Northern Lights

SEB (Buy, TP: SEK102.00) - Positive catalysts look delayed

We have trimmed our 2018–2020e EPS by 1–2%, and lowered our target price to SEK102 (SEK110). However, we maintain our BUY on our view of an attractive valuation and expectations of improving profitability over the next 1–2 years. We see this being fuelled by higher interest rates, lower government fees and possibly further cost and capital efficiency measures from the bank’s new business plan, due to be disclosed in conjunction with the Q4 results.

Good value but Q1 unlikely trigger

We forecast a Q1 ROE of 13.4% (results due at 07:30 CET on 26 April). The results should be supported by solid lending growth outside of Denmark and low loan losses, while muted client hedging activity may hurt non-interest income. We expect a Q1 CET1 ratio of 16.4%, above the regulatory minimum (12%) and the bank’s own target (14–15%). We reiterate BUY, but have reduced our target price to DKK275 (DKK285).

Rate hikes set to provide relief

On growing confidence of interest rate hikes in Sweden this year, we have included in our forecasts the expected net positive contributions from higher rates to NII. This has led to EPS estimate upgrades of up to 10% for those set to gain the most (SEB, Swedbank). We still believe Swedish residential prices and mortgage margins carry downside risk, but that this is largely priced in as share prices have de-rated. We have changed our 6–12-month sector view from negative to positive, with upgrad...

Northern Lights

SEB (Sell, TP: SEK95.00) - Earnings headwinds ahead in 2018

We view SEB’s Q4 results as solid, as high corporate activity lifted commission revenues and the adjusted ROE to a healthy 13.3%, but we found the underlying NII somewhat soft. We have cut 2018–2019e adjusted EPS by 1–4%, mainly reflecting the divestment of Pension Denmark expected in mid-2018. We reiterate our SEK95 target price and SELL recommendation.

SEB (Sell, TP: SEK95.00) - Earnings headwinds ahead in 2018

We view SEB’s Q4 results as solid, as high corporate activity lifted commission revenues and the adjusted ROE to a healthy 13.3%, but we found the underlying NII somewhat soft. We have cut 2018–2019e adjusted EPS by 1–4%, mainly reflecting the divestment of Pension Denmark expected in mid-2018. We reiterate our SEK95 target price and SELL recommendation.

In good summer shape

SEB (SEBA SS, Sell) - In good summer shape (11 pages)