Svenska Handelsbanken (Buy, TP: SEK118.00) - Rate hikes reinforcing turnaround
The Q1 report provided evidence that SHB’s turnaround is on track and that the bank is reaping early rewards from rising central bank rates. We have lifted our 2022–2024e EPS by 4–5%, primarily on higher NII, and our target price to SEK118 (114); we reiterate our BUY. We expect the ongoing cost-efficiency measures coupled with NII support from higher interest rates to help return the ROE to 11%+ in 2023–2024. We believe SHB remains attractively valued at a 2023e P/E of c9x, given its low-risk profile, strong track record and robust profitability.
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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