SpareBank 1 Sørøst-Norge (Buy, TP: NOK63.00) - Taking shape
Supported by strong core revenues, SOON reported a rather solid Q2 ROE of 9.4%, despite soft trading income and merger-related costs. Following the inclusion of SpareBank1 Modum and healthy organic growth, gross lending reached cNOK105.3bn at end-Q2, while the ~1.1%-points QOQ CET1 uptick leaves headroom for further growth and dividend potential. We have raised our 2023–2024e EPS by ~1% and edged up our target price to NOK63 (62). Seeing scope for further synergies, potential capital tailwinds and continued growth momentum, we find the valuation undemanding at a 2023e P/E of ~9.9x and reiterate our BUY.Sparebank 1 BV, formerly Sparebank1 Buskerud-Vestfold (the Bank), is a Norway-based regional bank. It is primarily active in Buskerud, Kongsberg, Drammen and Vestfold in Norway. It is engaged in the provision of a range of banking and related products and services to both private clients and small and middle-sized enterprises. Its products and services include financing, payment processing, savings accounts, insurance and real estate services. The Bank is active through branches in Drammen, Kongsberg, Hvittingfoss, Horten, Tonsberg, Sandefjord, Larvik and Stavern. As of December 31, 2011, the Bank had three direct wholly owned subsidiaries, namely EiendomsMegler 1 Buskerud Vestfold AS, Georg Solberg AS and Imingen Holding AS. Additionally, it had one indirect subsidiary, Parkeringsplassen AS, and three associated companies. Sparebank1 BV is a member of the SpareBank1 bank alliance, which comprises 15 independent Norwegian banks.
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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