Pareto Bank (Buy, TP: NOK63.00) - ROE ambition raised to 15%
Supported by solid NII, firm cost-efficiency and reduced loan losses, Pareto Bank reported a Q2 ROE of 14.8%, despite negative trading income. The bank raised its ROE ambition from 14% to 15%, and announced a long-term CET1 ratio target of at least 16.7% following its reduced Pillar 2 requirement (it previously targeted 17.7% at end-2023). We have raised our 2024–2025e EPS by ~2–3%, driven by higher NII, and edged up our target price to NOK63 (62). At a 2024e P/E of ~6.4x, 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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