Pareto Bank (Buy, TP: NOK57.00) - Set for continued strong ROE
We expect PARB to report a Q4 ROE of 13.7%, just shy of its 14% long-term target, supported by further NII expansion and still-firm cost efficiency. While we acknowledge the greater uncertainty in the bank’s core segments, we find its business model with tight follow-up measures and close customer relationships supportive of its asset quality. Implying a 50% payout ratio and a 7.5% dividend yield, we forecast a 2022 DPS of NOK3.6. At a 2024e P/E of ~6.3x, we continue to find the valuation attractive and reiterate our BUY and NOK57 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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