK106.00) - Positive momentum
We have raised our 2022–2023e EPS by c1% following Nordea’s Q1 results, which were marked by a strong 11% underlying ROE and continued positive loan-volume momentum, particularly in mortgages. Nordea increased its CET1 ratio by 50bp QOQ to 17.5%, implying almost cEUR8bn in excess capital relative to a normalised CET1 ratio, or c20% of market cap. We find the 2022e P/E of 10x too low, particularly when taking into account the excess capital that should eventually go to shareholders, and we reiterate our BUY and SEK106 target price.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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