Pareto Bank (Buy, TP: NOK62.00) - 13% ROE despite higher losses
Helped by further NII expansion, Pareto Bank reported a Q1 ROE of 13.0%, despite negative trading income and elevated loan losses. With solid lending growth and higher risk-weighted assets, the CET1 ratio fell to 17.1% versus the bank’s estimated end-2023 target and fully phased-in requirement of 17.7%, though we note a potential CET1 capital relief from a new Pillar 2 assessment. At a 2024e P/E of ~6.5x, we continue to find the valuation attractive. We reiterate our BUY and NOK62 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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