JYSK.CO — mttssn research

HOLD

Conviction: MEDIUM

Denmark's second-largest bank earning a ~10% ROE and trading at ~book (1.04× vs Gordon-justified ~1.03×) — fairly valued, with capital returns the support. HOLD.

Return on Equity

9.7%

Cost of equity ~9.5%

Price / Book

1.04×

1.04× book; fair

Fair P/B (Gordon)

1.03×

(ROE−g)/(COE−g); g 3%

Price / Target

DKK 918 → DKK 920

+0% base; HOLD

Price / Earnings

10.7×

≈10.7× earnings

P / TBV

1.11×

Price / tangible book

Economic Profit

+DKK 859M

+DKK 859M; ~10% ROE

Equity (book)

DKK 51.1B

Bank equity

Thesis

Jyske Bank is Denmark's second-largest bank, a retail/SME/corporate lender (strengthened by the Handelsbanken Denmark acquisition) with a ~10% return on equity and a strong capital position funding buybacks. It is a steady, conservatively-run Danish bank.

On the ROE/P-B frame the equity is fairly valued — 1.04× book against a Gordon-justified ~1.03× (ROE 10%, COE ~9.5%, g 3%), essentially at fair value. Returns barely exceed the cost of equity, so the modest valuation is appropriate; capital returns are the total-return driver.

Valuation · residual income (equity frame) & scenarios

Gordon fair P/B = (10%−3%)/(9.5%−3%) ≈ 1.03×, essentially the current 1.04× — fairly valued at around book. A low-P/E (≈10.7×) bank where buybacks compound per-share value.

Base DKK 920 (flat) on stable ROE plus buybacks; bull DKK 1100 (rate/credit tailwind and synergy delivery lift ROE); bear DKK 750 (a Danish credit/rate downturn).

Market-implied ROE

9.7%

sustainable ROE the price already demands — vs 9.7% observed

Current → Fair P/B

1.04× → 1.03×

at a sustained 9.7% ROE, K_e 9.5%, g 3%

Excess-return premium

DKK 25 / sh

value above DKK 885.70 book from the +0.2pp ROE−K_e spread

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 K_e; the single-stage lens is the Gordon fair price-to-book, (ROE−g)/(K_e−g). The market prices in a sustainable ROE of 9.7% vs 9.7% currently earned; at a sustained 9.7% ROE the warranted P/B is 1.03× (DKK 911/sh, -1%).

Scenario	24m target	Impl. ROE	Upside	Prob.	Driver
Bull	DKK 1,100	11%	+20%	30%	Rate/credit tailwind + synergy delivery lift ROE
Base	DKK 920	10%	+0%	45%	Fair: ~book; buybacks compound
Bear	DKK 750	9%	-18%	25%	Danish credit/rate downturn
Prob-weighted	DKK 932	—	+1%	100%	Scenario-weighted expected value

Sensitivity — fair value / share at K_e × ROE

K_e \ ROE	10%	14%	18%	22%	26%	30%	34%
8.00%	1240	1949	2657	3366	4074	4783	5491
8.75%	1078	1694	2311	2927	3543	4159	4775
9.50% (base)	954	1499	2044	2589	3134	3679	4224
10.25%	855	1344	1832	2321	2810	3298	3787
11.00%	775	1218	1661	2104	2546	2989	3432

Green = fair value above the current price of DKK 918.00. For a financial the surface is dominated by cost of equity and sustainable ROE — not unit growth.

Method & data. ROE 9.7% and book equity are observed (net income / total equity). Cost of equity 9.5% and terminal g 3% are assumptions, shown explicitly and overridable. The underwriting bridge (combined ratio → float → ROE) is [DATA SAKNAS] — it requires a financial deep-dive to extract the combined ratio and investment yield, and is omitted here rather than estimated.

⤓ Download the full model (.xlsx) — formula-driven sheets; flex the blue input cells and the model cascades in Excel.

Key drivers

1. Scale + Handelsbanken DK

The Handelsbanken Denmark acquisition adds scale and synergies.

2. Buybacks at ~book

Strong capital generation funds buybacks that compound per-share value at low multiples.

3. Conservative lending

A predominantly secured Danish loan book limits losses.

4. Rate support

Higher rates support net interest income.

5. Low valuation

Trades at ~book with a low P/E.

Key risks

At-COE returns~10% ROE barely exceeds the cost of equity — thin value creation.
Danish credit/rate cycleNII and loan losses are sensitive to the Danish cycle.
IntegrationHandelsbanken DK integration carries execution risk.
CompetitionDanish banking competition pressures margins.
Fee/market sensitivityWealth/markets revenue tracks asset levels.

Conclusion

Jyske Bank is a steady Danish bank fairly valued at around book, with buybacks the total-return driver. HOLD, medium conviction; base target DKK 920 (flat).

Synergy delivery and a rate/credit tailwind lifting ROE are the upside; a Danish downturn is the principal risk.