Nordea Not Dramatically Undervalued, But Also Not Likely To Disappoint

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

Seeking Alpha: After A Big Run, Can Danske Bank A/S Still Impress?

It's hard to complain about the performance of the Nordic banks over the past year. When Swedbank (OTCPK:SWDBY) is one of the laggards with a 14% yoy rise in the local stock price, you know you're talking about a fairly solid group. Amidst yoy performances like DNB (OTCPK:DNBHF) (up 23%), Nordea (OTCPK:NRBAY) (up 28%), SEB (OTC:SEBYF) (up 40%), Danske Bank A/S (OTCPK:DNSKY) has been a clear winner with a nearly 54% rise over the past year on new management, a new operating plan that emphasizes tighter operations, and expectations for improved funding costs and loan loss realizations.

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After A Big Run, Can Danske Bank A/S Still Impress?