DNB (No_rec, TP: NOK) - Ample payout capacity
Boosted by strong trading income and loan loss reversals, DNB reported a Q1 ROE of 17.2%, despite continued cost pressure. After another 3.8% QOQ increase in NII, management guided for still-meaningful interest rate hike benefits ahead (NOK1.1bn positive annual NII impact from the March 25bp hike). The CET1 ratio rose 30bp QOQ to 18.6%, leaving ample headroom of ~1.6%-points to its fully phased-in supervisory expectation. It has applied to the FSA for a 2.5% share repurchase limit. We have raised our 2024–2025e EPS by ~2%, driven by higher NII.
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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