Pareto Bank (Buy, TP: NOK57.00) - Volume-boosted NII
Despite elevated model-based provisions due to greater economic uncertainty, Pareto Bank reported a Q3 ROE of 14.0% – in line with its long-term target. Fuelled by strong growth in the corporate and residential property segments, lending volumes were up 5.1% in the quarter. With further support from margin tailwinds, NII increased by 7.1% QOQ. We have raised our 2023–2024e EPS by ~2–3%, as higher NII was only partly offset by higher costs and loan losses, and in turn edged up our target price to NOK57 (56). We continue to find the valuation attractive at a 2023e P/E of ~6.4x, and thus reiterate our BUY.
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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