SpareBank 1 Østlandet (Hold, TP: NOK150.00) - Non-NII tailwinds, but loan loss uptick
Aided by strong trading income (including a NOK287m gain from the Fremtind/Eika merger) and fees, Q3 ROE was a strong 20.4%, despite somewhat elevated loan losses. With solid lending growth partly offset by margin pressure, ‘real NII’ rose by 0.6% QOQ. Adjusted for merger-related expenses, YOY cost inflation was 11.0%. We have raised our 2025–2026e EPS by ~1% and our target price to NOK150 (148). However, trading at a 2025e P/E of ~9.9x, we continue to find a more attractive risk/reward elsewhere in the sector, and 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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