Nordea: We Are Raising Our Fair Value Estimate

We are raising our fair value estimate for Nordea to SEK 152 per share from SEK 131 previously after refreshing our model. Apart from the time value of money since our last model update, we believe that Nordea's midcycle profitability has structurally improved. While we previously believed that the bank could achieve about 11% in returns on equity through the cycle, we now believe 12% is more likely. Although interest rates are set to fall this year, we believe they will settle above previous levels, allowing for greater net interest margins than Nordea achieved over the past decade. Our no-moat rating is unchanged.