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    DANSKE   DK0010274414

DANSKE BANK A/S

(DANSKE)
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Delayed Quote. Delayed Nasdaq Copenhagen - 01/26 10:59:59 am
126.8 DKK   +0.79%
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Danske Bank-Inflation gaining slightly more traction

11/30/2021 | 04:48am EST

Whereas inflation was seen as a transitory phenomenon at the start of the year, it has gained a little more traction than expected, especially in the US.

Price increases this year have been stronger than both Danske Bank's economists and other economists and investors expected - and that has fuelled inflation. In the US, too, fears of inflation have grown - and the focus has shifted to whether the rise in inflation is perhaps not a temporary phenomenon after all.

'Inflation has surged in the US, hitting a 30-year high of 6.2 per cent in October this year. Even after deducting the most price-volatile sectors, such as energy and food, inflation remains very high at 4.6 per cent. When the biggest and most important economy in the world is struck by high inflation, we also risk it spreading to other regions and countries, including Europe and Denmark,' says Danske Bank's chief analyst Mikael Olai Milhoj.

Even after deducting the most price-volatile sectors, such as energy and food, inflation remains very high at 4.6 per cent. When the biggest and most important economy in the world is struck by high inflation, we also risk it spreading to other regions and countries, including Europe and Denmark.

Mikael Olai Milhoj

Chief analyst, Danske Bank

Highest inflation in Denmark for 10 years

Inflation in the US normally hovers around 2 per cent - and was all the way down at 0.3 per cent when Covid-19 struck. Inflation in the eurozone was 4.1 per cent in October and 4.1 per cent in Denmark, which is the highest in 10 years. However, we are not yet seeing the same high price rises on consumer goods excl. energy and food in Europe and Denmark as in the US.

Inflation in Europe is being driven higher by the increase in raw materials prices and supply chain pressures - but analysts across various Danish media remain very uncertain about whether high inflation is here to stay. The consensus is that it could go either way in 2022, but that inflation has perhaps gained a little more traction in the US.

'The US is currently experiencing very pronounced price increases on used cars and car leasing. One reason is that the market for microchips is very tight at the moment - and that has hit the number of cars being produced. Hence, it is difficult to meet demand through the production of new cars, which is pushing prices higher. We can see the same trends in other markets, too,' explains Mikael Olai Milhoj.

Rising wages in the US could create an upward inflationary spiral

The US economy is largely back on track, and demand for labour is high. This has fuelled the highest level of wage growth in 10 years. If wage growth begins to accelerate even more, it could ultimately push the costs of rising wages over onto prices, so consumers end up paying - and thus creating an upward inflationary spiral.

'The reaction of the central banks to this situation will be interesting to observe. Monetary policy in Denmark is largely determined by the EUR/DKK peg, but the US, UK and European central banks all have an inflation target of around 2 per cent. They may now be forced to lift their foot off the accelerator and onto the brake to prevent inflation becoming entrenched. The US central bank decided in early November to begin tapering bond purchases, thus taking the first steps towards a gradual tightening of monetary policy. This probably also means that a hike in monetary policy rates is not too far off,' says Danske Bank's chief analyst.

(C) 2021 Electronic News Publishing, source ENP Newswire

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Financials
Sales 2021 42 186 M 6 362 M 6 362 M
Net income 2021 11 574 M 1 745 M 1 745 M
Net Debt 2021 - - -
P/E ratio 2021 9,41x
Yield 2021 5,64%
Capitalization 108 B 16 401 M 16 312 M
Capi. / Sales 2021 2,56x
Capi. / Sales 2022 2,54x
Nbr of Employees 22 027
Free-Float -
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Mean consensus HOLD
Number of Analysts 20
Last Close Price 126,80 DKK
Average target price 128,21 DKK
Spread / Average Target 1,11%
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Managers and Directors
Carsten Rasch Egeriis Chief Executive Officer
Stephan Engels Chief Financial Officer
Karsten Dybvad Dalsj÷ Chairman
Fredrik Lindstrom Group Chief Information Officer
Frans Woelders Group Chief Operating Officer
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