Nordea Bank AB – Value Analysis (LONDON:0JNL) : December 21, 2017

Capitalcube gives Nordea Bank AB a score of 54.

Our analysis is based on comparing Nordea Bank AB with the following peers – Danske Bank A/S, Dexia SA, Sparebanken Vest and Nordjyske Bank A/S (DANSKE-DK, 0REX-GB, SVEG-NO and NORDJB-DK).

Fundamental Overview

Nordea Bank AB has a fundamental score of 54 and has a relative valuation of OVERVALUED.

Fundamental Score

Company Overview

  • It currently trades at a Price/Book ratio of (1.32).
  • The market expects 0JNL-GB to grow faster than its peers and for the company to improve its current ROE.
  • 0JNL-GB‘s relative capital efficiency and net profit margins are both around the median level.
  • Compared with its chosen peers, the company’s annual revenues and earnings change at a slower rate, implying a lack of strategic focus and/or lack of execution success.
  • Over the last five years, 0JNL-GB‘s return on equity has declined from above median to around median among its peers, indicating declining relative operating performance.
  • While 0JNL-GB‘s revenues have increased slower than peer median, the market currently gives the company a higher than peer median P/E ratio and may be factoring in some sort of a strategic play.
  • The company’s level of equity capital investment suggests it might be under-investing in a business with above median returns.
  • 0JNL-GB seems too levered to raise additional debt.

Drivers of Margin

  • Margins do not suggest any relative benefit from a pricing or an operating cost advantage.
  • The company’s net interest income (net interest income/total revenues) of 47.68% is around peer median suggesting that 0JNL-GB‘s lending operations does not benefit from any differentiating pricing advantage. In addition, 0JNL-GB‘s pre-tax margin of 41.61% is also around the peer median suggesting no operating cost advantage relative to peers.
  • The company’s proportion of fee based income (i.e. non interest income/total revenues) of 52.32% is around peer median. In addition, 0JNL-GB‘s proportion of overhead costs (i.e. non interest expense/total revenues) of 57.55x is also around peer median — suggesting no cost advantage on fee-based overhead operations.
Drivers of Margins

Quadrant label definitions. Hover to know more

Differentiated; Low Cost, Differentiated; High Cost, Commodity; High Cost, Commodity; Low Cost

Company Profile

Nordea Bank AB engages in the provision of commercial banking services, life insurance, investment advice, and funds. It operates through the following segments: Personal Banking, Commercial and Business Banking, Wholesale Banking, Wealth Management, Group Corporate Centre, and Others. The Personal Banking segment serves the household customers of Nordea in the Nordic markets, through various channels offering a full range of financial services and solutions. The Commercial & Business Banking segment services large corporate customers and small and medium-sized corporate customers. The Wholesale Banking segment provides banking and other financial solutions to large Nordic and international corporate, institutional and public companies. The Wealth Management segment provides investment savings and risk management products. The Group Corporate Centre segment manages the funding of the group and supports the management and control of the Nordea Group. The company was founded in 1820 and is headquartered in Stockholm, Sweden.