Pareto Bank (Buy, TP: NOK63.00) - Profitability remains resilient
Despite individual provisions contributing to elevated loan losses, PARB reported a solid Q4 ROE of 13.8%, helped by strong NII (+5.7% QOQ) and firm cost efficiency. The board proposed a 2023 DPS of NOK3.9, indicating a ~53% payout ratio and a 7.1% dividend yield. With the stock trading at a 2025e dividend-adjusted P/E of ~5.9x, we continue to find the risk/reward attractive. We have raised our 2024–2025e EPS by ~1–2%, with higher NII only partly offset by increased loan losses. We reiterate our BUY and NOK63 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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