Resurs Holding (Hold, TP: SEK26.00) - It gets better before it gets worse
We expect Resurs to report a 5-quarter record NIM of 7.6%, driven mainly by benefits from rate hikes. We believe this upward NIM trend may continue for another 1–2 quarters, but that the effect of tight underlying competition will re-emerge once the central banks cut rates. Thus, we see upside potential for Q4 earnings, but downside risk for late-2023 if investors over-extrapolate short-term rate-driven NIM trends. We have raised our 2023–2024e EPS by 5–10%, on mainly higher NIM estimates. We have raised our target price to SEK26 (23) and reiterate our HOLD.Resurs Holding, which operates through subsidiaries Resurs Bank and Solid Foersaekring, is engaged in retail finance in the Nordic region, offering payment solutions, consumer loans and niche insurance products. Co.'s operations are divided into three business segments: Payment Solutions; Consumer Loans and Insurance. Payment Solutions offers sales-supporting financing, payment and loyalty solutions to retail businesses as well as credit cards to the public. Consumer Loans focuses primarily on lending to consumers. Insurance offers insurance policies to consumers. As of Dec 31 2015, Co. had total assets of SEK25,565,420 and total deposits of SEK16,433,531.
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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