Pareto Bank (Buy, TP: NOK63.00) - Strong loan-loss absorption capacity
Supported by solid NII and firm cost efficiency, we expect a Q1 ROE of 13.1% (results due at c07:30 CET on 25 April). While we expect some provisions in the challenged real estate development segment, we find the bank’s business model, with in-depth sector knowledge, thorough credit assessments and close customer relationships, supportive of asset quality. With the stock trading at a ~13% discount to 2024e book value, we continue to find the risk/reward attractive, seeing prospects for 2025–2026e ROEs of ~13%. 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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