HOUSE OVERSIGHT 014863 • ISP will pay a dividend (confirmed) equivalent to an 8.0% yield vs. a 4.0% European banks average and on our estimates • Italian banks are trading at a PNAV discount to ISP but their profitability is half that of ISP's and their capital is lower • ISP retains the lowest (gross/net) Italian NPE ratio and in 4Q16 NPE were down yoy by 8% gross/10% net. • Shares have suffered from the uncertainty related to a possible tie-up with insurer Generali - still the seventh worst performing bank in the SX7E YTD Also remain very bullish on market exposed Nordic banks This morning we reiterate our preference for Nordic banks (click here for report) with more market exposed revenues and reiterate our Buy ratings on Danske Bank, Nordea, DNB and SEB ahead of Q1 results. We expect to see good fee /trading income in Q1 on the back of strong AUM and continued high activity levels. The relative P/E premium of Nordic banks vs. the sector is now 7% vs. a long term average of 11%. We also note that Nordic banks are expected to continue to deliver close to 4% better ROTE (2017-19E) and have a lower beta. Chart 1: Danske Bank remains best capital return story (Capital buffers as `)/0 of market cap) 300 200 100 00 208 69 13.8 11.0 DANSKE SHBA 10.8 10.8 10.4 10.3 5.8 6.4 6.1 6.0 4.9 ZIEN SEBA NDA DNB SWEDA Buffer 17E Divi + Buyback (not yet executed) Buffer + Dii + Buyback (not executed) Source. SofA Merrill Lynch Global Research estimates Please let me know if you would like to discuss in more detail or meet any of our analysts on the above reports. Kind regards, Russell Quelch European Financials Specialist Sales Bank of America Merrill Lynch Global Financials Specialist Sales Team: Russell Quelch - European Banks — London Juliette Nichols — European Insurance, Div Fo, Scott Smith — US Financials — New York The power of global connectionsTM