BankNordik: Capital optimisation may be a value trigger - Nordea

BankNordik's Q3 pre-tax profit was DKK 54m, DKK 8m (15%) below our estimate led by a DKK 7m (35%) miss on loan losses. With the Q3 results, BankNordik announced its new 2024 financial targets aiming at an ROE of above 10% (previous 8%) and a CET1 ratio of below 20% (previously ~23%). BankNordik now aims for a cost/income ratio of below 55% (from previously ~55%). The higher ROE ambition is hence mainly fuelled by capital optimisation. We estimate a 2023 ROE of 8.5%, a cost/income of 54% and a CET1 ratio of 20.6%. Hence, the 2024 ROE seems slightly ambitious but within reach. We cut 2022E-23E net profits by 2-4% while we raise 2023E adjusted EPS by 17% as we now factor in DKK 300m in buybacks in total during 2022-23. Our new Gordon growth-based fair value is DKK 163-186 (DKK 201-225 prior to EO dividend distribution of the DKK ~47 per share). Marketing material commissioned by BankNordik.

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