Cost reductions incoming

Insurance trip: 14 insurers in three days

High price increases in non-life = margin expansion; Attractive dividend levels to come from life units; BUY stability from Sampo/Tryg; earnings growth STB/GJF

SpareBank 1 Sørøst-Norge (No_rec, TP: NOK) - Discontinuing coverage

Given SOON’s pending merger with SRBNK and its expected subsequent delisting, we have discontinued coverage. Our last published recommendation, target price, and estimates should no longer be relied upon.

Nordic banks – statistical update – Swedish bankruptcies August 2024

Nordic banks – Statistical update - Finnish lending July 2024

Sparebanken Vest (Buy, TP: NOK148.00) - Expanding in the south

This morning, SVEG announced its intention to merge with SOR, creating Norway’s largest savings bank (cNOK429m combined lending). While seeing the greatest benefit for SOR’s shareholders, we expect an accretive effect on BV, and the capital and operating synergy guidance leave potential for a ~6% positive EPS effect (on 2025e EPS). We continue to find the valuation undemanding at a 2025e P/E of ~9.3x, and reiterate our BUY and NOK148 target price.

Looks like a win-win transaction

2024 Norwegian bank survey - Sector trends remain promising

While the respondents unsurprisingly forecast margins to decline from current highs, our 11th annual survey of the 50 largest banks in Norway presents an upbeat outlook, in our view. In addition to robust asset quality, the banks expect a slight uptick in lending growth. Supported by a market-disciplining profitability focus and solid dividend potential, we still find the sector valuation undemanding at an average 2025e P/E of ~9.3x. Noting a slightly more nuanced perspective with some HOLD reco...

Nordic banks – Statistical update – Danish lending July 2024

Total lending in July was up 4.4% y-o-y (corporate +6.0%; retail +3.4%) and increased by 0.4% m-o-m.

Nordic banks – Statistical update – Swedish lending July 2024

Total lending decreased slightly (-0.4%) y-o-y (corporate lending -2.5% and retail lending 0.9%) and was flat (0.0%) m-o-m.

Nordic banks – Statistical update - Norwegian lending July 2024

Sparebanken Vest (Buy, TP: NOK148.00) - Still-strong earnings momentum

Fuelled by strong core revenues, sound cost efficiency and robust asset quality, SVEG reported a standout Q2 ROE of 20.1%. Aided by continued lending growth momentum and improved retail lending margins, NII rose by 5.1% QOQ. We have raised our 2025–2026e EPS by ~3–4%, driven by higher NII, and edged up our target price to NOK148 (141). We still like the bank’s strong earnings generation capabilities, and at a 2025e P/E of ~9.3x, continue to find the valuation undemanding. Thus, we reiterate our ...

High growth, margins and valuation

Better margins make the beat

Adj. PTP beat of 9% vs. ABGSCe and cons. driven by strong margins. Cons. est. rev. likely up 2-4%; Stock up 2-4%

Sparebank 1 SMN (Hold, TP: NOK167.00) - Still-strong profitability

Helped by still-high NII and continued fee income momentum, MING reported a strong Q2 ROE of 15.4%, despite elevated cost inflation and somewhat soft trading income. Moreover, loan losses remained modest at NOK47m (8bp). That said, with the stock trading at a 2024e P/B of ~1.23x and 2025–2026e ROEs of ~13%, we continue to see a more attractive risk/reward elsewhere in the sector. Thus, we reiterate our HOLD and NOK167 target price.

SpareBank1 Nord-Norge (Buy, TP: NOK118.00) - Continued ROE tailwinds

Fuelled by strong core revenues and low loan losses (4bp), NONG reported a Q2 ROE of 18.9% (>13% target), despite somewhat soft trading income and sustained cost pressure. Helped by improved lending margins and decent lending growth, ‘real NII’ rose 1.8% QOQ, while fees and other operating income improved ~11% YOY. We have raised our 2025–2026e EPS by ~1%, driven by higher NII and fees, and our target price to NOK118 (115). With the stock trading at a 2025e P/E of ~8.8x, we continue to find the ...

SpareBank1 SR-Bank (Buy, TP: NOK160.00) - Solid growth but slight marg...

Supported by still-high NII and solid fee income, SRBNK reported a strong Q2 ROE of 14.6%, despite somewhat soft trading income. With margin pressure mitigated by high activity (2.3% QOQ lending growth), NII was fairly flat QOQ, while fee income rose 4.4% YOY, even with the recent transfer of its capital markets operations to SpareBank 1 Markets. With the stock trading at a 2025e P/E of ~8.8x, we continue to find the valuation attractive. We reiterate our BUY and NOK160 target price.

Seeking profitable growth

Adj. PTP in line vs. ABGSCe, +1% vs.cons; EPS impacted negatively by margins; Valuation in line with fundamentals

Fine-tuning estimates

Adj. PTP in line with ABGSCe, -2% vs. cons; Adj. EPS '25e down by 2%, unchanged for '24e and '26e; Strong fundamentals reflected in fine valuation: HOLD

More than enough capital post merger

Adj. PTP -1% vs. ABGSCe, but -5% vs cons (NII & loan losses). EPS down 3%, 4% and 2% for '24e/25e/26e (NII driven). Valuation starts to look more tempting ahead of the 1 Oct merger.