Sparebank1 SMN (Buy, TP: NOK109.00) - Strong start for new CEO
MING reported an underlying Q2 ROE of 12.4%, with PTP 8% above consensus due to lower loan losses than expected and solid trading income. Its cost base has trended upwards in tandem with investments in capital-light revenue sources and the bank is now establishing new and tighter cost objectives to limit cost inflation. Our 2020–2021e PTP is largely unchanged, while we have raised our 2019e DPS to NOK6.8 (5.5). We reiterate our BUY and NOK109 target price.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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