Pareto Bank (Buy, TP: NOK76.00) - Strong growth, but loan-loss uptick
Helped by solid NII and firm cost efficiency, Pareto Bank reported a Q4 ROE of 12.2%, despite increased loan losses. With strong lending growth of 6.7% QOQ, the CET1 ratio fell ~1.1%-points QOQ to 17.2%. The board proposed a 2024 DPS of NOK4.15, implying a ~50% payout ratio and a 6.0% dividend yield. We have raised our 2025–2026e EPS by ~1%, and with the stock trading at a 2026e dividend-adjusted P/E of 7.2x, we continue to find the valuation attractive. Thus, we have raised our target price to NOK76 (73) and reiterate our BUY.
DNB Markets is the investment banking arm of DNB Bank ASA and is focused primarily on the Nordic region, as well as internationally on niches such as global shipping, energy and related services, and seafood. DNB Markets offers services in FICC, Equities and Investment Banking advisory from offices in Oslo, Stockholm, London, Singapore and New York. Equity research coverage is offered on c250 Nordic companies. DNB was ranked no.2 in Extel Nordic Research 2017. The DNB Markets’ Credit and FICC Macro & FX Research teams are repeatedly highly rated by Prospera Nordic Institutional Investor Surveys.
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