DNB (No_rec, TP: NOK) - ROE and fee income targets raised

At its 2024 CMD, DNB raised its ROE target from >13% to >14% for 2025–2027. Targeting a CET1 ratio of >16.7% (supervisory expectation), the bank kept its dividend policy of nominally increasing cash dividends, a >50% payout ratio and share buybacks to optimise its capital position. While it continues to target 3–4% annual lending growth and a 9% (previously 4–5%).

CMD: ROE target upped to >14%

Heads-up for CMD 19 November

Sparebanken Vest (Buy, TP: NOK158.00) - Long-term synergy potential

In this note, we have included the merger with Sparebanken Sør in our estimates (scheduled for 1 May 2025 pending regulatory approval). The banks have guided for annual operating synergies of NOK350m–400m from 2027–2028, as well as combined capital benefits of NOK4.1bn (NOK2.1bn from the new standard method and NOK2bn from SVEG’s IRB models). While we have cut our 2025–2026e EPS by ~5% due to the synergy time lag, we expect the merger to be accretive longer-term. Also seeing generous dividend pr...

Norwegian banks: Q3'24 outcome vs. expectations

Sparebanken Sor: 1 director

A director at Sparebanken Sor bought 2,600 shares at 191.000NOK and the significance rating of the trade was 69/100. Is that information sufficient for you to make an investment decision? This report gives details of those trades and adds context and analysis to them such that you can judge whether these trading decisions are ones worth following. Included in the report is a detailed share price chart which plots discretionary trades by all the company's directors over the last two years clear...

Sparebanken Sør (Buy, TP: NOK227.00) - Resilient margins and credit qu...

Aided by a positive NII trend, an improved contribution from associated companies and still-modest loan losses, SOR reported a Q3 ROE of 11.7%, despite booking NOK9m of merger-related costs and underlying cost inflation remaining somewhat elevated. After a stable CET1 ratio QOQ, the bank continued to guide for a c2.8%-point benefit from the upcoming new standard method. We reiterate our BUY, and have raised our target price to NOK227 (213) to reflect the agreed exchange ratio and our target pric...

DNB (No_rec, TP: NOK) - Focus on key 2027 financial targets

With 2022–2024 YTD ROEs of ~15–17%, DNB has continuously hit its >13% target set in 2022, with ample headroom. While expecting some margin pressure, we believe still-high interest rates, capital-light revenue momentum and robust asset quality bode well for continued strong earnings generation. At the CMD scheduled for 19 November, we expect the main focus to be on the new financial targets towards 2027, and see scope for its ROE target to be raised to >14%.

Negative cost revisions saved by associates

NII in line but higher cost and losses; Positive associate revisions, muted by personnel cost; Valuation in line with fundamentals

Sparebanken Øst (Buy, TP: NOK69.00) - Set for lasting generous dividen...

Helped by solid non-interest income, moderate YOY cost inflation and low loan losses, SPOG reported a Q3 ROE of 10.8%, exceeding its 10% target. Following slight lending volume outflows, NII fell marginally QOQ. Given the generous dividend prospects, we find the valuation undemanding at a 2025e P/E of ~10.4x (~7.9x when adjusting for excess capital, assuming a 1.0%-point buffer to its regulatory requirement including P2G and a 3.7%-points Basel IV benefit). Thus, we reiterate our BUY and have ra...

SpareBank 1 Helgeland (Hold, TP: NOK142.00) - Back to positive NII tre...

Helped by a NOK15m gain from the Fremtind/Eika merger and renewed QOQ NII tailwinds, HELG reported a strong Q3 ROE of 12.9%. Loan losses were 17bp. With the report, the bank guided for a ~1%-point CET1 ratio benefit from the upcoming implementation of Basel IV, adding to its already generous dividend capacity. We have edged up our 2025–2026e EPS by ~1–2% and our target price to NOK142 (139). That said, with the stock trading at a 2025e P/E of ~10.0x, we continue to find the valuation fair and re...

SpareBank 1 Østlandet (Hold, TP: NOK150.00) - Non-NII tailwinds, but l...

Aided by strong trading income (including a NOK287m gain from the Fremtind/Eika merger) and fees, Q3 ROE was a strong 20.4%, despite somewhat elevated loan losses. With solid lending growth partly offset by margin pressure, ‘real NII’ rose by 0.6% QOQ. Adjusted for merger-related expenses, YOY cost inflation was 11.0%. We have raised our 2025–2026e EPS by ~1% and our target price to NOK150 (148). However, trading at a 2025e P/E of ~9.9x, we continue to find a more attractive risk/reward elsewher...

Q3: Positive proforma revisions

Adj. proforma PTP in line with ABGSCe; Positive revisions muted by commision income and cost; Valuation is fair (HOLD)

Nordic banks – statistical update – Swedish bankruptcies October 2024

SpareBank 1 Sør-Norge (Buy, TP: NOK160.00) - Strong final pre-merger q...

With a NOK452m gain from the merger of Fremtind and Eika Forsikring, but a NOK105m writedown in Folkeinvest and NOK64m of merger-related costs, the bank reported a strong Q3 ROE of 17.5% (13.6% adjusted). While loan losses were a somewhat elevated ~22bp, NII increased 2.4% QOQ. From an 18.3% end-Q3 pro forma CET1 ratio, it guided for a ~10bp benefit in Q4 (sale of SamSpar shares), ~40bp in Q1 (Basel IV) and another ~70bp in 2025 (IRB models). With the stock trading at a 2025e P/E of ~9.8x and lo...

Sparebank 1 SMN (Buy, TP: NOK175.00) - NII momentum

Solid NII from strong loan growth helped offset higher opex and loan losses in Q3, while the NOK452m gain from the merger of Fremtind and Eika Forsikring on 1 July helped drive Q3 ROE above 21%. Asset quality remains strong, and we expect moderate loan losses going forward. We have raised our 2025–2026e EPS by ~2% on continued NII momentum and increased our target price to NOK175 (172). We reiterate our BUY.

Nordic banks – Statistical update - Norwegian lending September 2024

Quarter impacted by higher cost and losses

Adj. PTP -7% vs. ABGSCe, -1% vs cons amid cost & LLP; Stronger lending growth, but weak deposit growth; Cons. EPS chg. likely down 1-3%, stock down 1-4%

Weaker cost and lending to impact revisons

Adj. PTP -6% vs. ABGSCe, -5% vs. consenus. Higher cost lower lending to impact revisions. Cons. '24e-26e EPS chg. down 0-1%, stock down 0-2% today.

Sparebanken Vest (Buy, TP: NOK158.00) - Strong revenues and firm cost ...

Fuelled by continued core revenue expansion, good cost efficiency and low loan losses, SVEG reported a strong Q3 ROE of 21.4%. While NII rose 2.5% QOQ and fee income 10.3% YOY, the bank saw marginal YOY cost reductions. We have raised our 2025–2026e EPS by ~3%, and our target price to NOK158 (148). With the stock trading at a 2025e P/E of ~9.1x, we continue to find the valuation attractive and reiterate our BUY.