DnB Markets - Sparebanken Sor (SOR) Sparebanken SÃ¸r (Buy, TP: NOK110.00) - A candidate for customer dividends

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DnB Markets

Håkon Astrup

EUR 185.81 For Business Accounts Only

Sparebanken SÃ¸r (Buy, TP: NOK110.00) - A candidate for customer dividends

Q3 ROE was 11.3%, with pre-tax profit 16% above our estimate as a result of higher net financial items and loan loss reversals. Most higher-quality lines were also strong, with NII up 6.9% QOQ and fees up 19% YOY. We have upgraded SOR to BUY (HOLD) and raised our target price to NOK110 (98), as recent re-pricing is set to support profitability. In addition, the bank is in our view a good candidate to launch customer dividends, which could improve loyalty and reduce tax expenses.

08/11/2019 15 EN

Underlying

Sparebanken Sor

Sparebanken Sor. Sparebanken Sor (the Bank), formerly Sparebanken Pluss, is a Norway-based regional bank. In December 2013, the Company merged with Sparebanken Sor. It is engaged in the provision of both financial and banking products and services to individual and corporate customers. The Bank's offering includes such products and services as credit cards, loans, foreign exchange, different types of insurance, savings accounts, payment services and pension funds, as well as the NettBank online banking facility. The Bank is active through around 30 branches in the West-Agder area, the East-Agder area and Telemark. The Company's subsidiaries are Sormegleren and Sor Boligkreditt AS.

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NO0006001502 Oslo Bors Norway

Provider

DnB Markets

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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Analysts

Håkon Astrup

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DnB Markets

Scope for continued strong earnings

Seeing support from still-high interest rates and sound fundamentals, we expect solid NII and robust asset quality to contribute to continued strong earnings generation for the banks, despite the stable and eventually falling key policy rate trajectory. Trading at an average 2025e P/E of ~8.5x (adjusted for undistributed 2023 dividends), we continue to find the valuation undemanding. We maintain a positive view on the sector and highlight SVEG as our top pick.

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March 21, 2024 March 21, 2024 1 EN

DnB Markets

Sparebanken Sør (Buy, TP: NOK159.00) - Further NII and cost expansion

Helped by sustained NII expansion (+4.1% QOQ), SOR reported a Q4 ROE of 10.5%, despite negative trading income and elevated cost inflation. The board proposed a 2023 DPS of NOK10.0, implying a ~61% payout ratio (~50% policy) and a 6.9% dividend yield. With the stock trading at a dividend-adjusted 2025e P/E of 8.0x, we continue to find the valuation undemanding. We reiterate our BUY and NOK159 target price.

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February 9, 2024 February 9, 2024 1 EN

Moody's Investors Service

Sparebanken Sor: Update following rating affirmation and change of outlook to stable

Our credit view of this issuer reflects its resilient asset quality, with two-thirds, against some single borrower and its asset risk.

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February 8, 2024 February 8, 2024 1 EN

Valmet (Buy, TP: EUR30.00) - Q1 on the weak side

Following a mixed but negatively skewed overall Q1, we have lowered our 2024–2026e clean EPS by c4% on average. We reiterate our BUY and EUR30 target price.

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18h / 53m 18h / 53m 1 EN

Ole Martin Westgaard

Ole Martin Westgaard

Komplett (Hold, TP: NOK10.00) - Challenging market set to persist

The Q1 report was weak, as revenues were badly hit by a challenging market, which looks set to persist near-term. We reiterate our HOLD and have cut our target price to NOK10 (12) on negative estimate revisions. At our new target price, the stock would be trading at a 2026e P/E of c5x, which we find to be warranted given the subdued market outlook and weak balance sheet.

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Ole Martin Westgaard

Ole Martin Westgaard

XXL ASA (No_rec, TP: NOK) - Weak Q1, but better than forecast

XXL reported weak Q1 results, albeit slightly better than expected, as it continues to underperform in a challenging market. On a positive note, the company continues to make progress on its strategic initiatives and has improved its financial position following the private placement. We have cut our 2024–2025e EBITDA by 21–13% on slightly revised revenue and margin assumptions.

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18h / 57m 18h / 57m 1 EN

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Sparebanken SÃ¸r (Buy, TP: NOK110.00) - A candidate for customer dividends

Scope for continued strong earnings

Sparebanken Sør (Buy, TP: NOK159.00) - Further NII and cost expansion

Sparebanken Sor: Update following rating affirmation and change of outlook to stable

Valmet (Buy, TP: EUR30.00) - Q1 on the weak side

Komplett (Hold, TP: NOK10.00) - Challenging market set to persist

XXL ASA (No_rec, TP: NOK) - Weak Q1, but better than forecast

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