Danske Gains as Loan Losses Seen Under Control: Copenhagen Mover

Danske Bank A/S rose to the highest price in more than two years in Copenhagen trading after analysts raised their estimates on the share, betting Denmark’s largest lender has brought its loan losses back under control.

Danske rose as much as 3.5 percent to 116.90 kroner, the highest since May 9, 2011. The stock, today’s biggest winner in the Copenhagen 20 Index, advanced 2.2 percent to 115.40 kroner at 9:47 a.m. with trading volume at 67 percent of the three-month daily average.

Danske reported second-quarter net income yesterday that beat analyst estimates and said loan losses dropped as the economies of the Copenhagen-based bank’s main markets picked up. Today, Nordea Markets raised its recommendation on the share to buy from hold and said the earnings result may support Danske’s ambition to obtain a higher credit grade from rating companies.

“Danske Bank’s six-year long loan loss nightmare might have come to an end so we upgrade our rating,” Simon Christensen, an analyst at the unit of Nordea Bank AB, said in the note. “Our analysis of European banks shows that Danske Bank is set to outpace better credit-rated peers.”

Christensen raised a price estimate on the share to 130 kroner from 115 kroner.

Deutsche Bank AG raised its Danske price estimate to 108 kroner from 100 kroner and JPMorgan Chase & Co. lifted its target to 140 kroner from 120 kroner, according to notes distributed to clients. Jyske Bank A/S raised its price estimate to 140 kroner from 135 kroner, according to data compiled by Bloomberg.

Danske shares jumped 9.3 percent yesterday when the bank reported net income of 2.18 billion kroner ($388 million), beating a 1.68 billion-krone average estimate in a Bloomberg survey. Loan losses fell 45 percent to 924 million kroner.

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