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BankNordik: ABGSC’s Investor Day feedback - ABG

Planning for EO DPS of DKK 26 in 2022 (yield 18%)
Targeting ROE above 10% with normal loan losses
’22e adj. PE of 7.4x, 5.4x adj. for dividends

BankNordik (BN) CFO Rune Nørregaard presented on Tuesday at our virtual ABGSC Investor Day. BN is headquartered in the Faroe Islands, where it holds around 42% of the bank market as a North Atlantic SIFI. BN has a small but rapidly growing operation in Greenland (19% market share). The bank also operates its own non-life insurance company in the Faroe Islands (33% market share). Following the divestment of the Danish business, BN is overcapitalised, with a pro forma CET1 of 27.6% as of Q3’21 (the CET1 target is 20%). This follows BN distributing DKK 450m of EO dividends in October: it plans for DKK 250m EO dividends in 2022 (DKK 26 per share).

BankNordik is trading at a 2022e adj. P/E of 7.4x. If we adjust for dividends paid in 2022e, however, it is just 5.4x.
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