Positive Sweden - Firstly we remain overweight Nordic banks, particularly Swedish. Whilst there are clearly increasing risks (zero interest rates, deflation, demanding valuations) they are far from unique in a European context. In the meantime government finances are broadly in order, banks are very well capitalised, lending volume growth is (almost uniquely) positive, house prices remain robust and increasing clarity on capital requirements raises the spectre of materially increased dividends. Nordea – Upgrade to Conviction Outperform (from Neutral), TPSK103 (from SK91) – We do see risks to near term performance from areas such as Russia, Finland, Norway, etc. We understand that total risk exposure in respect of Russia is c€5bn, which equates to a manageable cSK12 a share (assuming no tax relief on losses). However, Nordea is forecasting to deliver in 2015:- the most ambitious cost programme in the sector, which we expect will reduce costs by - 7% (fall away of restructuring charges and improved efficiency in Swedish Retail); the best pre-impairment profit performance in the Nordic sector (+12%); a post tax return on tangible equity above 13%; and a Pillar 2 adjusted core tier 1 ratio of comfortably over 15% ensuring a robust dividend (we forecast 2015e yield of 7%).

1. Nordic Banks “Everything is Awesome ... ish”
Description: Positive Sweden - Firstly we remain overweight Nordic banks, particularly
Swedish. Whilst there are clearly increasing risks (zero interest rates, deflation, demanding
valuations) they are far from unique in a European context. In the meantime government
finances are broadly in order, banks are very well capitalised, lending volume growth is
(almost uniquely) positive, house prices remain robust and increasing clarity on capital
requirements raises the spectre of materially increased dividends.
Reference URL: http://business.wesrch.com/paper-details/pdf-BU187QVG8TIBG-nordic-bank
s-everything-is-awesome-ish