Nordea (Buy, TP: SEK79.00) - 10% ROE target looks achievable
We have raised our 2020–2021e EPS by 1%, and reiterate our BUY and SEK79 target price. We believe the underlying performance in Q3 was a step in the right direction towards a ROE recovery, noting healthy lending and savings volume trends, and abating pressure on lending margins. Nordea’s new 10% ROE target appears achievable, and if reached should prompt a re-rating of the shares to at least 1.0x book value, or roughly 20% above the current multiple.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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