Sparebanken Øst (Hold, TP: NOK51.00) - Generous dividend capacity
Helped by solid NII and low loan losses, SPOG reported a Q4 ROE of 9.7%, despite sustained cost pressure. The board proposed a generous 2023 DPS of NOK5.4, implying a ~95% payout ratio and a 9.9% dividend yield. With the bank’s strong capital position (noting further upside potential from Basel IV; +4.0%-points guidance) and flexible dividend policy, combined with a more moderate growth outlook, we see scope for payout ratios to remain close to 100%. That said, trading at a dividend-adjusted 2025e P/E of ~9.1x, we continue to find the risk/reward more attractive elsewhere in the sector. We reiterate our HOLD and NOK51 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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