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...

Sparebanken Sør: Second Party Opinion – Green Bond Framework Assigned ...

We have assigned an SQS2 to Sparebanken Sør's green bond framework, which is aligned with the relevant principles and demonstrates a significant contribution to sustainability.

Still-encouraging profitability outlook

Despite expecting some margin headwinds, we believe still-high interest rates, robust asset quality and a firm profitability focus bode well for sector earnings remaining strong. Adding generous dividend prospects, we continue to find the valuation undemanding, with a coverage average 2025e P/E of ~9.1x. While noting a slightly more nuanced perspective with some HOLD recommendations, we maintain our positive sector view.

Sparebanken Sor: Update following outlook change to positive

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

Sparebanken Sør (Buy, TP: NOK213.00) - Set to merge with SVEG

This morning, SOR announced its intention to merge with SVEG (acquirer), creating Norway’s largest savings bank (cNOK429m combined lending). The 1.437 ECC exchange ratio values SOR at 1.23x our 2024e BV and represents a 23% premium to yesterday’s closing price. In addition to the estimated NOK2.1bn benefit from the implementation of the new standard method, the banks guide for NOK2.0bn of capital synergies related to IRB models and NOK350m–400m of annual operating synergies. We have upgraded to ...

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...

Sparebanken Sør (Hold, TP: NOK165.00) - Capital relief on the horizon

Supported by strong non-interest income and low loan losses, SOR reported a solid Q2 ROE of 12.5%. With some margin headwinds, but robust lending growth, NII was largely stable QOQ. Having made only minor changes to our 2025–2026e EPS, we reiterate our NOK165 target price. That said, after the recent share-price appreciation, we find a more attractive risk/reward elsewhere in the sector (SOR is trading at a 2025e P/E of ~9.4x), and have downgraded to HOLD (BUY).

Robust profitability outlook

With the key policy-rate trajectory indicating still-high interest rates, we see prospects for NII remaining at solid levels, despite expecting some margin pressure. Helped by additional support from robust asset quality, we expect continued strong sector profitability. Trading at an average 2025e P/E of ~8.9x, we continue to find the valuation undemanding and keep our positive sector view. SRBNK is our top sector pick.

Sparebanken Sør (Buy, TP: NOK162.00) - Robust Q1 profitability

Boosted by the tax benefit of customer dividends, strong trading income and low loan losses, SOR reported a Q1 ROE of 14.4%. Despite some pressure on deposit margins from high levels, NII rose 1.1% QOQ, helped by improved lending margins and solid corporate growth. Driven by the latter and a raised ownership share in Brage, the CET1 ratio fell by ~20bp QOQ to 16.6% (requirement including P2G reduced to 15.9%). At a 2025e P/E of ~8.6x, we find the valuation undemanding and reiterate our BUY and N...

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.

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.

Sparebanken Sor: Update following rating affirmation and change of out...

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

Scope for further generous distributions

With repricing efforts yet to take full effect and sound fundamentals boding well for manageable loan losses, we see prospects for solid earnings generation ahead, despite likely margin pressure from high levels longer-term. Given the banks’ solid capital positions, a more moderate growth outlook, and an enhanced profitability focus in the sector, we forecast further generous shareholder distributions, with an average dividend/ buyback yield of ~8% for 2023e. At an average 2024e P/E of ~8.4x, we...

Sparebanken Sør (Buy, TP: NOK154.00) - Collecting further repricing be...

Helped by further NII expansion and eased cost inflation, SOR reported a Q3 ROE of 11.5%, despite a YOY decline in fees. With the report, the bank announced that the foundation intends to complete its planned sale of equity certificates in Q4 following the conversion from primary capital. We have raised our 2024–2025e EPS by ~2–3%, driven by higher NII and slightly lower costs, and edged up our target price to NOK154 (152). Given our ~10–11% 2024–2025e ROEs, we continue to find the valuation att...

NII momentum to continue into 2024e

With recent repricing efforts yet to take full effect, we expect continued margin momentum for the rest of 2023 and into 2024. With additional support from relatively resilient asset quality, we see room for still-solid earnings for the sector ahead. Also, we believe enhanced profitability focus, comfortable capital positions and a more moderate growth outlook bode well for sustained generous dividend distributions. Trading at an average 2024e P/E of ~8.5x, we reiterate our positive sector view....

Sparebanken Sor: Key facts and statistics - H1 June 2023

A summary company profile, detailing Sparebanken Sor’s business operations and financial highlights.

Norwegian bank survey 2023 - Supportive ROE focus

Helped by its NII-skewed income mix, the Møre og Romsdal market leader has been a key beneficiary of rising interest rates. With recent repricing efforts leaving scope for further margin momentum near-term, we estimate 2024–2025 ROEs roughly in line with the >11% target, despite elevated cost inflation. With approved model changes to be implemented and an updated Pillar 2 assessment expected by year-end, we see potential upside to its already comfortable capital headroom. We continue to find the...

Northern Lights

Sparebanken Sør (Buy, TP: NOK151.00) - Q2 ROE consistent with target u...

Helped by loan loss reversals, SOR reported a solid Q2 ROE of 11.0%, despite low trading income. With the Q2 report, the bank raised its ROE target to >11% (>10%) for 2023 and >12% (>11%) by end-2025. Meanwhile, it lowered its internal CET1 ratio target to >16.5% (>16.7%), following the pending change in required capital mix to fulfil the Pillar 2 requirement. We have trimmed our target price to NOK151 (152) on estimate revisions. However, with the stock trading at a 2024e P/E of ~7.7x, we conti...