Sbanken (Buy, TP: NOK85.00) - Favourable fundamentals in H2
Q2 was somewhat soft with an ROE of 10.3%, hampered by higher loan losses. More importantly, mortgage growth was restored (up 2.3% QOQ) and the competitive situation is described by management as more normalised. We believe that this, together with the initiated interest rate adjustments, bodes well for NII towards the end of 2019. Sbanken launched its SME deposit offering during Q2, which should provide some funding cost tailwinds. We have raised our 2020−2021e EPS by ~1-2%, and our target price has been increased slightly to NOK85 (83). BUY reiterated.Sbanken ASA, formerly Skandiabanken ASA, is a Norway-based online retail bank. The Bank operates a digital platform, through which serves individual customers in Norway. Its financial products and services comprise current accounts, payment and card services, savings, investment products, as well as long- and short-term loans.
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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