Svenska Handelsbanken (Hold, TP: SEK106.00) - The premium is gone
We view Handelsbanken’s underlying performance in Q1 as solid, and have left our earnings estimates intact. However, we are still concerned about the risk of meaningful margin pressure in Swedish mortgage lending. Moreover, it may have possible compliance deficiencies in its UK operations. With these issues, we find it difficult to justify a premium valuation versus its domestic peers. We have adjusted our valuation assumptions accordingly, and have thus reduced our target price to SEK106 (115).
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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