Pareto Bank (Buy, TP: NOK68.00) - Loan-loss downtick

Helped by further NII expansion and a loan-loss downtick, Pareto Bank reported a solid Q1 ROE of 14.3%. While the CET1 ratio fell QOQ after strong lending growth (2.2% QOQ), the bank has a still-solid ~1.4%-point headroom to its 16.7% target. With the stock trading at a 2025e P/E of ~6.7x, we continue to find the valuation attractive. We reiterate our BUY and have raised our target price to NOK68 (63).

Pareto Bank (Buy, TP: NOK63.00) - Strong loan-loss absorption capacity

Supported by solid NII and firm cost efficiency, we expect a Q1 ROE of 13.1% (results due at c07:30 CET on 25 April). While we expect some provisions in the challenged real estate development segment, we find the bank’s business model, with in-depth sector knowledge, thorough credit assessments and close customer relationships, supportive of asset quality. With the stock trading at a ~13% discount to 2024e book value, we continue to find the risk/reward attractive, seeing prospects for 2025–2026...

Pareto Bank (Buy, TP: NOK63.00) - Profitability remains resilient

Despite individual provisions contributing to elevated loan losses, PARB reported a solid Q4 ROE of 13.8%, helped by strong NII (+5.7% QOQ) and firm cost efficiency. The board proposed a 2023 DPS of NOK3.9, indicating a ~53% payout ratio and a 7.1% dividend yield. With the stock trading at a 2025e dividend-adjusted P/E of ~5.9x, we continue to find the risk/reward attractive. We have raised our 2024–2025e EPS by ~1–2%, with higher NII only partly offset by increased loan losses. We reiterate our...

Pareto Bank (Buy, TP: NOK63.00) - Robust profitability

Supported by solid NII and firm cost efficiency, we expect a Q4 ROE of ~13%, despite somewhat elevated loan losses (results due at c07:30 CET on 25 January). We forecast a 2023e DPS of NOK3.6, implying a ~50% payout ratio (>50% policy) and a 6.9% dividend yield. We have made only minor changes to our 2024–2025e EPS. With the stock trading at a 2024e P/E of ~6.8x, we continue to find the valuation attractive, and reiterate our BUY and NOK63 target price.

Pareto Bank (Buy, TP: NOK63.00) - Firm cost efficiency

Supported by further NII expansion and a firm cost/income ratio, Pareto Bank reported a Q3 ROE of ~14%, despite increased loan losses. Following the recently completed private placement, the end-Q3 CET1 ratio was up ~1.5%-points QOQ at 18.7%, leaving ample headroom to its lowered fully phased-in capital requirement of ~16.7% (including P2G). At a 2024e P/E of ~6.6x, we continue to find the valuation attractive, and reiterate our BUY and NOK63 target price.

Pareto Bank (Buy, TP: NOK63.00) - Ready for volume expansion

Supported by further volume and NII expansion, we expect Pareto Bank to report a Q3 ROE of 13.6% (results due at c07:30 CET on 25 October). Given the completed private placement, we forecast a ~1.5%-point QOQ CET1 ratio uptick to 18.7%, leaving ample headroom to its reduced 16.74% fully phased-in requirement. We have made only minor estimate revisions. With the stock trading at a 2024e P/E of ~6.9x, we continue to find the valuation attractive. Hence, we reiterate our BUY and NOK63 target price.

Pareto Bank (Buy, TP: NOK63.00) - Preparing for growth

Highlighting attractive opportunities for further expansion after solid 5.8% growth in H1, PARB has completed a NOK350m private placement at a NOK50.5 subscription price per share. This leaves a pro forma end-Q2 CET1 ratio of 18.8% (17.2%) versus its 16.7% fully phased-in requirement (including P2G). We continue to favour the bank’s strong track record with regards to profitability and asset quality, as well as its business model. We have lowered the share count, but raised our lending growth es...

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Pareto Bank (Buy, TP: NOK63.00) - ROE ambition raised to 15%

Supported by solid NII, firm cost-efficiency and reduced loan losses, Pareto Bank reported a Q2 ROE of 14.8%, despite negative trading income. The bank raised its ROE ambition from 14% to 15%, and announced a long-term CET1 ratio target of at least 16.7% following its reduced Pillar 2 requirement (it previously targeted 17.7% at end-2023). We have raised our 2024–2025e EPS by ~2–3%, driven by higher NII, and edged up our target price to NOK63 (62). At a 2024e P/E of ~6.4x, we still find the valu...

Pareto Bank (Buy, TP: NOK62.00) - Strong first line of defence

Supported by continued margin momentum and still-firm cost efficiency, we forecast a Q2 ROE of 14%. While we acknowledge the increased uncertainty in the bank’s core segments, we view its business model – with in-depth sector knowledge and close customer relationships – as a mitigating factor. Moreover, we expect its profitable operations to provide solid loan-loss absorption capacity, with our ~43–63bp 2023–2025e loan-loss ratios (2–3x its historical average) leaving still-solid ROEs of ~13%. A...

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Pareto Bank (Buy, TP: NOK62.00) - 13% ROE despite higher losses

Helped by further NII expansion, Pareto Bank reported a Q1 ROE of 13.0%, despite negative trading income and elevated loan losses. With solid lending growth and higher risk-weighted assets, the CET1 ratio fell to 17.1% versus the bank’s estimated end-2023 target and fully phased-in requirement of 17.7%, though we note a potential CET1 capital relief from a new Pillar 2 assessment. At a 2024e P/E of ~6.5x, we continue to find the valuation attractive. We reiterate our BUY and NOK62 target price.

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Pareto Bank (Buy, TP: NOK62.00) - Set for another solid quarter

Helped by solid NII and cost efficiency, we expect PARB to report a Q1 ROE of 13.8%, broadly in line with its 14% target. While we acknowledge the uncertainty in the bank’s core segments, we view its business model with in-depth sector knowledge, close customer relationships and thorough credit assessments as a mitigating factor. We have made only minor changes to our 2024e EPS. At a 2024e P/E of ~6.6x, we continue to find the valuation attractive. We reiterate our BUY and NOK62 target price.

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Pareto Bank (Buy, TP: NOK62.00) - Strong Q4 leaves 2022 ROE >14%

Fuelled by continued NII momentum, trading income tailwinds and net loan loss reversals, PARB reported a strong Q4 ROE of 17.4% – leaving the 2022 ROE at 14.6%, above the company’s 14% target. The board proposed a 2022 DPS of NOK3.86, implying a 7.2% dividend yield and a 50.1% payout ratio. Based on a more moderate growth outlook and still-solid earnings prospects, we see scope for further generous distributions ahead. We have raised our 2023–2024e EPS by ~4% on higher NII and increased our targ...

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Pareto Bank (Buy, TP: NOK57.00) - Set for continued strong ROE

We expect PARB to report a Q4 ROE of 13.7%, just shy of its 14% long-term target, supported by further NII expansion and still-firm cost efficiency. While we acknowledge the greater uncertainty in the bank’s core segments, we find its business model with tight follow-up measures and close customer relationships supportive of its asset quality. Implying a 50% payout ratio and a 7.5% dividend yield, we forecast a 2022 DPS of NOK3.6. At a 2024e P/E of ~6.3x, we continue to find the valuation attrac...

Pareto Bank (Buy, TP: NOK57.00) - Volume-boosted NII

Despite elevated model-based provisions due to greater economic uncertainty, Pareto Bank reported a Q3 ROE of 14.0% – in line with its long-term target. Fuelled by strong growth in the corporate and residential property segments, lending volumes were up 5.1% in the quarter. With further support from margin tailwinds, NII increased by 7.1% QOQ. We have raised our 2023–2024e EPS by ~2–3%, as higher NII was only partly offset by higher costs and loan losses, and in turn edged up our target price to...

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