Sparebanken Øst (Hold, TP: NOK53.00) - Strong Q1 and capital position
Boosted by a NOK31m gain from Eksportfinans, further NII expansion and still-modest loan losses, SPOG reported a strong Q1 ROE of ~13% (9% target), despite sustained cost pressure. With lower deposit margins and one fewer interest day more than offset by improved lending margins and solid lending growth, NII rose another 3.8% QOQ. Moreover, given its ample buffer to capital requirements, we see scope for payout ratios to remain near 100% in 2024–2026e. That said, with the stock trading at a 2025e P/E of ~9.7x, we continue to find more attractive risk/reward elsewhere in the sector. We reiterate our HOLD and NOK53 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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