Swedbank AB (SWEDA) rose to the highest in 11 days in Stockholm trading after Nordea Bank AB (NDA) said the lender will probably distribute excess capital next year and raised its rating on the stock to buy from hold.
Swedbank rose as much as 1.9 percent to 156.8 kronor, its highest level since June 3 and its steepest intraday increase since June 7. The shares traded 1.7 percent higher as of 10:04 a.m. local time, with trading volume at less than a third of the the daily average in the past three months.
Nordea raised its share-price estimate for Swedbank to 174 kronor from 163 kronor, saying it expects growth to gradually return in Sweden and that Swedbank should start to regain “its natural market share.” When it distributes cash in 2014, Nordea said it believes Swedbank’s markets in the Baltics will provide “good growth” and that the lender will boast the best cost-to-income ratio in the industry.
“Swedbank is overcapitalized and the capital equals a yield of 15 percent that we believe will be handed out in 2014,” Pawel Wyszynski, an analyst at Nordea in Stockholm, said in the note to clients. “We foresee capital triggers drawing closer and regard the 30 percent to 35 percent total upside as attractive.”
Moody’s Investors Service raised Swedbank’s credit ratings one step to A1 on June 4, its fifth-highest investment-grade rating, citing the Swedish lender’s lower risk and higher capital buffers.
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