Sparebanken Norge is a large Norwegian regional savings-bank group with strong retail and SME positions, conservative (largely secured) lending and an ~11% return on equity. The Norwegian savings-bank model combines stable net interest income with a high dividend payout.
On the ROE/P-B frame the equity is cheap — 1.14× book against a Gordon-justified ~1.28× (ROE 11%, COE ~9.5%, g 3%), i.e. ~13% upside before a high dividend. The benign Norwegian credit backdrop and rate tailwind support the ROE.
Gordon fair P/B = (11%−3%)/(9.5%−3%) ≈ 1.28×, versus the current 1.14× — ~13% upside to the formula, plus a high dividend. A rare bank trading below its Gordon-justified multiple.
Base NOK 210 (+11%) toward fair value plus dividend; bull NOK 240 (rate/credit tailwind lifts ROE and the multiple); bear NOK 165 (a Norwegian credit/housing downturn lifts loan losses).
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 10.5% vs 13.1% currently earned; at a sustained 13.1% ROE the warranted P/B is 1.56× (NOK 245/sh, +34%).
| Scenario | 24m target | Impl. ROE | Upside | Prob. | Driver |
|---|---|---|---|---|---|
| Bull | NOK 240 | 13% | +31% | 35% | Rate/credit tailwind lifts ROE + multiple |
| Base | NOK 210 | 12% | +15% | 45% | Re-rate toward Gordon P/B + dividend |
| Bear | NOK 165 | 10% | -10% | 20% | Norwegian credit/housing downturn |
| Prob-weighted | NOK 212 | — | +15% | 100% | Scenario-weighted expected value |
| Ke \ ROE | 10% | 14% | 18% | 22% | 26% | 30% | 34% |
|---|---|---|---|---|---|---|---|
| 8.00% | 221 | 347 | 473 | 599 | 725 | 851 | 977 |
| 8.75% | 192 | 301 | 411 | 521 | 630 | 740 | 850 |
| 9.50% (base) | 170 | 267 | 364 | 461 | 558 | 655 | 752 |
| 10.25% | 152 | 239 | 326 | 413 | 500 | 587 | 674 |
| 11.00% | 138 | 217 | 295 | 374 | 453 | 532 | 611 |
Green = fair value above the current price of NOK 183.14. For a financial the surface is dominated by cost of equity and sustainable ROE — not unit growth.
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1.14× book vs a Gordon-justified ~1.28× — cheap on the right frame.
Norwegian savings-bank payout supports a high, well-covered dividend yield.
A predominantly secured (mortgage) loan book limits credit losses.
Higher Norwegian rates support net interest income and ROE.
Strong regional retail/SME positions provide stable funding and lending.
Sparebanken Norge is a conservative Norwegian savings bank trading below its Gordon-justified P/B with a high dividend — cheap on the frame. BUY, modest conviction; base target NOK 210 (+11%).
A benign credit backdrop and rate tailwind support the ROE; a Norwegian housing downturn is the principal risk.
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NOPAT adjustments: Not available from structured data
Company add-backs we reject: Not available without footnote extraction
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How the mttssn view has evolved — each prior dated note is preserved.