Investment bank Berenberg has labeled shares in Finnish bank Nordea Bank “too cheap to ignore”. Founded in 1820 and headquartered in Helsinki, Nordea has millions of customers in Finland, Sweden, Norway and Denmark. The stock also trades in the United States, United Kingdom, Germany, Italy and Switzerland. Earlier this week, the bank announced first-half results, with net profit rising to 2.66 billion euros ($2.89 billion) from 2.48 billion euros last year. Net interest income (earned through the interest rate differential offered to savers and borrowers) increased 7% year-on-year to 3.86 billion euros. The bank said these strong figures were achieved despite continued macroeconomic uncertainty and a challenging geopolitical climate. Nordea CEO Frank Vang-Jensen said: “Our results show that despite the economic slowdown, we continue to make good progress on our strategic priorities and deliver industry-leading financial results.” Berenberg analysts said the strong The fundamentals make Nordea an attractive investment opportunity with 27% upside potential. “We view Nordea’s attractive fundamentals as its P/E premium to the sector narrows,” Hugh Moorhead said in a July 16 note to clients. Becoming even more compelling. “Trading at just 7.5 times 2025 (fiscal year) earnings and an 8% premium to the industry, we think Nordea’s shares are too cheap to ignore. Buy.” Moorhead added. NRDBY 5Y Line The stock underperformed in 2024, down 2%, as central banks in three of Nordea’s four home markets have begun cutting interest rates and further cuts are expected. In a lower interest rate environment, banks typically make less money. However, Berenberg analysts believe Nordea’s net interest income is relatively resilient, noting that “we believe the market still underestimates Nordea’s (net interest income) stability, which is consistent with being more interest rate sensitive.” The analyst also said recent challenges, including a slight decline in second-quarter net interest income or a modest increase in costs, should not deter investors. Additionally, Moorhead is positive about Nordea’s long-term shareholder distributions. attitude, although the bank plans to postpone share buybacks until 2025. The stock’s forward dividend yield is also 9%.
