SpareBank 1 Helgeland (Hold, TP: NOK134.00) - Turn in NII momentum

Helped by strong trading income, HELG reported a Q1 ROE of ~12% versus its >11% target, despite the pre-announced elevated loan losses. With one less interest day and margin pressure, ‘real NII’ fell 2.2% QOQ. While down QOQ, the CET1 ratio remained solid at 18.1% (>16.5% target). We have cut our 2025–2026e EPS by ~3–5%, driven by lower NII, and lowered our target price to NOK134 (139). Trading at a 2025e P/E of ~9.0x, we continue to find a more attractive risk/reward elsewhere in the sector and...

SpareBank 1 Helgeland (Hold, TP: NOK139.00) - Set for elevated loan lo...

With cNOK55m (58bp) of pre-announced loan losses, but prospects for solid revenue momentum, we expect a Q1 ROE of 11.0%, in line with its >11% target. With ample ~2.2%-points headroom to its capital requirement (including a 1% management buffer) at end-2023, we see scope for payout ratios of >80% over our forecast horizon. That said, with the stock trading at a 2025e P/E of ~8.7x, we continue to find a more attractive risk/reward elsewhere in the sector. We reiterate our HOLD, but have lowered o...

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.

SpareBank 1 Helgeland (Hold, TP: NOK145.00) - Q4 ROE hit by elevated l...

While the NII momentum continued (+4.2% QOQ), the Q4 ROE was 8.2% versus its >11% target, following negative trading income and elevated loan losses. With an uptick in RWA and the proposed 2023 DPS of NOK10.8 implying a ~77% payout ratio, the CET1 ratio fell ~1.4%-points QOQ. That said, at 18.4%, the bank still has ample buffer to its updated >16.5% target. We have cut our target price to NOK145 (147) on trimmed estimates, and at a dividend-adjusted 2025e P/E of 8.5x, we now find the risk/reward...

SpareBank 1 Helgeland: Update following rating affirmation, outlook po...

Our credit view of this issuer reflects its stable asset quality with retail focused lending and no direct exposure to the oil sector, against a high reliance on net interest income.

Moody's affirms SpareBank 1 Helgeland's long-term deposit ratings at A...

Moody's Investors Service ("Moody's") has today affirmed the A3 long-term deposit and issuer ratings of SpareBank 1 Helgeland. Furthermore, the rating agency affirmed the Baseline Credit Assessment (BCA) and Adjusted BCA at baa2, and the short-term deposit rating at Prime-2. Moody's also affirmed th...

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...

SpareBank 1 Helgeland (Buy, TP: NOK147.00) - Returned NII momentum

Boosted by increased ‘real NII’ (up by ~8% QOQ) and relatively moderate loan losses, HELG reported a Q3 ROE of ~11.6%, despite negative trading income. With ample headroom to requirements and further upside potential from an updated Pillar 2 assessment, we see scope for generous dividend distributions ahead and forecast a combined 2023–2025 dividend yield of ~30%. We have raised our 2024–2025e EPS by ~3%, driven by higher NII, and our target price to NOK147 (146). Trading at a 2024e P/E below 8x...

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

SpareBank 1 Helgeland (Buy, TP: NOK145.00) - Strong capital, but highe...

Supported by solid fee income, HELG reported a decent Q2 ROE of c10% (>11% target), despite elevated loan losses. NII and lending volumes were largely flat QOQ. Meanwhile, with the c50bp QOQ CET1 ratio uptick leaving a c2.3%-point buffer to its fully phased-in requirement (including a 1%-point management buffer) and further upside potential from an updated Pillar 2 assessment, we see scope for generous dividends. We have trimmed our target price to NOK145 (148) on estimate revisions. However, gi...

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.

SpareBank 1 Helgeland: 1 director

A director at SpareBank 1 Helgeland sold 25,000 shares at 124.000NOK and the significance rating of the trade was 50/100. 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 ...

Northern Lights

SpareBank 1 Helgeland (Buy, TP: NOK146.00) - Generous dividend prospec...

Supported by continued NII momentum and NOK27m in dividends boosting trading income, HELG reported a strong Q1 ROE of ~13%. With an end-Q1 CET1 ratio of 19.0% versus its >17.5% internal target, we see scope for generous distributions ahead and forecast a combined 2023–2025 dividend yield of ~27%. We have made only minor revisions to our 2024–2025e EPS. Given our 2024–2025e ROEs of ~10–11%, we continue to find the valuation attractive at a 2023e P/B of ~0.9x. Thus, we reiterate our BUY and NOK146...

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...

SpareBank 1 Helgeland (Buy, TP: NOK142.00) - Generous dividends after ...

Helped by solid core revenues and trading income, as well as low loan losses, HELG reported Q4 ROE of 14.6%. Expanding 9.1% QOQ, the recent NII momentum continued. After revising its dividend policy from 50%, the board proposed a 2022 DPS of NOK10.3, implying a ~80% payout ratio and an ~8.0% dividend yield. We have raised our 2023–2024e EPS by ~4–2%, driven by higher NII, and have increased our target price to NOK142 (137). Given our ~11% 2023–2024e ROEs and the still-generous dividend prospects...

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...