← Deep analysesHome
mttssn research · Nordic Deep Dive
DNB Bank (DNB.OL)
Financials · Norway's dominant bank · LTM Q1 2026
Analysis date: 2026-06-15
Price at analysis: NOK 284.20
Method: mttssn_streamlined_v1
Conviction: MEDIUM
BUY
Conviction: MEDIUM
Norway's #1 bank, generating a ~15.4-15.9% ROE on an 18% CET1 base with a benign 12bps cost of risk — a ~6pp ROE-over-cost-of-equity spread (residual income +NOK 16bn). At 1.49x book / 10x earnings with a 6.3% dividend it sits below a Gordon fair P/B of ~1.7-2.0x (fair value ~NOK 322-337). BUY; watch NII compression + Carnegie integration. Base NOK 330.
Return on Equity
15.4%
Cost of equity ~9.5%
Price / Book
1.52×
1.49× book; fair ~1.7-2.0×
Fair P/B (Gordon)
1.91×
(ROE−g)/(COE−g); g 3%
Price / Target
NOK 284 → NOK 330
+16% base; BUY
Price / Earnings
9.8×
~10× earnings
P / TBV
1.65×
Price / tangible book
Economic Profit
+NOK 16,126M
Residual income +NOK 16bn (ROE−COE ~6pp)
Equity (book)
NOK 271.8B
Common equity NOK 272bn; CET1 18%
Thesis

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.

Valuation · residual income (equity frame) & scenarios

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.

Market-implied ROE
12.9%
sustainable ROE the price already demands — vs 15.4% observed
Current → Fair P/B
1.52× → 1.91×
at a sustained 15.4% ROE, Ke 9.5%, g 3%
Excess-return premium
NOK 171 / sh
value above NOK 187.01 book from the +5.9pp ROE−Ke spread

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%).

Scenario24m targetImpl. ROEUpsideProb.Driver
BullNOK 37016%+30%35%Mid-teens ROE holds; buybacks continue
BaseNOK 33014%+16%45%Warranted P/B on ~14.5% sustainable ROE
BearNOK 27012%-5%20%Deeper NII squeeze or credit normalisation
Prob-weightedNOK 332+17%100%Scenario-weighted expected value

Sensitivity — fair value / share at Ke × ROE

Ke \ ROE10%14%18%22%26%30%34%
8.00%26241156171186010101159
8.75%2283584886187488781008
9.50% (base)201316432547662777892
10.25%181284387490593696800
11.00%164257351444538631725

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.

Method & data. ROE 15.4% and book equity are observed (net income / total equity). Cost of equity 9.5% and terminal g 3% are assumptions, shown explicitly and overridable.

⤓ Download the full model (.xlsx) — formula-driven sheets; flex the blue input cells and the model cascades in Excel.

Key drivers

1. Dominant Norwegian franchise

Scale, low-cost deposits and benign credit underpin a durable mid-teens ROE.

2. Capital returns

6.3% dividend + buybacks off an 18% CET1 surplus.

3. Value-creative spread

ROE ~15% vs ~9.5% COE → residual income +NOK 16bn.

4. Carnegie / wealth

Nordic investment-banking + wealth reach if integration delivers.

Key risks
Conclusion

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.

Footnote evidence & sources

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 / figureValueSourceWhy mttssn treats it this way
Net income attributable to shareholders FY202541,944Consolidated income statement, p.208 📄 p.208Profit 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 2025271,770Consolidated balance sheet, p.209 📄 p.209Group 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) FY202522,178Note G37 Intangible assets, p.271 📄 p.271Goodwill 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)1.34Key figures / APMs, p.9 📄 p.9DNB 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 FY202538Key figures / APMs, p.9 📄 p.9Total 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 202517.9Key figures / APMs, p.9 📄 p.9CET1 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)0.12Key figures / APMs, p.9 📄 p.9Impairment 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) FY20250.81Key figures / APMs, p.9 📄 p.9Stage-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 20252,403,340Consolidated balance sheet, p.209 📄 p.209Loans 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 20251,521,872Consolidated balance sheet, p.209 📄 p.209Customer 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)18Key figures / APMs, p.9 📄 p.9Board 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 20269,860Q1 2026 consolidated income statement, p.12 📄 p.12Q1 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 2026276,734Q1 2026 consolidated balance sheet, p.13 📄 p.13Latest 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.
Analysis history

How the mttssn view has evolved — each prior dated note is preserved.

Quality · Buffett tenets13 / 15
Understandable business
Norway's dominant universal bank — retail + corporate lending, markets, asset management; legible deposit-funded balance sheet.
Durable moat
Wide: #1 Norwegian franchise, scale, low-cost funding, sticky deposits and a benign-credit home market.
Able & honest management
Disciplined capital returns (6%+ dividend + buybacks) on 18% CET1; the Carnegie acquisition adds ~NOK 17bn goodwill (integration to prove).
Financial strength
ROE ~15.4-15.9%, ROTCE ~16.8%, CET1 18%, cost of risk just 12bps — a structurally value-creative bank well above its ~9.5% cost of equity.
Margin of safety
Gordon fair P/B ~1.7-2.0x → fair value ~NOK 322-337 vs ~284; trades 1.49x book / 10x earnings with a 6.3% dividend.