Sparebank1 SR-Bank (Buy, TP: NOK75.00) - Higher loan-loss impairments
Earlier today SRBANK announced that Q1 ROE is expected to be 3–4% owing to elevated loan-loss impairments and negative net income from financial investments. Loan losses are expected at NOK560m (c105bp, above our 70bp estimate), and relate to one large impairment within its offshore portfolio and portfolio-wide model adjustments. We see this as an early indicator of near-term volatility in loan-loss impairment levels across banks, particularly those with meaningful exposure to sectors hit by the recent turmoil (e.g oil-related). We have kept our 2021–2022e EPS, and reiterate our BUY and NOK75 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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