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.

SpareBank1 Nord-Norge (Buy, TP: NOK117.00) - Outlook for strong distri...

SpareBank 1 Nord-Norge reported a Q4 ROE of 18.8% and a pre-tax profit of NOK928m, 10% stronger YOY as continued NII momentum helped offset a rise in opex and loan losses. The board proposed a DPS of NOK7 for 2023 while the Q4 CET1 ratio of 17.1% should be supportive of capital distributions going forward. Owing to somewhat higher opex entering 2024, we have cut our 2024–2025e EPS by 2–3% but reiterate our BUY and NOK117 target price.

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...

BN Bank ASA - Strategy, SWOT and Corporate Finance Report

Summary BN Bank ASA - Strategy, SWOT and Corporate Finance Report, is a source of comprehensive company data and information. The report covers the company's structure, operation, SWOT analysis, product and service offerings and corporate actions, providing a 360˚ view of the company. Key Highlights BN Bank ASA (BN Bank) is a provider of banking products and financial related services to retail and corporate customers. It is owned by SpareBank 1 SMN, SpareBank 1 NORD-NORGE, SpareBank 1 SR-Ban...

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....

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

SpareBank1 Nord-Norge (Buy, TP: NOK115.00) - Continued strong ROE

Supported by solid core revenues, NONG reported a Q2 ROE of ~15%, despite low trading income. ‘Real NII’ continued to expand, by 3.5% QOQ, helped by solid lending growth. After a ~20bp QOQ CET1 ratio increase, the bank had comfortable ~1%-point headroom to its 16.5% requirement (including P2G) at end-Q2, with further upside potential from an updated Pillar 2 assessment given the change in the required capital mix. With the stock trading at a 2024e P/E of ~8.4x, we still find the valuation attrac...

Nordea to acquire Danske’s Norwegian retail portfolio

This morning, Nordea announced that it has entered into an agreement with Danske Bank to acquire its Norwegian retail portfolio, increasing its mortgage market share in Norway from ~11% to ~16%. At end-2022, Danske’s operations consisted of ~EUR18bn in lending, ~EUR4bn in deposits and ~EUR2bn of savings assets. The transaction is expected to close in Q4 2024 and the exact amount paid will be determined by the assets left on Danske’s balance sheet at that date. We expect further consolidation fro...

Strong ROE and valuation support

Boosted by the full impact of recent repricing efforts and the still-positive rate trajectory, we expect further margin momentum ahead. Moreover, with sound fundamentals boding well for relatively resilient asset quality, we see scope for continued solid earnings generation, despite greater cost pressure. At an average 2024e P/E of ~8.3x, we still see an attractive valuation for the banks we cover and reiterate our positive sector view. SRBNK is our top sector pick.

Northern Lights

SpareBank1 Nord-Norge (Buy, TP: NOK112.00) - Superior Q1 ROE

With sustained core revenue momentum, solid trading income and ~16bp of loan-loss reversals, NONG reported a strong Q1 ROE of 19%, despite slightly enhanced cost pressure. Aided by margin and volume tailwinds, NII rose by ~8.4% QOQ. We have raised our 2024–2025e EPS by ~2%, driven by higher NII, and in turn edged up our target price to NOK112 (110). At a 2024e P/E of ~8.5x, we continue to find the valuation undemanding and reiterate our BUY.

Continued profitability momentum

With recent repricing efforts yet to take full effect and a still-positive rate trajectory, we expect margin gains to contribute to continued solid earnings generation in 2023. Moreover, helped by sound fundamentals, we also expect asset quality to remain relatively robust, and see limited risks of the Norwegian banks facing similar issues to the banks at the centre of the recent turmoil. Trading at an average dividend-adjusted 2024e P/E of ~7.6x, we still find the valuation attractive and reite...

SpareBank1 Nord-Norge (Buy, TP: NOK105.00) - 13% ROE target and 100% p...

NONG reported a solid Q4 ROE of 17% and operating profit up 19% YOY. NII momentum remained strong, with the margin on loans improving 24bp QOQ and rebounding financial markets further supporting earnings. The board raised its ROE target by 1%-point to 13% and remains committed to delivering profitability at the upper end of peers. In addition, the proposed 2022 DPS of NOK8.20 would mean ~100% of earnings being distributed for 2021–2022. Given the strong NII momentum, we have raised our 2023–2024...

Further repricing tailwinds ahead

With a further positive rate trajectory and recent repricing efforts set to take full effect, we see scope for margin tailwinds to continue to support earnings into 2023e. Given the comfortable headroom to fully phased-in capital requirements, we expect dividend distributions to remain rather generous, and estimate an average 2022 dividend yield of ~5.5% for the banks we cover. Trading at an average 2024e P/E of ~8.4x, we still find the valuation undemanding and thus reiterate our positive secto...

Sector Fast Comment - Norw. FSA proposes higher risk-weight floors

Proposal: RW-floor to 25% for mortgages, 45% for CRE Negative outcome could be mitigated with lower CET1-req The N-MoF to make final decision likely before year-end

SpareBank 1 Nord-Norge - Still superior NIM

Q3: Adj. net profit -3% and -8% vs ABGSCe and cons We lift our estimates on better NII TP up to NOK 88 (84) – 3% upside - HOLD

Northern Lights

SpareBank1 Nord-Norge (Buy, TP: NOK98.00) - Strong NII momentum into 2...

Strong underlying NII momentum was offset by continued financial-market headwinds from trading and associated companies, which together with an increase in model-based loss provisions put a dampener on earnings for NONG in Q3. The reported ROE was 10.2% YTD; while below the 12% target, we expect the NII momentum to strengthen, and have raised our 2023–2024e EPS by 2–3%. We have increased our target price to NOK98 (95) and reiterate our BUY.

SpareBank 1 Nord-Norge - Q3: better NII and costs, weaker other income

Adj. net profit miss of -3% vs. ABGSCe, -8% vs. cons… …driven by higher loan losses and lower non-NII Consensus prelim. 23e-34e EPS change: up 2-5% on NII