BankNordik: More clarity on the EO dividends of DKK 700m later this month - Nordea

BankNordik is set to distribute DKK 450m (DKK ~47 per share) in Q4 following the sale of its Danish activities to Spar Nord and DKK 700m in total between 2021-23.

The first payment is pending approval at an extraordinary general meeting which is set to be held no later than October, and hence we expect to get more clarity on the way of capital distribution amid the EGM notice later this month which needs to be send our at least three weeks prior to the EGM. Interestingly, the H1 2021 report involved a change of wording and the bank explicitly aired the idea of distributing part of the capital by way of a share buyback instead of only dividends.

As previously argued, we believe BankNordik should consider distributing the entire excess capital through share buybacks in order to avoid the Faroese withholding tax on foreign investors of a minimum of 15%. This implies a post-tax gain of DKK ~11 (7%) per share for non- Faroese investors compared to the base case of a 100% dividend payout.

Were we to include 100% buybacks instead of dividends in our estimates, this would lift 2023E EPS by ~73%. BankNordik currently trades at a capital-adjusted P/E of ~5x 2023E, 40% below Danish peers.

Länk till analysen i sin helhet: https://research.nordea.com/api/reportfileapi?id=711740