Swedbank (Buy, TP: SEK257.00) - NII normalisation delayed
Q3 showed surprising NII resilience given the lower market rates, although this was partly due to timing effects (loans being repriced more slowly than deposits). We have raised our 2025–2026e EPS by c5%, and our target price to SEK257 (245). We expect NII to fall meaningfully and ROE to fall below the 15% target by 2025. Still, trading at 2025e EPS below 9x and with an appealing yield potential after the AML settlement, we see a good return outlook, and reiterate our BUY.Swedbank provides financial services and products in its home markets of Sweden, Estonia, Latvia and Lithuania. Co. has four segments: Swedish Banking, which is responsible for all its Swedish customers except corporates and financial institutions; Large Corporates and Institutions, which is responsible for large corporates, financial institutions and banks as well as for trading and capital market products; Baltic Banking, which operates in Estonia, Latvia and Lithuania; and Group Functions and Other. At Dec 31 2013, Co. had 731 branches and 1,396 automated teller machines. Also as of such date, Co. had total assets of SEK1.82 trillion and deposits of SEK620.85 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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