DNB (No_rec, TP: NOK) - Positive trend in profitability and payout
DNB reported Q4 ROE of 12.3% and EPS 22% above consensus, driven by a low tax rate and low loan losses. We believe the positive trend in the Norwegian economy opens up for profitable growth. The bank seems comfortable with its capital position, which is illustrated by a total payout ratio of 73% for 2017, up from 50% in 2016. We keep 2018–2019e EPS largely unchanged, but have raised 2018–2019e DPS by 2–3%.DnB Nor is a holding company. Through its subsidiaries, Co. is financial services group in Norway. Co. provides a range of financial services, including loans, savings, advisory services, real estate broking, insurance and pension products for personal and corporate customers. Co.'s operations are divided into six segments: Personal Banking Norway, Corporate Banking Norway, Large Corporates and International, Markets, Wealth Management, and Products. As of Dec 31 2013, Co. had total assets of NOK2,389,438,000,000 and total deposit of NOK867,904,000,000.
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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