SpareBank1 SR-Bank (Buy, TP: NOK154.00) - Solid underlying profitability
Supported by strong core revenues and modest loan losses, SRBNK reported a 12.3% Q1 ROE, despite low trading income and elevated cost inflation. As margins improved further, NII rose by 9.0% QOQ. With an end-Q1 CET1 ratio of 17.4%, we expect the bank to be able to meet a potential raised requirement from a 1% SIFI buffer with its current growth trajectory and dividend policy. We continue to find the valuation attractive at a 2023e P/B of ~1.0x, given our ~12–13% 2024–2025e ROEs, and reiterate our BUY and NOK154 target price.Sparebank 1 SR Bank is a savings bank. Co.'s core activities are sales and brokering of financial products and services, as well as leasing and real estate brokering. Co. is organized in three divisions: The Retail Market Division; The Corporate Market Division; and The Capital Market Division Co. provides products and services in the fields of financing, investments, money transfers, pensions and life and non-life insurance.
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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