Swedbank (Buy, TP: SEK190.00) - Stable profitability not appreciated
We have trimmed our 2021–2022e earnings by 2% due to lower NII estimates, and our target price to SEK190 (194). Despite the NII dip in Q3, we believe the overall results (with an ROE above 14%) underpin the stable profitability, which in our view is not appreciated in the P/BV of ~1.1x. Swedbank reiterated its ambition to pay the 2019 dividends, which coupled with 2020e ordinary dividends we estimate would add up to 12% of market cap. We 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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