Danske Bank (1K) | Buy | Q1: F28 ambitions support long-term case

Research evidence excerpt

Danske Bank (1K) | Buy | Q1: F28 ambitions support long-term case

e cost-to-income target is tightened to below 43% by 2028, with management Tangible BVPS 209.93 217.15 223.70

highlighting AI-driven initiatives as key efficiency drivers. We make only limited EPS Adj 29.62 32.52 34.22

estimate revisions following the strategy update, although we now assume Consensus EPS 29.57 31.67 33.64

somewhat lower FTEs given the strong emphasis on AI-driven productivity gains. FY to 31/12 12/26E 12/27E 12/28E

P/E adj. and fully

▪The strategy assumes annual loan losses of c.7bp, while management guides for diluted(x) 10.9 9.9 9.4

impairments of DKK c.1bn in 2026. We view this as conservative given average P/BV (x) 1.46 1.41 1.37

impairments of only c.3bps since 2023 and net reversals of 1bps in Q1 2026. Our P/TBV (x) 1.53 1.48 1.44

forecasts continue to assume loss levels of 4–6bps over the coming years. Dividend yield 8.9% 7.7% 8.1%

RoTBV 14.1% 15.2% 15.5%

▪ The CET1 target is revised to c.17% in 2026, declining to c.16% by 2028 (implying RoE after tax 13.4% 14.5% 14.8%

a 150–200bp buffer), supported by the release of resolved legacy cases. The 2028 CET 1 ratio 16.9% 16.5% 16.0%

target is slightly below our prior 16.5% assumption. Danske also announced a Cost income ratio 44.5% 42.9% 42.6%

DKK 5bn extraordinary dividend and increased its payout ratio target to 60–70%, Net NPL ratio (on na na na loans)

signalling greater confidence in medium-term capital generation and regulatory

Sector Most Pref. Sector Least Pref.

visibility. Barclays Banco BPM

Deconstructing the forecasts KBC CaixaBank

Santander Svenska Handelsbanken

▪We raise our 2027-28E forecasts by 2-3%. While our estimates remain c.4% above

consensus, we expect consensus to move higher following the strategy update.