HSBC sees 'more pain than gain' from rate cuts for Nordic banks
** HSBC remains cautious on Nordic banks, saying Wednesday's 25bp rate cut from the Riksbank signals the start of policy easing that is likely to maintain downward pressure on Net Interest Income (NII)
** Share prices continue to lag the sector with Nordic banks underperforming the STOXX European Banks index .SX7P by over 20% in the last quarter, the broker says
** "We expect the absence of core earnings momentum to continue to weigh on share performance," it says, adding that Q1 EPS forecasts were only met due to trading profits and low impairments
** It sees positive news on capital distributions as unlikely until later in the year and says pay-out constraints remain an issue for investors
** Margin dynamics look more favourable in the Danish market as deposit repricing and customer switching continues to lag other markets, HSBC notes
** The broker maintains "buy" on Danske Bank DANSKE.CO and Islandsbanki ISB.IC, but trims TP by 3-4% for both, as they trade at discounts to P/TNAV and offer double-digit yields with buyback support
** It maintains "hold" for SEB SEBa.ST, Swedbank SWEDa.ST, Nordea NDAFI.HE and Handelsbanken SHBa.ST, lowering TP by 18% to SEK 105 for the latter
Reporting by Elsa Ohlen
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