Skandinaviska Enskilda Banken AB (publ)
Research by MICKE
Author: micke
2023-07-01 at 119SEK. The 2023Q1 was very strong (high NII) and I assume that Q2 will be quite similar and probably going forward 2023 and 2024. The stock market seems to assume that rates will come down already in the end of 2023, I think it will be a bit further away and that rates will not go especially low. During the Q1 presentation Q&A SEB got the question when NII will be lower, the bank replied that long term growth will continue, a potential lower NII would only be temporary. 2023Q1 EPS was 4.45SEK which on a year would be 17.8SEK which would give PE23= 6.9. The normal PE for Swedish banks is 10, thus an upside potential of 48%. Clearly showing that other investors do not think these profit levels are sustainable.
2021-12-23 at 123SEK. The business is going well and increasing at a few percent per year on average. Profit pre-tax is ~8BSEK per quarter and ~6.6 after tax, amounting to 27B/year, est P/B21=9.7. My estimate is slightly higher profit 2022 since business is improving and reservations for bad loans are probably bigger than actual defaults will be.
Business (2)
At PE=10 return on the investment should be ~10% which is high in a low interest environment, for a company that has some growth and given the in my opinion low risk with SEB. Should be room for a higher stock price.
23/12/2021 by MICKE｜1Higher interest rates would increase for banks profits, but the stock price might be offset by lower stock prices in general due to higher interest rates.
23/12/2021 by MICKE｜1
Financial (1)
2023Q3 EPS and dividend estimate
2023Q3 EPS=5SEK a bit up from Q1 and Q2. I estimate EPS23=18SEK. The dividend policy is 50%, thus 9SEK divided by today's price 125SEK = 7% dividend yield. Additional excess capital will be distributed via share buy backs (1.25 billion Q1 and Q2 respectively, potentially higher in 2024Q2 and forward)
25/10/2023 by MICKE｜1
Risks (2)
There will probably be a temporary windfall tax baltics for banks, including SEB.
01/07/2023 by MICKE｜12021-12-15: tax demands News:"Swedish bank SEB hit with $575 mln German tax demand". SEB: "To date, the tax authority has reclaimed a total of EUR 936m relating to historical transactions involving the crediting of withholding tax on dividends paid on German shares. Further reclaims cannot be ruled out, nor that this could have a negative financial effect on SEB.", "The bank strongly opposes these reclaims and will appeal them."
26/12/2021 by MICKE｜1