DnB Markets - Pareto Bank (PARB) Pareto Bank Minor model adjustments

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DnB Markets

Håkon Astrup

EUR 88.42 For Business Accounts Only

Pareto Bank Minor model adjustments

We have updated our estimates ahead of the Q3 report, due at 07:30 CET on 29 October. Our 2021-2022e EPS are raised by 2-4% mainly owing to raised NII estimates. We do not consider these changes to be material, and we have not changed our BUY recommendation. We keep our target price of NOK45.

19/10/2020 14 EN

Underlying

Pareto Bank

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Provider

DnB Markets

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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Analysts

Håkon Astrup

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Pareto Bank (Buy, TP: NOK84.00) - Solid start to the year

Helped by still-solid core revenues and firm cost efficiency, PARB reported a Q1 ROE of 13.5%, despite some provisions. With deposit volumes rising by ~8.1% QOQ, the bank somewhat increased its bond holdings in the quarter, resulting in a ~5bp lower CET1 ratio at quarter-end, offset by strong earnings generation. We have made only minor changes to our 2026–2027e EPS. With the stock trading at a 2026e P/E of ~8.0x, we still find the valuation attractive, and reiterate our BUY and NOK84 target price.

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Pareto Bank (Buy, TP: NOK84.00) - Set for continued strong profitability

Supported by still-solid core revenues and firm cost efficiency, we expect a Q1 ROE of 13.0%, despite some provisions in real estate development. With an updated CET1 requirement of 16.29% (formerly 16.7%), including P2G, we see solid dividend potential and growth capacity. We have raised our 2026–2027e EPS by ~1%, and with the stock trading at a 2026e dividend-adjusted P/E of 8.2x, we continue to find the valuation attractive. Thus, we have raised our target price to NOK84 (76) and reiterate BUY.

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Pareto Bank (Buy, TP: NOK76.00) - Strong growth, but loan-loss uptick

Helped by solid NII and firm cost efficiency, Pareto Bank reported a Q4 ROE of 12.2%, despite increased loan losses. With strong lending growth of 6.7% QOQ, the CET1 ratio fell ~1.1%-points QOQ to 17.2%. The board proposed a 2024 DPS of NOK4.15, implying a ~50% payout ratio and a 6.0% dividend yield. We have raised our 2025–2026e EPS by ~1%, and with the stock trading at a 2026e dividend-adjusted P/E of 7.2x, we continue to find the valuation attractive. Thus, we have raised our target price to NOK76 (73) and reiterate our BUY.

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Airthings (No_rec, TP: NOK) - Recommendation and target price withdrawn

As a result of DNB Markets acting as financial advisor in conjunction with the company’s announcement (link) of a strategic review prompted by a non-binding letter of intent from Firda AS to explore a potential sale of its business segment assets, we have withdrawn our target price and recommendation.

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May 9, 2025 May 9, 2025 1 EN

Håkon Astrup

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SpareBank 1 Helgeland (Hold, TP: NOK167.00) - Softer margin, but lower costs

Helped by still-solid core revenues, cost reduction YOY and moderate loan losses, HELG reported a Q1 ROE of 12.3%, despite some margin pressure. With solid earnings generation, the bank increased its CET1 ratio by ~20bp to 18.0% and still guides for a 0.8%-point benefit from the implementation of Basel IV, boding well for meaningful distributions. We have lowered our 2026–2027e EPS by 0–1%, That said, we reiterate our target price of NOK167. With the stock trading at a 2026e P/E of ~12.4x, we continue to find the valuation fair and reiterate our HOLD.

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Smartoptics (Buy, TP: NOK27.00) - We remain optimistic

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Pareto Bank Minor model adjustments

Pareto Bank (Buy, TP: NOK84.00) - Solid start to the year

Pareto Bank (Buy, TP: NOK84.00) - Set for continued strong profitability

Pareto Bank (Buy, TP: NOK76.00) - Strong growth, but loan-loss uptick

Airthings (No_rec, TP: NOK) - Recommendation and target price withdrawn

SpareBank 1 Helgeland (Hold, TP: NOK167.00) - Softer margin, but lower costs

Smartoptics (Buy, TP: NOK27.00) - We remain optimistic

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