Sparebank 1 Østlandet (Buy, TP: NOK86.00) - Choosing growth over profitability
SPOL successfully raised NOK700m of new equity through a private placement of 8.1m equity certificates (EC) at NOK86 per EC to support growth opportunities. Given its profitability relative to other regional banks, we are concerned the bank’s growth focus may hurt profitability. We have cut our 2019–2020e EPS by 4–5% following added ECs offset by lending growth. We have cut our target price to NOK86 (100) and downgraded the stock to HOLD (BUY).
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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