GICS Sector : Financial Services
DNB Bank ASA provides financial services for retail and corporate customers in Norway and internationally.The company offers personal banking products and services, including savings and investment products; loans, such as home mortgages, and car and consumer loans; pet, home and property, travel, and personal insurance products, as well as insurance products for vehicles; retirement savings products; foreign exchange and treasury activities; and Internet and mobile banking services, as well as cards.It also provides business banking products and services comprising savings and investment products consisting of savings accounts, fixed rate deposits, exchange traded products, bonds and commercial papers, asset management, and equity services; financing, such as installment loans, overdraft facility, bank guarantees, leasing, factoring, and trade and export financing services; transaction banking services; research, commodities, bonds and commercial papers, corporate finance, debt capital market, equities, foreign exchange and interest rates, and securities services; and Internet services, including online equity trading, online FX trading, e-confirmation, equities execution, and investor and margin accounts, as well as pension services.
DNB delivered a solid Q3 result with a return on equity of 15.8%, earnings per share of NOK 6.99, beating analyst estimates of NOK 6.88, and a year-to-date earnings per share of NOK 20.81. Net interest income decreased by 1% due to the key policy rate, customer repricings, and product mix effects. However, the bank saw positive loan growth in all customer segments, with Personal Customers increasing by 0.4%, Corporate Banking Norway stable, and Large Corporates up 0.5%. Deposits increased by 0.6%, driven by Corporate Customer Norway and Large Corporate.
Publication Date: Oct -24
Net commission income rose 28.9% from the corresponding quarter last year, with a strong activity and investment banking pipeline moving into Q4. The bank expects above 9% annual growth in commission income, driven by Asset Management and Investment Banking. As management noted, "they have seen a substantial increase in assets under management, with a record high level of savings agreements," which will drive growth.
The credit portfolio remains robust and well-diversified, with 99.4% of the portfolio in Stage 1 and 2. Impairment provisions totaled NOK 862 million, with NOK 281 million related to the legacy portfolio in Poland. The bank's core equity Tier 1 ratio stands at 17.9%, 135 basis points above the regulatory expectation, indicating a strong capital position.
With a Price-to-Tangible Book Value (P/TBV) ratio of 1.39 and a Dividend Yield of 6.46%, DNB's valuation appears attractive. Analysts estimate next year's revenue growth at 0.1%, which is already priced in, given the stock's current valuation multiples. The bank's focus on building a valuable business over time, rather than short-term share price developments, is a positive sign for long-term investors.
DNB is well-positioned for growth, with a strong presence in the Norwegian market and a diversified credit portfolio. The bank's exposure to U.S. renewable energy stands at NOK 3.7 billion, and they do not see any immediate risk for higher risk weights for this exposure class. With a robust capital position and a focus on optimizing operations, DNB is poised for continued growth and profitability.
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The personal customer segment is expected to grow slightly above the global hypothesis due to the stable and essential nature of its services. Norway's stable economy supports this growth. The segment's growth is driven by the increasing demand for digital banking services.
This segment is expected to grow below the global average due to its exposure to global economic fluctuations and intense competition in the corporate banking sector. However, DNB Bank ASA's established presence in Norway and its international network may help maintain a relatively stable growth rate.
The corporate customers segment is expected to grow above the global hypothesis due to its importance to the Norwegian economy. Medium-sized and large corporates in Norway are likely to continue demanding financial services, supporting growth in this segment.
The 'Other Operations' segment is expected to grow in line with the global hypothesis. Its diversified activities, including real estate management and asset management, are subject to various market conditions, but overall, it is expected to maintain a stable growth trajectory.
By definition, 'Eliminations' does not have a growth rate as it is not a revenue-generating segment but rather an accounting adjustment to eliminate inter-segment transactions.
DNB Bank ASA offers a range of personal banking services, including current and savings accounts, credit cards, personal loans, and mortgages.
DNB Bank ASA provides corporate banking services, including cash management, trade finance, and lending solutions, to large and medium-sized companies.
DNB Bank ASA offers investment banking services, including mergers and acquisitions, equity and debt capital markets, and restructuring advisory services.
DNB Bank ASA provides market-making and trading services in fixed income, currencies, commodities, and equities.
DNB Bank ASA offers wealth management services, including investment advice, portfolio management, and wealth planning.
DNB Bank ASA issues credit cards, debit cards, and prepaid cards, and provides card payment processing services.
DNB Bank ASA offers digital banking services, including online banking, mobile banking, and digital payment solutions.
DNB Bank ASA operates in a highly competitive market, and customers have various alternatives for their banking needs. However, the bank's strong brand and wide range of services mitigate the threat of substitutes.
DNB Bank ASA has a large customer base, but individual customers do not have significant bargaining power. The bank's diversified customer base and wide range of services reduce the bargaining power of customers.
DNB Bank ASA has a strong bargaining position with its suppliers, given its large size and market presence. The bank can negotiate favorable terms with its suppliers, reducing the bargaining power of suppliers.
The banking industry has high barriers to entry, including regulatory requirements and significant capital requirements. This reduces the threat of new entrants in the market.
The banking industry in Norway is highly competitive, with several major players competing for market share. DNB Bank ASA faces intense competition from other banks, which can lead to pricing pressure and reduced market share.
| Value | |
|---|---|
| Debt Weight | 77.88% |
| Debt Cost | 6.18% |
| Equity Weight | 22.12% |
| Equity Cost | 6.18% |
| WACC | 6.18% |
| Leverage | 352.15% |
Value: 5.8
Growth: 6.6
Quality: 7.4
Yield: 8.1
Momentum: 10.0
Volatility: 7.0
1-Year Total Return ->
Value: 8.4
Growth: 3.7
Quality: 6.9
Yield: 10.0
Momentum: 7.5
Volatility: 8.3
1-Year Total Return ->
Value: 6.2
Growth: 4.9
Quality: 5.5
Yield: 9.4
Momentum: 8.5
Volatility: 9.0
1-Year Total Return ->
Value: 6.2
Growth: 4.6
Quality: 5.7
Yield: 9.4
Momentum: 8.5
Volatility: 7.3
1-Year Total Return ->
Value: 6.4
Growth: 4.6
Quality: 6.2
Yield: 7.5
Momentum: 9.5
Volatility: 6.3
1-Year Total Return ->
Value: 7.0
Growth: 4.4
Quality: 5.1
Yield: 2.5
Momentum: 10.0
Volatility: 3.3
1-Year Total Return ->