Sparebank 1 SMN (Buy, TP: NOK155.00) - NII comeback and 13% ROE target
As NII momentum returned (+13.2% QOQ), MING reported a Q4 ROE of 13.1%. Like SRBNK, MING followed DNB and raised its ROE target to 13% in conjunction with the report. In line with its dividend policy of a ~50% payout ratio, the board proposed a 2022 DPS of NOK6.5, implying a 5.0% dividend yield. We have raised our 2023–2024e EPS by ~5–8%, driven by higher NII, and in turn lifted our target price to NOK155 (150). At a 2024e P/E of ~8.4x, we continue to find the valuation attractive and reiterate our BUY.SpareBank 1 SMN is an independent, regional finance house. Through the SpareBank 1 Alliance and its own subsidiaries (the Bank), Co. has access to products in the fields of financing, savings and investment, insurance and money transfer services. At its Offices business area, the bank provides advice to retail customers, farm sector customers, pools/associations, one-person businesses and small and medium businesses. The Corporate business area focuses on financial counselling in investment and operations financing, domestic and foreign money transfers, fixed income and currency hedging, investment of surplus liquidity and insurance of individuals and buildings/operating equipment.
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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