Pareto Bank (Buy, TP: NOK45.00) - Indicating resilience
While the Q2 ROE of 15.7% was aided by loan loss reversals, we find the improved activity outlook and resilient margins positive. The bank now sees moderate lending growth in H2. We have lifted our target price to NOK45 (40) in light of reduced macroeconomic uncertainty, resilient house prices and our positive earnings revisions. We reiterate our BUY, as we still consider Pareto Bank undervalued at a 2020e P/B below 0.8x, given its ability to also generate healthy returns and attract profitable growth in a more challenging operating environment.
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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