BankNordik: High capital repatriation but we had hoped for buybacks - Nordea

Today, 30 September, BankNordik announced the agenda for its EGM regarding the DKK 700m capital distribution following the sale of its Danish activities to Spar Nord. In short, the Board of Directors proposed an EO dividend pay-out of DKK 46.8 per share, corresponding to a ~30% yield, which makes up the first DKK 450m tranche of the total capital distribution. BankNordik has previously flagged that they were considering distributing part of the capital by way of a share buyback, yet this was not the case. As discussed in our September 16 flash, we would have preferred to see BankNordik distribute the entire excess capital through buybacks in order to avoid the Faroese withholding tax of 15% on non-Faroese investors. We hence find today’s announcement somewhat disappointing. A 100% share buyback would have implied a post-tax gain of DKK ~7 (4%) per share compared to the “only” dividend scenario. The remainin g DKK 250m is set to be distributed in DKK 125m tranches between 2022-23, and the way of capital distribution remains undecided. BankNordik trades at a 2023E P/E of 11.7x but adjusted for the DKK 46.8 per share dividend it trades at 8.3x.