Svenska Handelsbanken (Buy, TP: SEK138.00) - Slow and steady wins the race
Q2 offered further evidence of rising profitability with a decade-high ROE of c15% on an overcapitalized balance sheet. We cut our 2023–2025e EPS 1-2% and reiterate our BUY and SEK138 target price. Though SHB’s cautious approach to capital and lending standards may weigh on near-term returns, we still believe its conservative approach has yielded superior returns at low risk long term. At a P/E of c7x, we believe the market is overlooking SHB’s robust earnings profile and capital distribution capacity, being too concerned over perceived CRE exposure risks (which we find overdone).
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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