Sparebanken Øst (Hold, TP: NOK49.00) - Addressing capital efficiency
SPOG reported a Q2 ROE of 9.6%, supported by robust asset quality, while cost inflation remained elevated. The recent NII momentum continued, albeit at a more modest pace (+0.8% QOQ). Highlighting its solid capital position and low risk level, the bank raised its dividend payout policy to “up to 100%” for the coming years, while reiterating its “up to 50%” target long-term. We have lowered our 2024–2025e EPS by ~2–3%, driven by lower NII and higher costs, but raised our DPS estimates. At a 2024e P/E of ~9.1x, we continue to see a more attractive risk/reward elsewhere in the sector, and reiterate our HOLD and NOK49 target price.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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