Svenska Handelsbanken (Sell, TP: SEK93.00) - Reset DPS path to a lower base
We have trimmed our 2019–2020e EPS estimates by 0–1% and reduced our DPS estimates by 7–8%. On the SEK5.50 cut proposed total DPS for 2018, Handelsbanken’s shares offer a 5.7% dividend yield, the lowest of the large Nordic banks, and not attractive in enough in our view to justify a positive view on the stock also in light of our expectation of zero earnings growth in 2019. We are still concerned about continued margin pressure in Swedish mortgage lending, to which Handelsbanken is highly exposed. We reiterate our SELL recommendation with a SEK93 target price.
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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