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BankNordik: Upgrading 2021 net profit guidance - ABG

2021 net profit guidance up to DKK 230-250m
Net loan loss reversals H2’21 higher than we expected
We expect a positive share price reaction

This afternoon, BankNordik upgraded its guidance for 2021 net profit to DKK 230-250m (DKK 190-220m). The guidance upgrade crossed our preview for Q3’21 also published this afternoon, and it seems loan loss reversals likely make up the main difference between the new guidance and our 2021 net profit estimate of DKK 221m. Fires on the Faroe Islands impacting Q3’21 negatively is confirmed in the upgrade. DKK 46.8 EO DPS is to be decided on the EGM on 22 October and the share is trading exclusive of the EO dividend on 25 October. Note the 35% Faroese dividend withholding tax.

We estimate a 2023e RONAV of 10.1%, which would be 9% with normal loan losses of 25bp. We still see a ‘22e adj. PE of 9x; as the normal DPS for 2021 could likely grow with the guidance upgrade (50% pay-out), the dividend adjusted PE for 2022 is now likely below 6x.
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