Pareto Bank (Buy, TP: NOK40.00) - Understated balance sheet flexibility
Despite the recent recovery, we find Pareto Bank’s valuation attractive at below 6x 2021e EPS, given: 1) the extensive balance sheet flexibility due to sharp redemption profiles; 2) a robust capital position; and 3) its solid capital-generating capability with an ROE of close to 10% in 2020–2021e despite elevated loan-loss provisions. Our 2021–2022 EPS forecasts are unchanged as lower NII is offset by lower costs, and we reiterate our BUY and NOK40 target price.
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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