SpareBank1 SR-Bank (Buy, TP: NOK163.00) - Strong Q4, but CET1 ratio downtick
Fuelled by 7.5% QOQ NII expansion, a NOK421m gain related to SB1 Markets and further loan-loss reversals, Q4 ROE was a strong 19.7%, despite a negative contribution from SB1 Gruppen and elevated cost inflation. That said, while completing the cNOK1bn private placement and proposing a ~46% payout ratio (NOK7.5 DPS, 5.9% dividend yield), the CET1 ratio fell ~25bp QOQ, following increased deferred tax deductions. With our 2024–2025e EPS up ~1–4%, we have raised our target price to NOK163 (161). Trading at a dividend-adjusted 2025e P/E of ~7.7x, we still find the valuation attractive and reiterate our BUY.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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