DNB is Norway's dominant universal bank — leading retail and corporate franchises, markets and asset management — funded by a sticky, low-cost deposit base in a structurally benign credit market. Valued the right way for a bank (ROE / P-TBV / residual income, not ROIC), it earns a ~15.4-15.9% ROE and ~16.8% ROTCE on a fortress 18% CET1 ratio, with a cost of risk of just 12bps. That is a ~6pp spread over our ~9.5% cost-of-equity estimate — genuine value creation (residual income +NOK 16bn).
Capital allocation is shareholder-friendly: a 6.3% dividend plus active buybacks off surplus capital. The Carnegie acquisition adds ~NOK 17bn of goodwill (Nordic investment-banking/wealth reach) that integration must justify, and Q1 showed net interest income down ~7% YoY as rate tailwinds fade — the two things to watch. On a Gordon fair P/B of (ROE−g)/(COE−g) ≈ 1.7-2.0x the warranted value is ~NOK 322-337 against a ~284 price (1.49x book, 10x earnings), so the quality is not yet in the price.
On a Gordon fair P/B = (ROE−g)/(COE−g) with COE 9.5%, g 3% and a sustainable ROE ~14.5%, the warranted P/B is ~1.7x → fair value ~NOK 322-337 (reported 15.9% ROE implies ~1.98x / higher). Current 1.49x book, 10x earnings, 6.3% dividend.
Base NOK 330 (warranted P/B on a ~14.5% sustainable ROE); bull NOK 370 if ROE holds in the mid-teens and buybacks continue; bear NOK 270 on a deeper NII squeeze or a credit normalisation.
The operating reverse-DCF (NOPAT / invested capital / WACC) does not apply to a balance-sheet business — leverage is the raw material and "net debt" is not meaningful. The equity is valued on residual income: book equity plus the present value of returns above the cost of equity, discounted at Ke; the single-stage lens is the Gordon fair price-to-book, (ROE−g)/(Ke−g). The market prices in a sustainable ROE of 12.9% vs 15.4% currently earned; at a sustained 15.4% ROE the warranted P/B is 1.91× (NOK 358/sh, +26%).
| Scenario | 24m target | Impl. ROE | Upside | Prob. | Driver |
|---|---|---|---|---|---|
| Bull | NOK 370 | 16% | +30% | 35% | Mid-teens ROE holds; buybacks continue |
| Base | NOK 330 | 14% | +16% | 45% | Warranted P/B on ~14.5% sustainable ROE |
| Bear | NOK 270 | 12% | -5% | 20% | Deeper NII squeeze or credit normalisation |
| Prob-weighted | NOK 332 | — | +17% | 100% | Scenario-weighted expected value |
| Ke \ ROE | 10% | 14% | 18% | 22% | 26% | 30% | 34% |
|---|---|---|---|---|---|---|---|
| 8.00% | 262 | 411 | 561 | 711 | 860 | 1010 | 1159 |
| 8.75% | 228 | 358 | 488 | 618 | 748 | 878 | 1008 |
| 9.50% (base) | 201 | 316 | 432 | 547 | 662 | 777 | 892 |
| 10.25% | 181 | 284 | 387 | 490 | 593 | 696 | 800 |
| 11.00% | 164 | 257 | 351 | 444 | 538 | 631 | 725 |
Green = fair value above the current price of NOK 284.20. For a financial the surface is dominated by cost of equity and sustainable ROE — not unit growth.
⤓ Download the full model (.xlsx) — formula-driven sheets; flex the blue input cells and the model cascades in Excel.
Scale, low-cost deposits and benign credit underpin a durable mid-teens ROE.
6.3% dividend + buybacks off an 18% CET1 surplus.
ROE ~15% vs ~9.5% COE → residual income +NOK 16bn.
Nordic investment-banking + wealth reach if integration delivers.
DNB is a wide-moat, fortress-capitalised Norwegian bank creating economic value (ROE ~15% vs ~9.5% COE) yet trading at 1.49x book / 10x earnings — below a Gordon fair P/B of ~1.7-2.0x. BUY; base NOK 330.
The 6.3% dividend pays you to wait; the watch items are NII compression and Carnegie integration, both manageable against the franchise quality.
Every adjustment traces to the cited note/page in the source filing — click to open it there. Annual report / 10-K: 📄 open · Latest interim: 📄 open
| Adjustment / figure | Value | Source | Why mttssn treats it this way |
|---|---|---|---|
| Net income attributable to shareholders FY2025 | 41,944 | Consolidated income statement, p.208 📄 p.208 | Profit for the year 43,586 less AT1 coupon 1,603 and NCI 39 = 41,944 attributable to common shareholders; this is the numerator for ROE/ROTCE and residual income. |
| Total common equity (ex-AT1, ex-NCI) 31 Dec 2025 | 271,770 | Consolidated balance sheet, p.209 📄 p.209 | Group equity 295,855 less 23,380 AT1/hybrid and 705 non-controlling interests = 271,770 common equity = share capital 18,262 + premium 18,733 + other equity 234,775. |
| Intangible assets (goodwill + systems + other) FY2025 | 22,178 | Note G37 Intangible assets, p.271 📄 p.271 | Goodwill 16,890 + capitalised systems development 2,088 + other intangibles 3,200; goodwill rose from 8,411 on the Carnegie acquisition. Deducted from common equity to get tangible common equity 249,592. |
| Combined lending + deposit spread FY2025 (NIM proxy) | 1.34 | Key figures / APMs, p.9 📄 p.9 | DNB does not report a single NIM; the combined weighted average spread for lending and deposits (1.34%, down from 1.40%) is the closest margin proxy. NII / average total assets is ~1.55%. |
| Cost/income ratio FY2025 | 38 | Key figures / APMs, p.9 📄 p.9 | Total operating expenses 34,476 / total income 90,649 = 38.0%; up from 35.2% in 2024 as Carnegie integration lifted the cost base ahead of full synergy capture. |
| CET1 capital ratio 31 Dec 2025 | 17.9 | Key figures / APMs, p.9 📄 p.9 | CET1 17.9% (down from 19.4% in 2024) reflects CRR3 implementation and the Carnegie acquisition; still well above the ~16.3% supervisory expectation. Rose to 18.1% by 31 Mar 2026. |
| Cost of risk FY2025 (impairment / avg net loans) | 0.12 | Key figures / APMs, p.9 📄 p.9 | Impairment of financial instruments 2,803 over average net loans ~12 bps (reported 0.12%). Benign through-cycle; Q1 2026 ran at 11 bps, mostly a few specific stage-3 corporate names. |
| Stage-3 ratio (% of net loans at amortised cost) FY2025 | 0.81 | Key figures / APMs, p.9 📄 p.9 | Stage-3 (credit-impaired) exposures 0.81% of net loans, down from 0.97% in 2024 — strong asset quality. Ticked up to 0.90% at 31 Mar 2026 on specific corporate cases. |
| Loans to customers 31 Dec 2025 | 2,403,340 | Consolidated balance sheet, p.209 📄 p.209 | Loans to customers grew 6.7% YoY (from 2,251,513); profitable lending growth across all three customer segments, augmented by Carnegie. |
| Deposits from customers 31 Dec 2025 | 1,521,872 | Consolidated balance sheet, p.209 📄 p.209 | Customer deposits 1,521,872 (+2.3% YoY); deposit-to-net-loan ratio in customer segments 72.2%. A large, low-cost Norwegian deposit franchise underpins the funding base. |
| Dividend per share FY2025 (proposed) | 18 | Key figures / APMs, p.9 📄 p.9 | Board proposed NOK 18.00 DPS for 2025 (up from 16.75), a 6.3% yield at the current price, supplemented by an ongoing buyback (NOK 5,527 repurchased in FY2025, 2,243 in Q1 2026). |
| Profit for the period Q1 2026 | 9,860 | Q1 2026 consolidated income statement, p.12 📄 p.12 | Q1 2026 group profit 9,860 (-9.1% YoY); attributable to shareholders 9,466. ROE 14.0% on spread compression and CRR3; EPS 6.50. Captures the post-FY momentum. |
| Total common equity (ex-AT1, ex-NCI) 31 Mar 2026 | 276,734 | Q1 2026 consolidated balance sheet, p.13 📄 p.13 | Latest common equity = share capital 18,165 + premium 18,733 + other equity 239,836 = 276,734; tangible common equity 255,322 after 21,412 intangibles. BVPS 190.43. |
How the mttssn view has evolved — each prior dated note is preserved.