Swedbank is a leading Swedish and Baltic retail bank, dominated by a large, low-risk mortgage book and a low-cost operating model (~36% cost/income). It earns a strong ROE ~14.7% (ROTCE ~16.3%) on a ~1.54% NIM with near-zero credit losses (a net provision release in FY2025) and a 17.8% CET1 ratio. On a ~10% cost of equity that is a ~4.7pp value-creative spread (residual income +SEK 10.2bn), and the bank distributes most of it — a gross dividend yield of ~8.9% including the special.
Two things cap the upside. First, valuation: at 1.66x book / 1.85x tangible / 11.5x earnings, the stock trades right at a Gordon fair P/B of ~1.68x (fair ~SEK 337), so there is little multiple re-rating to come — the return is the dividend plus a cyclical NII tailwind as rate cuts feed through. Second, the unresolved Baltic anti-money-laundering legacy remains a governance and capital tail-risk. A quality compounder to own for the capital return, fairly valued.
Gordon fair P/B = (ROE−g)/(COE−g) with COE 10%, g 3% and ROE ~14.7% gives ~1.68x → fair value ~SEK 337 (reported 15.2% ROE implies ~1.74x / ~SEK 350). Current 1.66x book, 11.5x earnings, ~8.9% gross dividend yield.
Base SEK 335 (at warranted P/B); bull SEK 375 if ROE holds ~15% and the AML overhang clears; bear SEK 280 on a Baltic credit/AML shock or a sharper NII squeeze.
The operating reverse-DCF (NOPAT / invested capital / WACC) does not apply to a balance-sheet business — leverage is the raw material and "net debt" is not meaningful. The equity is valued on residual income: book equity plus the present value of returns above the cost of equity, discounted at Ke; the single-stage lens is the Gordon fair price-to-book, (ROE−g)/(Ke−g). The market prices in a sustainable ROE of 14.6% vs 14.5% currently earned; at a sustained 14.5% ROE the warranted P/B is 1.64× (SEK 330/sh, -1%).
| Scenario | 24m target | Impl. ROE | Upside | Prob. | Driver |
|---|---|---|---|---|---|
| Bull | SEK 375 | 16% | +12% | 30% | ROE holds ~15%; AML overhang clears |
| Base | SEK 335 | 15% | +0% | 45% | At warranted P/B; dividend is the return |
| Bear | SEK 280 | 13% | -16% | 25% | Baltic credit/AML shock or sharper NII squeeze |
| Prob-weighted | SEK 333 | — | -0% | 100% | Scenario-weighted expected value |
| Ke \ ROE | 10% | 14% | 18% | 22% | 26% | 30% | 34% |
|---|---|---|---|---|---|---|---|
| 8.50% | 256 | 402 | 548 | 694 | 840 | 986 | 1132 |
| 9.25% | 225 | 354 | 482 | 611 | 739 | 868 | 996 |
| 10.00% (base) | 201 | 316 | 430 | 545 | 660 | 775 | 889 |
| 10.75% | 181 | 285 | 389 | 492 | 596 | 700 | 803 |
| 11.50% | 165 | 260 | 354 | 449 | 543 | 638 | 733 |
Green = fair value above the current price of SEK 333.40. For a financial the surface is dominated by cost of equity and sustainable ROE — not unit growth.
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Large, low-risk mortgage book + ~36% cost/income = high, stable ROE.
~8.9% gross dividend (incl. special) off a 17.8% CET1 surplus.
ROE ~14.7% vs ~10% COE → residual income +SEK 10.2bn.
Mortgage repricing supports NII as policy rates ease.
Swedbank is a high-quality, fortress-capitalised Swedish/Baltic mortgage bank (~14.7% ROE, +SEK 10.2bn residual income) trading right at its Gordon fair P/B of ~1.68x with a ~8.9% dividend. HOLD; base SEK 335.
Own it for the capital return, not re-rating; the swing factors are the Baltic AML resolution and the NII path.
Every adjustment traces to the cited note/page in the source filing — click to open it there. Annual report / 10-K: 📄 open · Latest interim: 📄 open
| Adjustment / figure | Value | Source | Why mttssn treats it this way |
|---|---|---|---|
| 32,762 | — | ||
| 68,736 | — | ||
| 44,000 | — | ||
| 44,203 | — | ||
| 225,802 | — | ||
| 22,661 | — | ||
| 0.152 | — | ||
| 0.36 | — | ||
| 0.015 | — | ||
| 0.178 | — | ||
| 0 | — | ||
| 0.006 | — | ||
| 1,124,225,510 | — | ||
| 201 | — | ||
| 29.8 | — | ||
| 199,113 | — | ||
| 333 | — |
How the mttssn view has evolved — each prior dated note is preserved.