Banks | Reporting season & outlook for 2021

Norwegian Equity Certificates and Banks: Preview for the 4th quarter reporting season & outlook for 2021.

Norwegian Savings Banks - 4Q20 Sector Results Preview.

The Norwegian savings banks are expected to continue to improve profitability thanks to margin relief, good volume growth and solid non-interest income, while strengthening macro outlook and oil price should lead to further reduction in overall loan losses. While some of the banks will have to wait for more generous dividend payouts when dividend limits are lifted after September, we see decent dividends for some of the banks already in 4Q20. Overall, this will lead to strong dividends for 2021 supported by record-strong CET1 ratios as the banks should be willing to distribute excess capital. We believe the sector’s valuation is moderate given zero interest rate environment which makes it difficult to improve margins and ROE. However, the prospects of a hike in interest rates next year, improving economy, rising oil price, recordhigh CET1 ratios and especially generous dividends should support the sector in 2021.

Our Top Picks are: SOR, HELG and SBVG.

Please register for our webinar to get full update in details.