Sparebanken Øst (Buy, TP: NOK62.00) - Strong Q2 and raised ROE target
Boosted by strong NII, moderate cost inflation and low loan losses, SPOG reported a Q2 ROE of 11.6%, despite soft trading income (PTP ~10% above our estimate). With the report, the bank raised its ROE target from 9% to 10%, highlighting an expected capital relief from the new standard method. We have raised our 2025–2026e EPS by ~6–7% on higher NII and lower costs, and increased our target price to NOK62 (55). Seeing support from the bank’s ample dividend capacity, we find the valuation attractive at a 2025e P/E of ~9.3x, and have upgraded to BUY (HOLD).Sparebanken Ost (the Bank) is a Norway-based regional bank. The Bank is engaged in the provision of both banking and financial products and services to individuals and businesses. The Bank's primary market area is the lower part of Buskerud county and the Drammen region. Its product and service offering includes loans, cards, payment services, savings accounts, pension funds, life and non-life insurance, investment services and foreign exchange. As of December 31, 2011, the Bank had such subsidiaries, as Sparebanken Ost Boligkredit AS, a mortgage company; AS Financiering, a car financing company; Sparebanken Ost Eiendom AS, which was engaged in real estate development and operations, and Ost Prosjekt AS, a subsidiary supporting the Bank's activities. As of December 31, 2011, the Bank's largest shareholder was MP Pensjon (9.89%).
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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