Pareto Bank (Buy, TP: NOK46.00) - Raised ROE target
Q1 ROE was 15.2% and pre-tax profit 8% above our forecast due to higher activity in both the real estate and corporate project financing segments. Activity has in general held up better than we and the company expected, and the bank upgraded its 2018 lending growth target as well as raising its ROE target to >14% (>13%). We have factored in slightly higher lending growth, but also somewhat higher costs following increased activity, and raised our 2019–2020e EPS by 2–3%. We have raised our target price to NOK46 (NOK45) and reiterate our BUY recommendation.
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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