SpareBank 1 Østlandet (Hold, TP: NOK148.00) - Strong ROE despite market turmoil
With support from the tax advantage of customer dividends, SPOL reported a strong Q1 ROE of 12.2%, as revenues and asset quality proved robust to the recent market turmoil. With 2.4% QOQ lending growth, the bank saw continued growth momentum, while extending its agreement with LO. Although we have lowered our 2023–2024e EPS by ~1% and, in turn, trimmed our target price to NOK148 (150), we find the valuation fair at a 2022e P/B of ~1.2x given the prospect for 2023–2024e ROEs of ~10%. We reiterate our HOLD.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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