Pareto Bank (Buy, TP: NOK62.00) - Attractive near-term dividend yield
Pareto Bank reported a Q3 ROE of 13.8%, leaving the YTD ROE at 14.1%, just above its 14% internal target. Yesterday, the bank announced it has proposed a doubling of the authorised 2020 dividend, leaving an estimated 12-month dividend yield of 10.3%. Given the attractive near-term dividend yield and the stock trading at a 2022e P/E of c8.5x, we continue to find the valuation attractive at a 2021e P/B of 1.2x and reiterate our BUY. While we have trimmed our 2022–2023e EPS by c2% on lower NII estimates, we reiterate our 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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