TSX runs higher on rate cut expectations
Investing.com - Potential fee misses at Nordic banks are likely to be in focus when these lenders report their latest quarterly returns, according to analysts at Barclays (LON:BARC).
The brokerage has recently been selective in its approach to banks in the region, as investors remain on the lookout for any signs that recent global trade tensions are impacting growth.
On Thursday, Norway’s central bank also unexpectedly slashed its policy interest rate for the first time since 2020, citing an "uncertain" economic picture.
Earlier in the week, Norges Bank’s counterpart in Sweden also slashed its key interest rate to 2.00% from 2.25%. Writing in a note to clients, the Barclays analysts predicted that the Sweden’s Riksbank will reduce borrowing costs by 25 basis points once more this year.
Against this backdrop, the strategists noted that Sweden’s SEB has said it will bring down its deposit rates by 20 basis points later this month, possibly weighing on net interest income, a metric for measuring banks’ income from lending and deposits. Their estimates for SEB’s fees in its second quarter are also seen 2% below consensus, although they estimated that there will be "larger fee misses at other Nordic banks."
The Barclays analysts said they prefer SEB (ST:SEBa) over regional peers Handelsbanken (ST:SHBa) and Swedbank (ST:SWEDa), adding that their per-share projections between this year and 2027 for SEB are 7-8% above consensus expectations.
Danske Bank (CSE:DANSKE) is also preferred above DNB (OL:DNB) and Nordea (CSE:NDADK), the analysts added, arguing that the latter two "lack catalysts."
"[I]f [Danske] can demonstrate second-quarter net interest income is the trough [...], we believe this may be a positive catalyst for the shares," the Barclays analysts said.