SpareBank 1 Østlandet (Hold, TP: NOK133.00) - Strong core revenues
Hampered by negative trading income, SPOL reported a soft Q2 ROE of 7.7%. However, supported by sustained volume tailwinds, a margin improvement, and an uptick in payment-related fees, core revenues were strong, while asset quality remained robust. We have raised our 2023–2024e EPS by ~2%, driven by higher NII and fee income. However, with the shares trading at a 2022e P/B of ~1.1x and given the 2023–2024e ROE potential of ~11%, we find the risk/reward more attractive elsewhere in the sector. Hence, we reiterate our HOLD and NOK133 target price.Sparebank 1 Ostlandet operates as a bank and holding company. Co.'s main focus is on responsible lending, financial crime, requirements for providers of financial services, ethics and corruption, and ethical marketing of products and services. Co. is primarily a regional actor that operates in central Eastern Norway. Because of this, Co. concentrates on sustainability, growth and development in the local communities of which it. is a part. The Co.'s 38 branches have authorised financial advisers with local knowledge about their communities to better serve its clients.
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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