Don’t bank on rising profitability
SEB’s net commission income failed to impress in Q3 with a 10% YOY decline in the important LCFI division. High profitability in the retail division is lifting group profitability to a satisfactory level, but our concerns about the risk of margin pressure in mortgages partly triggered by falling residential prices make this a risky buoy in our view. We have trimmed our 2018–2019e EPS by 1–2%, driven by lower commission estimates. Our recommendation remains SELL and our target price SEK100.Skandinaviska Enskilda Banken provides corporate, retail, investment and private banking services, as well as asset management and life insurance services. Merchant Banking provides wholesale and investment banking services to corporations and institutions. Retail Banking provides products mainly to private customers and small and medium-sized corporate. Wealth Management performs asset management and private banking activities and Life provides life, care and pension insurance. Division Baltic provides retail, asset management and private banking services in the Baltic countries. As of Dec 31 2013, Co. had total assets of SEK1,904.16 billion and total deposits of SEK821.47 billion.
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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