Danske Gains as BofAML Prefers Bank Over Peers: Copenhagen Mover

Danske Bank A/S (DANSKE) rose in Copenhagen trading after Bank of America Merrill Lynch added Denmark’s biggest lender to its list of most preferred bank stocks, saying it has underperformed its peers.

Danske rose as much as 1.5 percent, making it today’s third-biggest winner in the Nasdaq OMX Copenhagen 20 Index (KFX), which fell less than 0.1 percent. Danske’s shares added 1.3 percent to 104.70 kroner at 10:09 a.m. in the Danish capital with trading volume at 15 percent of the three-month daily average. The stock has now gained six trading days in a row, its longest winning streak since February 2011.

Danske, which has suffered from burst real estate bubbles in its home market and in Ireland, in October issued new shares for about $1.2 billion to bolster its capital. Its stock lost 8.6 percent in the fourth quarter of 2012 compared with a 10 percent gain in the Bloomberg Europe Banks and Financial Services Index. BofA Merrill Lynch today said the shares have “catch up potential” and will gain in the “near to medium term,” according to a note to clients.

“Danske Bank is the worst performing Nordic bank over the last three months,” BofA Merrill Lynch said. “Given we expect improved profitability for Danske while Swedish peers are likely to show weaker profitability, we see scope for a re-rating.”

Danske’s capital position “is now solid” and its Irish business “is seeing signs of improvement,” the New York-based bank said.

Danske, which is based in Copenhagen, said in November that cash raised from the share sale will help the bank reach its target of a core Tier 1 capital ratio in excess of 13 percent by the end of 2013.

To contact the reporter on this story: Christian Wienberg in Copenhagen at cwienberg@bloomberg.net

To contact the editor responsible for this story: Tasneem Brogger at tbrogger@bloomberg.net

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