BankNordik - Planning to distribute 46% of the market cap
EO distributions of DKK 700m planned 2021-2023 The distribution type depends on government exit plans We expect the share to trade up today Q4’20 PBLL was close to our expectations BankNordik reported Q4’20 profit before loan losses DKK 38m close to our expectation of DKK 40m, this is with the Danish business moved to the discontinued line. NII was 2% above ABGSCe and up 7% y-o-y while commissions were DKK 2m below our expectation. Cost were 2% above ABGSCe but 7% down y-o-y while loan losses were net reversals of DKK 10m. The discontinued Danish business result was just DKK 1m before tax.
CET1 of 22. 6% Q4'20 (ABGSCe 22. 8%); pro-forma 33% CET1 Q4’20 factoring in the divestment of Denmark.
DPS for 2020 is DKK 5 (above ABGSCe of DKK 3. 7) corresponding to a pay-out ratio just below 30% and a yield of 3. 1%.
New LT DPS target of 50%, Cost/Income targeted below 55% The divestment of the 11 Danish branches leads to an EO dividend expected in 2021 of DKK 450m (DKK 47 per share) and DKK 250m split between 2022-2023. DKK 700m distributions in total makes up DKK 73 per share; at this point the EO DPS can still be switched into buybacks aimed at facilitating a potential exit of the Faroe government (35% stake). BankNordik is guiding for a 2021 net profit of DKK 150-200m (ABGSCe DKK 201m) while 2021 costs are guided flat and loan losses to stay low.
The DPS target is lifted to about 50% (20-40%) while the C/I ratio is now targeted below 55% (below 65% before). Due to the changed profile after the divestment of Denmark, the CET1 ratio is now targeted at 23% (19. 5%) while the MREL ratio is targeted at 33%.
ROE after tax is still targeted above 8%. 46% of the market cap to be repaid to shareholders We expect the share to trade up today due to the confirmation of large planned EO distributions corresponding to 46% of the market cap. We have factored in the large distribution as buybacks, but as we understand it, nothing is set in stone at this point regarding the.
