Very impressive results boosted by interest rate hikes

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.

Beating earnings with FY22 guidance confirmed

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, good results but expensive stock

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.

A disappointing level of expenses

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.

Same story as in Sweden or Denmark

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.

FX headwind and AML provision in Q4

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.

ECB asks for moderation until Sep 30th

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)

Downside risk on delayed distributions

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.

Lockdowns will trigger additional provisions

The pandemic has resulted in new lockdowns and we expect this to trigger additional provisions in Q4 and likely an above normalised loan loss level next year. In addition, a worse macro picture will keep interest rates lower for longer and we have pushed our first hike to Q4/21. Finally, continued heightened uncertainty will mean less likelihood of normal distributions for 2019 and 2020 in our view. We lower our target price to NOK 155 (165) but reiterate Buy.

What I want for Christmas is a DPS

DNB’s Q3 was on the strong side in our view as lending growth was solid, impairments continue to trend down and earnings from all parts of the business were sound. We argue you should look through the minor deviation on NII, also fx adjusted, and the increased tax rate and focus on distribution capacity once DNB is allowed to pay dividends again. We increase ’20e EPS 9%, but lower ’21e/’22e 3%/2%. We reiterate Buy and our target price of NOK 165.

Sky-high capitalisation

Q3/20 EPS came in at NOK 3.41, 24%/22% above ARCe/consensus Impairments roughly 40% of our estimate at NOK 776m in Q3 CET1 at record 18.9% (20.3% including ‘19 DPS)… …propose up to NOK 9 in DPS for 2019 and 4% buy-back authorisation

Overcapitalisation is evident

DNB’s Q3 report is due on October 22nd. We have included two hikes in the key policy rate in 2021 and see this as supportive for NII in the entire banking sector in Norway. We have also lowered impairments in 2021/2022 as we expect provisions taken largely to be sufficient, although uncertainty remains high within offshore. We expect key triggers going forward to be 1) normalisation of distribution, 2) additional comfort on credit quality and 3) a rate hike.

Lower loan losses key to performance

DnB released on Monday its Q2 20 numbers. The numbers were better across-the-board. Revenues were above expectations (although mostly driven by trading) and loan losses were 40% below expectations as the bank has seen some reversals in every stage (1,2,3) of IFRS9 vs Q1 20. The CET1 ratio at 18.2% was also above the expectations of 17.6% thanks to FX effects and a decrease in counterparty risk (+30bp). According to management, the bulk of the 2020 “COVID-19 provisions” have been booked in H1 20

Cruising through 2020 at a higher speed

DNB reported lower impairments than feared and together with a better trading and solid quality income lines this resulted in a clear earnings beat. The impressive capital generation and the solid level of the CET1 ratio increases the likelihood for both 2019 DPS and a higher 2020 DPS in our view. We increase ‘20e/‘21e/’22e EPS 20%/4%/4%. We reiterate Buy and raise our target price to NOK 154 (146), equivalent to 12x 2021e EPS and a 2020e P/B of 1.03x.

A solid Q2 report that should support recovery

Q2/20 EPS came in at NOK 3.06, 275%/125% above ARCe/consensus Impairments roughly half our estimate at NOK 2.1bn in Q2 Stage 3 provisions within the oil, gas and offshore segment primary driver CET1 of 18.2% versus our 17.4% estimate (19.4% including ‘19 DPS)

Cenkos: Healthcare Sector - Ward Round

Weekly round-up of AIM-listed healthcare news. Venture Life Group, GENinCode, Kromek, Alliance Pharma, Polarean Imaging, Benchmark Holdings, Ondine Biomedical, Verici Dx, Faron Pharmaceuticals, Avacta Group, Abingdon Health, Open Orphan, Belluscura, Hutchmed (China), Oxford Biodynamics

Earnings in line, NAV ahead, caution being exercised

Urban Logistics REIT (“ULR”) has delivered a solid FY22 performance – deploying capital apace and driving strong returns through active asset management. Earnings and dividend are both in line vs SCMe. EPRA NAV is 190p (+7% vs SCMe); as yield compression came as a bonus. Caution is being exercised in deploying remaining capital, which impacts FY23e earnings only. We upgrade EPRA NAV by 14-20% incorporating some (but not all) recent yield compression. We increase our Target Price to 210p (FY23e E

Morning Note – 8 June 2022

In line final results, market headwinds impact AuM

Finals are in line on management fee earnings, but an unexpected performance fee drives a 6% earnings beat and a higher dividend. Recent market conditions have been challenging and have impacted AuM, down 12% in Q1 so far (vs pf incl. Majedie). We update our model, driving a 8-11% reduction in our earnings estimates. We think that the current 8x Mar-23e PER is already more than pricing in further forecast risk. We note a 6%+ prospective dividend yield generously covered by earnings with signific

LIBERUM: Alternatives Daily

Hybridan Small Cap Feast 22/06/2022

Dish of the day Joiners: No Joiners Today. Leavers: No Leavers Today. What’s cooking in the IPO kitchen? Visum Technologies seeking admission to The AQSE Growth Market. The Company's business is to own and operate an "on-ride" video and photographic camera system that it sells and/or licenses to customers (being theme parks, ride manufacturers, souvenir imaging providers, and other leisure operators). Due 30 June. LifeSafe Holdings, a fire safety technology business with innovative fire safety p

LIBERUM: Alternatives Daily

LIBERUM: Alternatives Daily

SP Angel Morning View: Tin, lithium and nickel prices bounce despite equity fall on monetary tightening

AfriTin Mining (ATM LN) – Uis mine delivers record 13% quarter-on-quarter increase in Q1 tin output Altus Strategies* (ALS LN) – Share purchases by the management Ariana Resources (AAU LN) – Tavsan drilling results Cornish Metals* (CUSN LN) – Valuation 48p/s – Indonesia insists that value must be added to tin exports as Chinese tin smelters take break for maintenance BHP (BHP AU) – Thermal coal exit scrapped as prices sit around record highs KEFI Gold and Copper* (KEFI LN) – Saudi Arabia op

Cenkos: Marlowe Plc -- Record organic growth

Marlowe delivered an impressive set of FY22A results, with underlying organic revenue growth of 9%, Adj EBITDA margins up 240bps to 18.6%, and Adj EBITDA of £54.4m (ahead of our £50.7m forecast). We make minor updates to our FY23E forecasts (Adj Diluted EPS increases 1% to 49.6p) and release new FY24E forecasts. Given the strength of Marlowe's business model, its defensive nature (non-discretionary products and services; 85%+ recurring revenue), the group's continued positive momentum (including

SP Angel Morning View: Markets start to price 75bp Fed hike rise as inflation expectations build

AEX Gold (AEXG LN) – Results from initial Nanoq exploration campaign and commencement of 2022 field program Altus Strategies* (ALS LN) - BUY – Recommended offer from Elemental Royalties in all share merger of equals Anglesey Mining (AYM LN) – Drilling results from Parys Mountain Antofagasta (ANTO LN) – Mineral resources at the Encierro and Cachorro deposits Condor Gold* (CNR LN) – Raising £3.25m to complete the La India feasibility study Lynas Rare Earths (LYC AU) – $120m Pentagon contract

Hybridan Small Cap Feast 23/06/22

Dish of the day Joiners: No Joiners Today. Leavers: No Leavers Today. What’s cooking in the IPO kitchen? Immediate acquisitions (IME.L) is to re-join AIM via a Reverse Takeover of Fiinu Holdings Limited. Once complete the Company is proposing to change its name to Fiinu Group plc. Fiinu intends to be a provider of a consumer banking product, the Plugin Overdraft ®, which is designed to provide customers with an overdraft facility without having to change their current account or request an overd

NextEnergy Solar Fund - NAV Grows 15% in FY 22

NextEnergy Solar Fund’s (NESF) full-year results show a 15% growth in NAV resulting from better pricing and new asset growth. The fund has been working hard to diversify its asset growth opportunity with battery storage in the UK and more international exposure through its commitment and co-investment opportunity with the NPIII private fund. From a strong start the fund is showing continued progress into the current year.

Molten Ventures - Readying the ship for choppy waters

Molten had a very strong FY22 (net growth in fair value of 37%), delivering a solid series of cash exits (realisations/gross portfolio value of 13%). Despite this, Molten’s shares trade at 0.44x FY22 NAV per share of 937p, which seems an unjustifiably deep discount given its 26% y-o-y NAV/share growth and five-year NAV/share CAGR of 22%. Moreover, Molten has a broad-based portfolio, weighted towards the more robust B2B business model. Molten’s quoted holdings represented 4% of FY22 fair value an

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