Shares of Nordea Bank, the Finnish lender, have been branded “too cheap to reject” by investment bank Berenberg. Nordea, founded in 1820 and headquartered in Helsinki, has millions of customers throughout Finland, Sweden, Norway, and Denmark. The shares are also traded in the US, UK, Germany, Italy and Switzerland. Earlier this week, the bank reported first-half results, with net profit rising to 2.66 billion euros ($2.89 billion), from 2.48 billion euros a year earlier. Net interest income – earned through the difference in rates offered to savers and borrowers – increased by 7% annually to 3.86 billion euros. These strong numbers come despite macroeconomic uncertainty and a challenging geopolitical climate, according to the bank. “Our results show that despite the economic slowdown, we continue to make progress on our strategic priorities and deliver industry-leading financial performance,” said Frank Vang-Jensen, chief executive of Nordea. According to Berenberg analysts, strong fundamentals make Nordea an attractive investment opportunity with a potential upside of 27%. “Nordea’s attractive fundamentals become even more compelling as its price-to-earnings premium narrows the sector, in our view,” said Hugh Moorhead in a note to clients on July 16. Moorhead maintained a “buy” rating on Nordea, but lowered the price target slightly. to 156 Swedish kronor ($14.67) from 157 kronor. “Trading at just 7.5x earnings (financial year) 2025 – an 8% premium to the sector – we think Nordea is too cheap to turn down. Buy,” added Moorhead. NRDBY 5Y line As central banks in three of Nordea’s four forward markets have already started to cut interest rates, with further reductions anticipated, the stock underperformed in 2024, down 2%. Banks typically make less money in a lower interest rate environment. However, Berenberg analysts believe that Nordea’s net interest income is relatively resilient, stating that “the market still underappreciates the stability of Nordea (net interest income), in our view, which contrasts favorably to other level-sensitive Nordic peers.” The analyst also said that recent challenges, including a crash in second-quarter net interest income expectations or modest cost increases, should not bother investors. In addition, Moorhead has a positive view of Nordea’s long-term shareholder distribution despite the bank’s plan to postpone share buybacks until 2025. Analysts project 11% to 12% total annual returns, beating the sector average. The stock also trades with a forward dividend yield of 9%.