SpareBank 1 Sor-Norge is one of Norway's largest banks, created by the 2024 merger of SpareBank 1 SR-Bank and SpareBank 1 Sorost-Norge — a leading franchise across southern/southwestern Norway with the SpareBank 1 alliance's scale. FY2025 is the first full consolidated year; reported ROE ~12% (LTM) is depressed by goodwill/integration drag (merger-adjusted ~14%, normalized ~13%), with CET1 17.67%, an Aa3 rating, near-zero losses, and residual income +NOK 1.0bn over a 10% cost of equity.
On bank primitives it trades at 1.35x book, 1.46x tangible and 11.4x earnings, with a 6.4% dividend yield plus an active buyback (NOK 628m in Q1). On a normalized 13% ROE the Gordon fair P/B is ~1.43x -> ~NOK 199 (+5.6%); as merger synergies unwind the goodwill drag, the run-rate ROE should rise toward the merger-adjusted level. A high-quality, fortress-capitalised regional bank at a modest discount to fair value — the merger integration is the swing factor (and the temporary ROE drag is the opportunity). Note: it is an ordinary-share bank (SR-Bank legacy), not an equity-certificate structure.
Gordon fair P/B = (ROE-g)/(COE-g) with COE 10%, g 3%: a normalized 13% ROE -> ~1.43x -> ~NOK 199 (+5.6%); merger-adjusted 14% ROE implies more. Current 1.35x book, 11.4x earnings, 6.4% yield.
Base NOK 199 (normalized-ROE fair value); bull NOK 230 if synergies lift ROE toward 14%+; bear NOK 165 on integration setbacks / NII compression + a de-rate.
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 11.8% vs 11.6% currently earned; at a sustained 11.6% ROE the warranted P/B is 1.23× (NOK 185/sh, -2%).
| Scenario | 24m target | Impl. ROE | Upside | Prob. | Driver |
|---|---|---|---|---|---|
| Bull | NOK 230 | 14% | +22% | 35% | Synergies lift ROE toward 14%+ |
| Base | NOK 199 | 12% | +5% | 45% | Normalized-ROE fair value |
| Bear | NOK 165 | 11% | -13% | 20% | Integration setbacks / NII compression + de-rate |
| Prob-weighted | NOK 203 | — | +8% | 100% | Scenario-weighted expected value |
| Ke \ ROE | 10% | 14% | 18% | 22% | 26% | 30% | 34% |
|---|---|---|---|---|---|---|---|
| 8.50% | 191 | 300 | 410 | 519 | 628 | 737 | 846 |
| 9.25% | 168 | 264 | 360 | 457 | 553 | 649 | 745 |
| 10.00% (base) | 150 | 236 | 322 | 408 | 493 | 579 | 665 |
| 10.75% | 136 | 213 | 291 | 368 | 446 | 523 | 601 |
| 11.50% | 124 | 194 | 265 | 336 | 406 | 477 | 548 |
Green = fair value above the current price of NOK 188.80. For a financial the surface is dominated by cost of equity and sustainable ROE — not unit growth.
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Integration cost/revenue synergies unwind the goodwill drag, lifting ROE.
Leading southern-Norway franchise + alliance scale.
CET1 17.67%, 6.4% yield + active buyback off surplus capital.
Near-zero credit losses; Aa3 rating.
SpareBank 1 Sor-Norge is a large, fortress-capitalised southern-Norway bank whose reported ROE (~12%) is temporarily depressed by merger/goodwill drag, trading ~6% below a normalized-ROE Gordon fair value with a 6.4% yield + buyback. BUY/accumulate; base NOK 199.
The merger-synergy unwind is both the swing factor and the opportunity; quality + capital underpin the case.
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 income to shareholders (LTM) | 6,240 | Income statement - Group p.14 | LTM = Q1 2026 shareholders' share 1,516 + FY2025 6,365 - Q1 2025 1,641, attributable to ordinary shareholders (excludes hybrid-capital owners' share). |
| Shareholders' vs hybrid split of profit | 6,365 | Income statement - Group p.14 | FY2025 Group profit after tax 6,694 splits into shareholders' share 6,365 and hybrid capital owners' share 329; we measure ROE on the shareholders' share only. |
| Total income (LTM) | 13,894 | Key figures - Group p.3 | LTM total income = Q1 2026 3,346 + FY2025 14,040 - Q1 2025 3,492. |
| Net interest income (LTM) | 9,141 | Key figures - Group p.3 | Core revenue line for a bank; LTM = 2,180 + 9,271 - 2,310. NII pressured by repricing/competition (NIM 1.71% Q1 vs 1.92% prior-year quarter). |
| Net commission and other income (LTM) | 3,253 | Key figures - Group p.3 | Fee income LTM = 799 + 3,241 - 787. Stable fee engine (payments, asset management, real-estate brokerage, accounting). |
| Total equity incl. hybrid (31 Mar 2026) | 56,383 | Balance sheet - Group p.15 | Latest-quarter total IFRS equity. Includes NOK 4,000m hybrid capital (AT1); common equity to shareholders = 56,383 - 4,000 = 52,383. |
| Hybrid capital within equity | 4,000 | Balance sheet - Group p.15 | AT1 hybrid capital is presented inside IFRS equity (Norwegian savings-bank convention); deducted to reach common equity 52,383 for ROE / P/B. |
| Intangible assets (incl. goodwill) | 3,795 | Balance sheet - Group p.15 | Intangibles 3,795 (predominantly merger goodwill) deducted from common equity to reach tangible common equity 48,588 for ROTCE / P-TBV. FY2025 year-end goodwill was 4,079 of 4,091 total per Note 29. |
| Goodwill (FY2025, Note 29) | 4,079 | Note 29 Intangible assets | Of total intangibles 4,091 at 31.12.2025, goodwill is 4,079 (customer contracts 10, R&D 2). Merger SR-Bank/Sorost-Norge contributed 3,565 of goodwill (1 Oct 2024). |
| ROE (LTM, avg common equity) | 0.12 | Key figures - Group p.3 | Bank return measure. 6,240 / avg common equity 51,939.5. Reported RoE FY2025 12.8%, Q1 2026 11.8%; adjusted for merger goodwill + costs 14.1% / 12.7%. |
| ROE adjusted for merger goodwill + costs (FY2025) | 0.141 | Key figures - Group p.3 | Management's underlying RoE excluding the transitional merger goodwill drag and one-off integration costs: 14.1% FY2025, 12.7% Q1 2026. Supports normalized ~13%. |
| Common equity tier 1 capital ratio (CET1) | 0.177 | Key figures / Capital adequacy p.3, p.11 | Regulatory capital strength. CET1 17.67% (Q1 2026), around the bank's 17.6% target; Tier 1 19.56%, total capital ratio 22.08%, leverage ratio 7.4%. |
| Cost to income ratio (FY2025) | 0.38 | Key figures - Group p.3 | C/I 38.0% FY2025 (38.3% Q1 2026; Banking Group 36.1%). Synergy realisation from the merger targeting a 150-FTE reduction by end-2026 is bringing costs down. |
| Impairment / loan-loss ratio (FY2025) | 0.001 | Key figures - Group p.3 | Low cost of risk: impairment ratio 0.09% FY2025, 0.06% Q1 2026. Loans in Stage 3 only 0.53% of gross loans - solid credit quality. |
| Shares issued | 375,460,000 | Quarterly overview - per-share data p.37 | 375.46 million ordinary shares issued (unchanged through the period); ~3,778,982 held in treasury. Used for BVPS, P/B and market cap. |
| Market price SB1NO end of Q1 | 210 | SpareBank 1 Sor-Norge share p.3 | Report's own 31 Mar 2026 close NOK 210.50 (P/B 1.49); current verified price NOK 188.80 (9 Jun 2026) used for live multiples (P/B 1.35). |
| Book equity per share (31 Mar 2026) | 141 | SpareBank 1 Sor-Norge share p.3 | Report's stated book equity per share 140.94 (Q1 2026), 137.40 (FY2025). Our BVPS 139.52 = common equity 52,383 / 375.46m issued shares (the report uses net-of-treasury); close. |
| Dividend per share FY2025 | 12 | SpareBank 1 Sor-Norge share p.3 | FY2025 dividend NOK 12.00 (all ordinary cash; up from 8.50 FY2024). Policy ~50% cash payout + share buybacks. Yield ~6.4% at NOK 188.80. |
| Net purchase of own shares (Q1 2026) | -628 | Statement of changes in equity - Group p.16 | NOK 628m net buyback in Q1 2026, confirming the active share-buyback program that supplements the cash dividend under the new capital-return policy. |
| Pre-tax profit (LTM) | 8,168 | Key figures - Group p.3 | LTM pre-tax profit = 2,005 + 8,349 - 2,186; pre-tax profitability proxy for a bank (after impairments). |
| Merger completion date | 2,024 | Board report / Note 41 - merger SR-Bank + Sorost-Norge | Merger of SR-Bank and Sorost-Norge completed 1 October 2024 (IFRS 3). FY2025 is the first FULL consolidated year - actual, not pro-forma. Goodwill 3,565 recognised on the merger. |
How the mttssn view has evolved — each prior dated note is preserved.