Føroya Banki: 2024E net profit at the top of guidance range - Nordea

Føroya Banki reports its Q2 2024 results on 1 August 2024. We expect the sustainability of net interest income (NII) and the bank's capital position to remain key focus areas. We estimate Q2 net profit of DKK 68m, up 20% q/q, as Q1 was adversely impacted by elevated loan losses related to a few corporate customers in Greenland. Our 2024 net profit estimate of DKK 252m remains at the top of the DKK 225-255m guidance range. We lower 2025E-26E net profit by 6%, as we take a cautious view on lending margins. Føroya Banki trades at a 2025 dividend adjusted P/E of 3.9x, ~50% below Danish peers. Our Gordon growth-based fair value range is now DKK 190-232 (248-304), as we also lift our cost of equity estimate to 11%, roughly on a par with the cost of equity that we apply for Danish peers. Marketing material commissioned by Føroya Banki.

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