Sbanken (Buy, TP: NOK76.00) - Profitability focus
Sbanken reported a strong Q3 ROE of 12.2% and pre-tax profit 10% above consensus. While volumes were hit by elevated churn, particularly in low-LTV mortgages, margins saw a corresponding pick-up from lowered funding costs and positive mix effects. We continue to find the valuation attractive (2021e P/B of 1.1x) on our view that the market is overlooking its conservative asset mix and prospects of 2021–2022e ROEs of 11–12%. We reiterate our BUY and NOK76 target price.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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