Sparebanken Ost is a small savings bank in Buskerud/eastern Norway (NOT the larger SpareBank 1 Ostlandet / SPOL — a common conflation). It is fortress-capitalised — CET1 22.76%, total capital 27.83% — and pays a fat 9.5% yield. But the quality is modest: FY2025 ROE 11.8% is a high-water mark (the 5-year average is only ~9.8%, normalized ~10%), flattered by lumpy financial-investment income; loan growth was negative (-2.25%); and the listed equity certificate represents just a 28.6% ownership fraction (with large charitable gift distributions to the foundation).
On bank primitives it trades at 1.13x book, 1.20x tangible and ~10.7x earnings. On a normalized 10% ROE the Gordon fair value is ~NOK 64.68 (-11%); only if the FY2025 peak ROE persists does it reach ~NOK 81 (+11%). At a normalized ROE that barely covers the 10% COE, the 1.13x book is modestly rich despite the fortress capital + high yield. HOLD with a modest-reduce lean.
Gordon fair P/B = (ROE-g)/(COE-g) with COE 10%, g 3%: a normalized 10% ROE -> ~NOK 64.68 (-11%); the FY2025 peak 11.8% ROE -> ~NOK 81 (+11%). Current 1.13x book, ~10.7x earnings, 9.5% yield.
Base NOK 70 (~current; modestly rich vs a through-cycle anchor); bull NOK 81 if the peak ROE persists; bear NOK 60 on financial-income normalization + the negative loan-growth trend.
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 5.1% vs 10.0% currently earned; at a sustained 10.0% ROE the warranted P/B is 1.00× (NOK 244/sh, +236%).
| Scenario | 24m target | Impl. ROE | Upside | Prob. | Driver |
|---|---|---|---|---|---|
| Bull | NOK 81 | 5% | +11% | 25% | FY2025 peak ROE persists |
| Base | NOK 70 | 5% | -4% | 45% | Modestly rich vs a through-cycle anchor |
| Bear | NOK 60 | 5% | -18% | 30% | Financial-income normalization + negative loan growth |
| Prob-weighted | NOK 70 | — | -4% | 100% | Scenario-weighted expected value |
| Ke \ ROE | 10% | 14% | 18% | 22% | 26% | 30% | 34% |
|---|---|---|---|---|---|---|---|
| 8.50% | 310 | 486 | 663 | 840 | 1017 | 1194 | 1371 |
| 9.25% | 272 | 428 | 584 | 739 | 895 | 1051 | 1206 |
| 10.00% (base) | 243 | 382 | 521 | 660 | 799 | 938 | 1077 |
| 10.75% | 220 | 345 | 471 | 596 | 722 | 847 | 973 |
| 11.50% | 200 | 315 | 429 | 544 | 658 | 773 | 887 |
Green = fair value above the current price of NOK 72.80. 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 22.76% / total 27.83% — huge buffer.
9.5% dividend yield.
Financial-investment income can lift ROE in good quarters.
A small, low-cost regional operation.
Sparebanken Ost is a fortress-capitalised (CET1 22.76%) small eastern-Norway savings bank with a 9.5% yield, but a through-cycle ROE (~10%) that barely covers COE, negative loan growth and a minority EC claim leave it modestly rich at 1.13x book. HOLD/modest reduce; base NOK 70.
Own it (if at all) for the capital + yield; the negative loan growth + earnings-quality are the cautions. (Distinct from SPOL/SpareBank 1 Ostlandet.)
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 (group, FY2025) | 523 | Resultatregnskap hovedtall p.3 / Q1 2026 Hovedtall p.2 (Aaret 2025 column) | Reported FY2025 group result after tax (aarsresultat). Confirmed identically in the Q1 2026 report's FY2025 column. |
| Result attributable to EC + grunnfond (FY2025) | 494 | Resultatregnskap konsern p.10 (Aaret 2025 column) | Group result less hybrid-capital holders' share 28.5; this is the common-equity (EC+grunnfond) result used for ROE and per-EC result. |
| Net interest income (FY2025) | 868 | Resultatregnskap hovedtall p.3 | Core revenue line for a bank. NII fell from 931.6 in 2024 on lower rates and -2.25% loan growth; 1.85% of average total assets. |
| Net commission income (FY2025) | 44.8 | Resultatregnskap hovedtall p.3 (commission income 95.2 - commission cost 50.4) | Thin fee base — only ~4% of total income; the bank is overwhelmingly a spread (NII) lender with little fee diversification. |
| Total net income (FY2025) | 1,038 | Resultatregnskap hovedtall p.3 (sum netto inntekter) | NII 867.5 + net commission 44.8 + net financial 120.9 + other 4.7. The 120.9 financial line is large and volatile (62.9 in 2024, -28.7 in 2022) and flatters 2025. |
| Total common equity ex-hybrid (31 Dec 2025) | 4,691 | Note K1 Kapitaldekning / Balanse konsern p.11-12 (sum egenkapital 5,042.3 less hybrid 351.2) | ROE base. Total IFRS equity 5,042.3 includes hybrid capital 351.2; common equity ex-hybrid 4,691.1 is the bank's own 'sum egenkapital eksklusiv hybridkapital'. |
| Intangibles (goodwill-in-investments + other) | 301 | Note K1 Kapitaldekning p.12 (goodwill 270.3 + immaterielle 30.8) | Goodwill embedded in significant investments 270.3 + other intangible assets 30.8, deducted from common equity to reach tangible common equity 4,390.0 for ROTCE / P-TBV. |
| ROE (egenkapitalrentabilitet, FY2025) | 0.118 | Noekkeltall p.4 (Loennsomhet) | Bank return measure: result to EC+grunnfond / average common equity ex-hybrid. FY2025 11.77% (= 2024 11.77%); a high-water mark vs 5-yr average 9.78% and the bank's >10% target. |
| Five-year ROE history | 0.098 | Noekkeltall p.4 | Through-cycle ROE: 11.77 / 11.77 / 9.87 / 6.65 / 8.86% (2025-2021). Average 9.78% — below the 10% COE in 3 of 5 years. Supports a normalised ~10% (target) used in the Gordon fair-P/B. |
| Common equity tier 1 ratio (CET1, FY2025) | 0.228 | Noekkeltall p.4 (Soliditet) / Q1 2026 p.2 | Fortress capital: CET1 22.76% (FY2025), 22.31% (Q1 2026), vs a ~14.84% total CET1 requirement; total capital ratio 27.83%. Among Norway's most solid banks. |
| Cost/income ratio (FY2025) | 0.36 | Noekkeltall p.4 (Kostnader i % av inntekter) | Reported C/I 35.99% (below the bank's <40% target) BUT flattered by the 120.9 financial-asset gains; ex financial investments C/I is 40.74% (FY2025) and rose to 46.38% in Q1 2026 as those gains normalised. |
| Loan-loss ratio (FY2025) | 0 | Noekkeltall p.4 (Tap i % av netto utlaan) | Near-zero cost of risk: 0.04% of net loans (FY2025), 0.03% Q1 2026. Very low non-performing loans; conservative, secured, mostly residential-mortgage lending. |
| Equity-certificate ratio (eierbrok, morbank) | 0.286 | Noekkeltall p.4 / Note 41 (eierbrok per 01.01.26) | EC holders own only 28.59% of total equity (eierandelskapital); 71.41% is community-owned primary capital (grunnfondskapital). Defines how much of book value and profit accrues to the listed instrument. |
| Number of equity certificates | 20,731,183 | Noekkeltall p.4 (Antall egenkapitalbevis) | 20,731,183 ECs outstanding (unchanged 5 years); used for per-EC book value, P/B, P/E and EC market cap. |
| Book equity per EC (FY2025) | 64.68 | Noekkeltall p.4 (Bokfoert egenkapital pr. bevis) | Per-EC book value (eierandelskapital / EC count, incl. proposed dividend). NOK 64.68 -> P/B 1.13x at price 72.80. The bank's own published BVPS for the listed instrument. |
| Result per EC (FY2025) | 6.82 | Noekkeltall p.4 (Resultat pr. egenkapitalbevis) | Per-EC earnings -> P/E 10.7x at price 72.80. 5-yr history 6.82 / 6.80 / 5.67 / 3.83 / 5.16 confirms the cyclicality of the franchise. |
| Dividend per EC (FY2025) | 6.9 | Styrets beretning / utbytte p.2 (Q4 2025 p.2) | Proposed cash dividend NOK 6.90/EC (up from 6.40), total NOK 143.0m; plus NOK 357.3m charitable gifts to community. EC dividend yield 9.5% on 72.80. Total payout 98.9% of parent result. |
| EC price end-FY2025 (report) | 80.19 | Q1 2026 Hovedtall p.2 (Kurs, Aaret 2025) / 31 Mar 2026 close 77.21 | Bank's own EC close NOK 80.19 at 31 Dec 2025 and NOK 77.21 at 31 Mar 2026. Current verified price NOK 72.80 (9 Jun 2026) used for live multiples; the EC has drifted ~9% below year-end. |
| Average common equity (FY2025) | 4,199 | Q1 2026 Hovedtall p.2 (Gjennomsnittlig egenkapital, Aaret 2025) | Bank's reported average equity (adjusted for hybrid and proposed dividends); denominator for ROE 11.77% and the residual-income capital charge. |
How the mttssn view has evolved — each prior dated note is preserved.