JPM sees Nordic banks nearing NII peak, pressures to come
27/02/2023 12:34
** J.P.Morgan sees Nordic banks' net interest income (NII)
peak getting closer and warns of NII pressures in 2024-2025 from
rising funding costs, shrinking deposit base, rate cuts and
limited mortgage loan growth
** Following better-than-expected macro data from Sweden and
Norway, JPM says its economists expect the countries' rates to
peak at 3.50% in 2023
** It predicts rate cuts from Q1 2024 of about 2.25% for
Sweden and 2.50% for Norway
** Given falling house prices and contracting household
consumption, the broker sees mortgage loan growth remaining slow
through 2023, while strong corporate loan growth could continue
** As banks increasingly turn to deposits for funding,
driving up competition and pricing, JPM estimates a current
deposit beta of about 70% in Sweden in Q4 2022
** Among Nordic banks, the broker's top pick is Swedbank
SWEDa.ST at "overweight", as it sees more benefits than risks
for the bank's NII given its larger exposure to the Baltic
region
** JPM also likes Nordea NDAFI.HE , maintaining its
"overweight" rating
** It keeps "neutral" on DNB Bank DNB.OL , Islandsbanki
ISB.IC , Jyske Bank JYSK.CO , and "underweight" on Danske Bank
DANSKE.CO , Handelsbanken SHBa.ST and SEB SEBa.ST
(Reporting by Marta Frackowiak)
((marta.frackowiak@thomsonreuters.com))