Sparebanken Øst (Hold, TP: NOK74.00) - Solid distribution prospects
Helped by strong fees, modest YOY cost inflation and robust asset quality, Q4 ROE was 9.5%, despite a QOQ NII downtick and negative trading income. The board proposed a 2024 DPS of NOK6.4 (~94% payout ratio and 8.0% yield), with its strong capital position and pending tailwinds from the new standard method boding well for continued generous distributions. However, with the stock trading at a dividend-adjusted 2026e P/E of ~12.8x, we find the valuation fair. We have raised our target price to NOK74 (72) and have downgraded to HOLD (BUY).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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