Sparebanken Sør (Hold, TP: NOK105.00) - Net interest income miss
Q3 ROE was 7.8%, with pre-tax profit 7% below consensus and 5% below our estimate. The miss was primarily driven by weaker NII, offset by low loan losses and costs. Based on this, we have lowered our 2019–2020e EPS by 2–3%. We continue to find the shares fairly valued at a 2019e P/B of ~0.8x, and reiterate our NOK105 target price and HOLD recommendation.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.
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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