Foroya Banki is the leading bank of the Faroe Islands — retail + corporate banking plus the Trygd insurance subsidiary, listed in Copenhagen (with the Faroese Government owning 34.8%). It is fortress-capitalised (CET1 25.5%, total incl. MREL 40.2%) with an essentially all-tangible book (no goodwill). ROE was ~15.5% LTM / 14.1% FY2025, giving residual income +DKK 91m over a 10.5% cost of equity — but FY2025 was flattered by a negative cost of risk + high investment income, so a normalized ~12.5% ROE is the fair anchor.
On equity multiples it trades at 1.28x book, 1.29x tangible and ~8.5x earnings. On the normalized 12.5% ROE the Gordon fair P/B is ~1.27x -> ~DKK 247 (-1%); on the FY2025 ROE ~DKK 289 (+15%). The proposed FY2025 dividend (~70% payout) gives a ~8.4% forward yield (the TTM yield is inflated by surplus-capital release). Quality capital + yield, but the stock sits on its normalized anchor with single-economy concentration + a thin float as the binding constraints. HOLD.
Gordon fair P/B = (ROE-g)/(COE-g) with COE 10.5%, g 3%: a normalized 12.5% ROE -> ~1.27x -> ~DKK 247 (-1%); the FY2025 ROE -> ~DKK 289 (+15%). Current 1.28x book, ~8.5x earnings, ~8.4% forward yield.
Base DKK 250 (~at the normalized anchor); bull DKK 290 if ROE holds mid-teens; bear DKK 200 on a Faroese-economy shock / cost-of-risk normalization.
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 12.6% vs 15.2% currently earned; at a sustained 15.2% ROE the warranted P/B is 1.62× (DKK 316/sh, +26%).
| Scenario | 24m target | Impl. ROE | Upside | Prob. | Driver |
|---|---|---|---|---|---|
| Bull | DKK 290 | 14% | +16% | 30% | ROE holds mid-teens |
| Base | DKK 250 | 13% | -0% | 45% | ~At the normalized-ROE anchor |
| Bear | DKK 200 | 11% | -20% | 25% | Faroese-economy shock / cost-of-risk normalization |
| Prob-weighted | DKK 250 | — | -0% | 100% | Scenario-weighted expected value |
| Ke \ ROE | 10% | 14% | 18% | 22% | 26% | 30% | 34% |
|---|---|---|---|---|---|---|---|
| 9.00% | 228 | 358 | 488 | 618 | 749 | 879 | 1009 |
| 9.75% | 203 | 318 | 434 | 550 | 665 | 781 | 897 |
| 10.50% (base) | 182 | 286 | 391 | 495 | 599 | 703 | 807 |
| 11.25% | 166 | 260 | 355 | 450 | 544 | 639 | 734 |
| 12.00% | 152 | 239 | 326 | 412 | 499 | 586 | 673 |
Green = fair value above the current price of DKK 250.50. 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.
CET1 25.5%; ~8.4% forward yield off surplus capital.
Leading Faroese banking position + the Trygd insurance arm.
Negligible intangibles — clean book value.
Benign losses (FY2025 negative cost of risk).
Foroya Banki is a fortress-capitalised (CET1 25.5%), all-tangible-book leading Faroese bank with a ~8.4% forward yield, but it sits ~at a normalized-ROE Gordon anchor with single-economy concentration + a thin float. HOLD; base DKK 250.
Own it for the capital + yield; the swing factors are the Faroese economy + cost-of-risk normalization.
Every adjustment traces to the cited note/page in the source filing — click to open it there. Source reports archived locally.
| Adjustment / figure | Value | Source | Why mttssn treats it this way |
|---|---|---|---|
| Net profit (LTM) | 283 | Financial highlights and ratios - Group p.3 | LTM = Q1 2026 55,911 + FY2025 288,317 - Q1 2025 60,930 = 283,298 DKK k -> 283.3 DKK m, attributable to shareholders (no AT1/NCI). |
| Net profit (FY2025 anchor) | 288 | Financial highlights and ratios - Group p.4 | Full-year 2025 net profit DKK 288,317 k; company proposes a 70% payout (DKK 202m / 21.04 per share). |
| Net interest income (LTM) | 384 | Financial highlights and ratios - Group p.3 | Core bank revenue. LTM = 94,338 + 388,103 - 98,209 = 384,232 DKK k. Down ~13% YoY at the FY level on lower rate margins and a higher deposit mix. |
| Total income (LTM) | 565 | Financial highlights and ratios - Group p.3 ('Interest and fee income and income from insurance activities, net') | LTM = 132,324 + 563,119 - 130,240 = 565,203 DKK k. Includes NII, dividends, net fee/commission and the net insurance result of subsidiary Trygd. |
| Net insurance result (LTM, Trygd) | 68.1 | Segments - Insurance (Trygd) p.23 | Wholly-owned non-life insurer Trygd; FY2025 net insurance result DKK 66.1m, combined ratio 76 (vs 89 in 2024) on unusually low Faroese weather claims. LTM = 12,742 + 66,055 - 10,720 = 68,077 DKK k. |
| Total common equity (31 Mar 2026) | 1,870 | Statement of changes in equity - Group p.16 | Latest-quarter equity is the bank invested-capital base. DKK 1,869,776 k -> 1,869.8 DKK m, after deduction of the DKK 202m FY2025 dividend paid post-AGM. No proposed-dividend or AT1 line remains in equity at 31 Mar 2026. |
| Total equity (31 Dec 2025) | 2,015 | Balance Sheet - Group p.43 | FY2025 year-end equity DKK 2,015,313 k, incl. DKK 202m proposed dividend. Used to bridge to the post-dividend 31 Mar 2026 equity and for FY-average ROE. |
| Intangible assets (31 Mar 2026) | 4 | Balance Sheet - Group p.14 | Negligible intangibles DKK 4,011 k (no goodwill on the consolidated balance sheet). Tangible common equity 1,869.8 - 4.0 = 1,865.8; ROTCE ~ ROE. |
| Return on shareholders' equity FY2025 | 0.141 | Ratios and key figures - Group p.4 | Company-reported FY2025 RoE after tax 14.1% (FY2024 15.8%). LTM ROE recomputed at 15.5% on average equity 1,828.9; normalized through-cycle ~12.5% used for the Gordon anchor. |
| CET1 capital ratio (31 Mar 2026) | 0.255 | Ratios and key figures - Group p.3 | Regulatory capital strength. CET1 25.5% at 31 Mar 2026 (up from 23.3% at 31 Dec 2025 as the dividend cut equity but RWA also fell to DKK 7,054m); total capital incl. MREL 40.2%. Fortress capitalisation enabling ongoing capital return. |
| Cost/income ratio (Q1 2026) | 0.494 | Ratios and key figures - Group p.3 | C/I 49.4% Q1 2026 (FY2025 42.3%). Higher than a low-cost universal bank, reflecting a small, branch-and-advice-heavy North Atlantic franchise; the FY ratio is the cleaner gauge. |
| Impairment charges (FY2025, net) | -4 | Financial highlights and ratios - Group p.4 | Net impairment REVERSAL of DKK 3,982 k in FY2025 (and a DKK 0.7m reversal in Q1 2026). Cost of risk is effectively negative; FY2025 earnings are flattered by the absence of credit losses. A DKK 121.5m management overlay is held for economic uncertainty (oil/inflation). |
| Shares outstanding / EPS (Note 40) | 9.574 | Note 40 Shares p.87 | 9,600,000 issued shares of nominal DKK 20, single share class; 26,289 held in treasury -> 9,574,000 outstanding. Used for BVPS, P/B and market cap. FY2025 basic EPS DKK 30.12. |
| Book value per share (31 Mar 2026) | 195 | Ratios and key figures - Shares p.3 | Company-reported BVPS DKK 195.3 at 31 Mar 2026; matches equity 1,869.8 / 9.574m = 195.30 exactly. Current P/B 1.28x at DKK 250.50. |
| Proposed dividend per share FY2025 | 21.04 | Letter to our stakeholders p.5 | Board to propose DKK 202m (DKK 21.04/share) at the 26 March 2026 AGM, 70% of FY2025 net profit. Forward ordinary yield ~8.4%; TTM cash dividend paid was higher (DKK 36.46) on extra capital-release distributions. |
| Largest shareholder — Faroese Government | 0.348 | Investor relations - shareholder structure p.25 | Foroya Landsstyri (Faroese Government) holds 34.8% of the share capital; next holders Ruth Holding 14.6% and GTM Familie Holding 10.4%. Concentrated register and thin free float — a governance/liquidity flag and part of the rationale for the elevated COE. |
| Share price 31 Dec 2025 / market cap | 286 | Investor relations - key metrics p.25 | Company reports a 31 Dec 2025 close of DKK 286.0 (P/B 1.4, P/E 9.3, market cap DKK 2,746m). Live verified price is DKK 250.50 (9 Jun 2026), used for current multiples. |
How the mttssn view has evolved — each prior dated note is preserved.