April 23, 2024 13:57 GMT
DNB: Solid Results, Minor Spread Positive But Little To Move Dial Meaningfully
FINANCIALS
DNB conf call generated few surprises but highlight the capital strength and cautious approach of management (alongside its hawkish economists). We take these as a marginal spread positive but there’s little here to move the dial meaningfully.
- Revenues – the disappointment at the top line was palpable amongst the analysts, as was their frustration at the lack of guidance from mgmt. We look at this simply: revenues were down marginally y/y with net interest income 3% lower than 4Q23. Current estimates are for 1.7% revenue growth in FY24 (o/w +3.6% in NII) – this is likely to be trimmed 1-2pp, in our view.
- Loan losses – this was the good news story and, much as it was noted as being a volatile line, mgmt see the economy as resilient and noted lower non-performers, alongside model-driven improvements in risk asset density.
- Buybacks – the bank is running a 19% CET1 ratio, well above regulatory requirements and has only requested a similar sized buyback to FY23 in its AGM resolutions. Mgmt’s indication was the equity payout is a long-term game. Our view is mgmt is interested in keeping its powder dry until it sees rates dropping. The bank’s internal economists have taken a hawkish view on Norwegian rates – only seeing the first cut in Dec-24.
Next event: 2Q24 results on 11-Jul-24
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