The way a lot of bank stocks are priced today, you'd think the sector was doomed. True, rates at or near zero and weak loan demand are likely to put a serious crimp in growth over the next few years, but the significant discounts to tangible book look excessive. Nordic banks like Nordea (OTCPK:NRDBY), then, stand out as definite exceptions. With healthier balance sheets and better prospects for pre-provision profit growth, Nordea and its peers don't trade at anywhere near the same discount as most European banks.
I'd call Nordea's valuation fair today, and I can understand the appeal as a "safe haven" given the bank's very strong capital position, its diversification across markets, and self-help opportunities like cost leverage. Nordea is likely to be allowed to resume dividends relatively soon, and while I think there are far better return opportunities elsewhere, Nordea qualifies as a "sleep well at night" type of bank stock.
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Nordea Not Dramatically Undervalued, But Also Not Likely To Disappoint
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