Pareto Bank (Buy, TP: NOK62.00) - Volume and margin tailwinds
ROE was 14.5% in Q2, above PARB’s 14% long-term target, supported by a ~9% QOQ NII uptick following margin tailwinds and strong growth in corporate and ship financing. While acknowledging the greater uncertainty in the real estate sector, driven by high inflation and supply-chain shortages, we continue to view the bank’s credit quality as rather robust, with close follow-up and third-party controls/valuations as potential mitigating factors. We have raised our target price to NOK62 (59) on positive estimate revisions, and at a 2023e P/E of 6.7x we still find the valuation attractive and 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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