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DNB published results above expectations thanks to better-than-expected fee income, trading result and opex but these were overshadowed by disappointing NII and rising uncertainties surrounding NII evolution as NOK policy rate hikes are coming to an end, deposit and lending volume growth are moving into negative territory and risks of competitive pressure on deposits are starting to emerge.
Companies: DNB (DNB:STO)DNB Bank ASA (DNB:OSL)
AlphaValue
DNB has reported a good Q2 with NII momentum remaining the main earnings driver as the bank enjoyed the ongoing policy rate hikes, loan and deposit volume growth despite some quarterly corporate deposit volatility. Commissions and trading were a good surprise while cost inflation remained in line with expectations. The spike in the cost of risk was largely due to a one-off related to a legacy foreign currency loan portfolio in Poland. The buyback delay was the only negative, risking undermining
DNB realised a strong Q1 on the back of higher NII brought about by the deposit margins generated by higher policy rates. Loan volume and deposit volume growth remained healthy despite some quarterly decline in the deposit margins. Cost of risk was mild amid the reversal, while costs were in line. A request for approval to buy back 2.5% of the share capital was sent to regulator.
DNB had a good Q4 with a strong beat on jumping NII thanks to higher deposit margins induced by Norges Bank’s policy rate hikes. Costs were a negative surprise, impacted by higher variable remuneration from increased activity. Cost of risk was a miss too, although largely due to model change. The payout ratio was 60% this year. Long-term targets were maintained and do look achievable.
DNB held its capital markets day on Tuesday. Based on its strong track record of overshooting, the management maintained most of its targets for 2025 while upgrading its RoE target from above 12% to above 13%. The rationale for this upgrade is built on the bank’s top-line growth as well as its strong cost discipline, with a new cost reduction program (NOK1.5-2bn) announced through to 2025.
DNB realized a good Q3 marked by an acceleration in NII and fee income. The top-line was still a miss due to negative valuation effects on equity investments of restructured customers owned by DNB. The C/I ratio remained stable and asset quality remained strong with new provision reversals. Capitalisation was strong again but the regulatory requirements remain high leaving only limited excess capital for buybacks. The long-term targets were maintained. NII should continue to benefit from monetar
DNB again made an excellent quarter, delivering outstanding NII growth thanks to policy rate tightening, thus allowing for improved efficiency (40% C/I) while credit quality continued to remain rock-hard. As even more rate hikes are now planned by the central bank, management maintained its targets going into 2023, while remaining cautious on buy-backs as the excess capital situation has faded due to volume growth, the Sbanken acquisition and CCyB planned increases.
DNB realized a very impressive Q1 22 with a jump in the net result fuelled by strong growth in total income thanks to NII and fee income growth. As cost inflation was moderate, this resulted in a very good 39% C/I ratio which, combined with LLP releases, allowed DNB to beat consensus by 26% on its PBT. The CET1 ratio declined with the acquisition of Sbanken, displaying a 170bp buffer, while the dividend policy remained unchanged. The outlook and targets were maintained.
DnB posted good Q4 21 results, beating consensus on total income, thanks to NII and fees higher than expectations. Cost inflation also outpaced consensus but, thanks to the income generation, the C/I ratio considerably improved yoy. Guidance given on 2022 was better than consensus on the C/I ratio (expected to be lower than 40% vs a 44% consensus). Regarding capital, DnB maintained its payout ratio and stated that it could perform buy-backs with its excess capital once the potential acquisition
DnB has released its Q321 numbers. Net income was well above expectations, mostly driven by lower loan losses. Total income was also above expectations thanks to higher trading income and net interest income which remains buoyant for DnB. The CET1 ratio remains very high at 19.2%, almost 300bps above the management’s target. Expect an upwards revision to our EPS expectations (below consensus’ forecasts). We nonetheless see DnB as much too expensive and prefer the Swedish banks.
DnB released this morning its numbers for Q2 21. The Norwegian bank’s top line was roughly in line with expectations (and our forecasts) whereas it saw a big jump in total expenses both vs expectations and yoy driven by increased activity following the reopening of society. It remains to be seen whether this will negatively affect management’s guidance of a C/I ratio below 40% for 2023. We will, for that year, revise downwards the underlying numbers.
DnB released this morning its numbers for Q1 21. Net profit was comfortably above expectations (+18%), driven by lower loan losses (expected) and higher fees/commissions and volatile trading income. Net interest income was indeed slightly disappointing (-1% below expectations). The CET1 ratio was 50bp higher qoq and well above requirements (+210bp). Our expectations for 2021 will only marginally change.
DNB’s Q4 report is due on February 10th and we have only made minor estimate revisions this time around, including a NOK 400m provision in Q4 for the potential AML fine from the Norwegian FSA. We see lower risk on credit quality going forward following successful vaccines and initiated mass vaccination, but the offshore and travel sectors will remain difficult through 2021. We have lowered our 2020e EPS 6% and 2021e/2022e 2% and reiterate our Hold for now.
Companies: DNB Bank ASA
Arctic Securities
ECB concluded tonight and recommend to refrain from or limit dividend… …until September 30th 2021, but will then resume to normal supervision Max pay-out of 15% of 2019-2020 profits (approx. NOK 4.2 for DNB)… …BUT not higher than 20bps of CET1 (approx. NOK 1.3 for DNB)
Since our last update on November 9th DNB has rallied 22% following positive results from Covid-19 vaccine tests. We see a risk of a delay in resumption of distributions following ESRB’s pan-European decision, now postponed to December 15th, and the FSA and MoF’s response that will follow. We downgrade DNB to a Hold (Buy) recommendation but increase our target price to NOK 160 (155), equivalent to 12.7x 2021e EPS and 1.06x 2020e BVPS.
Research Tree provides access to ongoing research coverage, media content and regulatory news on DNB Bank ASA. We currently have 35 research reports from 5 professional analysts.
Proposed share-for-share merger with Northgate
Companies: Redde Northgate PLC
Arden Partners
Lowland Investment Company’s (LWI’s) unconstrained, multi-cap investment policy differentiates it from most peers in the AIC UK Equity Income sector. It offers investors broad market exposure, outside of the large, traditional ‘income stocks’ at a 13% discount to NAV. The underperformance of small- and mid-cap companies versus larger peers has slowed and a turnaround would be very positive for LWI. Portfolio returns are already benefiting from acquisition activity, spurred by low valuations, and
Companies: Lowland Investment Co PLC
Edison
Foxtons Group plc first quarter revenue rose 9% to £35.7m (1Q23: £32.9m) with growth delivered across all business segments. Trading is in line with management's expectations.
Companies: Foxtons Group Plc
Zeus Capital
PCI Pal’s FY23 results show revenue growth of +25% to £14.9m, gross profit growth of +31% to £13.1m at a margin of 88%, and an outlook confirming robust momentum in H1 24. The FY23 results are as expected following the August trading update, and FY23 Total Annual Contract Value (TACV) is +23% yoy to £16.4m, with ARR +14% yoy to £12.6m due to £3.1m of contracts in deployment. We expect ARR will increase +35% and +31% to £17.0m and £22.2m in FY24 and FY25, as management lands and expands following
Companies: PCI-PAL PLC
Cavendish
Foresight Solar Fund (FSFL) celebrated its 10-year anniversary of listing on the London Stock Exchange with decade-high cash distributions from assets of £120.4m in its FY23 results (year end 31 December). FY23 also saw FSFL’s divestment programme come to fruition with the sale of a 50% stake in its Spanish Lorca portfolio at a 21% premium to its holding value. The proceeds of this divestment, along with free cash, were used to pay down the fund’s variable rate debt via its revolving credit faci
Companies: Foresight Solar Fund Limited GBP
Tetragon Financial Group (Tetragon) posted a 6.4% net asset value (NAV) per share total return (TR) in US dollar terms in FY23. Tetragon’s returns normally have a low correlation with broader markets, and therefore its FY23 performance was below the 26.3% return of the S&P 500 Index, which rallied on the artificial intelligence (AI) theme. Tetragon’s FY23 return on equity (RoE) of 5.5% was below its target of 10–15% pa. That said, its performance since listing was within the target range at 11.3
Companies: Tetragon Financial Group Limited
Vp’s full year update highlights sector-leading results, once again benefiting from the diversity of its end markets and the quality of its specialist businesses. With results expected to be broadly in line with expectations, we trim our FY24 PBT forecast by c.5% to £39.0m, a shade below the FY23 outturn (£40.2m). We consider this an impressively resilient performance set against a mixed market backdrop. Under new leadership, a strategic refresh is underway and management is confident in long
Companies: Vp plc
Equity Development
On 9 January last year, we set out our ten top stock picks for 2023, for what turned out to be another relatively poor twelve months for UK equities due to two wars, stubbornly high inflation and further tightening of monetary policy. This was even as other major markets, such as the US, largely recovered in the year. In the 2023 calendar year, the AIM All-Share index fell 8.2% and is still 42% off its 2021 high. From the release of our 2023 top picks note, the average total return (assuming div
Companies: PTAL GHH IGP MSLH PINE NXQ EQLS NXR AXL
Vector Capital is an established commercial lending group, focused on secured short-term and bridging loans in the property sector. This morning, the group has reported full year results to 31 December 2023, illustrating the challenging market backdrop. While underlying trading was robust, with good demand being seen for new loans, provisions for bad debts relating to historical loans of £728k in the year led to a decrease in PBT to £2.1m (WHI est. £2.4m, FY22 £2.8m). Looking ahead, although VCA
Companies: Vector Capital PLC
WHIreland
Companies: Equals Group Plc
Canaccord Genuity
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