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On Wednesday, Citi analyst Shrey Srivastava increased the price target for Skandinaviska Enskilda Banken AB (SEBA:SS) (OTC: SKVKY) to SEK176.00, up from the previous SEK164.00, while keeping a Neutral rating on the stock. The adjustment follows the bank’s fourth-quarter results for 2024 and incorporates the latest economic forecasts, including factors like the forward curve and risk-free rate movements.
Srivastava’s updated model for SEB anticipates a slight increase in earnings per share (EPS) for the years 2025 to 2027, expecting an approximate 1-2% rise. This projection is based largely on an anticipated increase in net interest income (NII) due to stronger loan growth, especially in the Baltics and among large corporate clients. However, Srivastava notes that recent geopolitical events might pose a risk to these growth assumptions.
Despite the positive adjustments, Citi’s estimates remain conservative, particularly in terms of provisioning. The bank’s net profit forecasts for 2025 to 2027 are about 1-5% below the Infront consensus. Additionally, while Citi’s NII forecast for 2025 is 2% lower than the consensus, its 2027 NII prediction is 3% higher, supported by the expected loan growth. Fee income estimates from Citi are aligned with the consensus.
The price target increase to SEK176 is also influenced by an assumption of a higher dividend payout ratio. Srivastava reiterates the Neutral stance on SEB shares, acknowledging the bank’s potential benefits from volume growth and its exposure to fee-based income. However, the analyst also points out that SEB’s shares may appear relatively expensive, trading at approximately 1.5 times book value for a projected return on equity (RoE) of around 13-14% in 2025.
In other recent news, Skandinaviska Enskilda Banken AB (SEB) announced a lower-than-expected dividend, impacting investor sentiment. Citi analysts, led by Shrey Srivastava, have maintained a Neutral rating on SEB’s stock with a price target of SEK64.00. The decision to prioritize capital deductions for future buybacks over dividends has raised questions among investors about SEB’s financial strategy. The bank plans to transition to semi-annual dividends starting in 2026, with net interest income expected to hit its lowest point between the second half of 2025 and the first half of 2026. Analysts are also monitoring cost developments, particularly the impact of a strong U.S. dollar, which could pose challenges if it persists. Despite these challenges, Citi’s analysis highlights SEB as a high-quality bank benefiting from increased savings and investment activities in the Baltics. The bank’s asset and wealth management capabilities and large corporate exposure are seen as positive factors. However, the stock’s current valuation reflects these strengths, trading at approximately 1.5 times book value with a projected return on equity of around 14% in 2026.
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