Lending growth back on track

The Q2 ROE was 8.4% with EPS 12% below consensus, primarily driven by lower trading income. Adjusted for this, pre-tax profit was 4% above our forecast due to a beat on all remaining P&L lines. After muted growth due to capital building in 2016, SOR’s lending growth has gained momentum and the bank still sees the potential to surpass its 6% target for 2017. We have raised our 2018–2019e EPS by ~1%, mainly driven by higher NII. We reiterate our HOLD recommendation and NOK105 target price.