Niche banks – Buy the gap

Research evidence excerpt

Niche banks – Buy the gap

Equity Research - 6 July 2026 06:44 CEST

Financials

• Multiple contraction in the sector creates opportunity

• Minor positive revisions into Q2'26e

• Maintain a positive sector view, with NOBA and Morrow as top picks NOBA, Morrow Bank, Enity, Avarda Bank

NOBA and Morrow Bank are our top picks

Niche banks have lagged the Nordic large caps since the end of Q1: large

caps are now trading at a 12-month forward P/E of 11.7x, a 33% premium

to the niche banks, which are at 8.8x on average — down from 9.3x at the

end of Q1. We don't think this gap is warranted, given the higher expected

Norionearnings growth and profitability the coming years, and view the multiple

contraction as a buying opportunity. Our preference within the sector is

for banks combining the strongest expected earnings growth (CAGR

2025-28e) with attractive valuations and the greatest scope for positive

earnings or dividend surprises. On that basis, we maintain our BUY ratings

on Enity, Avarda Bank, NOBA and Morrow Bank, with NOBA and Morrow

Bank as our top picks. We stay more cautious on Norion at HOLD.

Adj. EPS up 3%/1%/2% for 2026e-28e

Our earnings estimate changes this time are modest, with adjusted EPS

raised by 3% for 2026e, 1% for 2027e and 2% for 2028e on average. The

largest revision is for Norion, where we have factored in the Consensus

Asset Management acquisition, lifting both income and cost forecasts,

though with a limited net impact on earnings.

Positive risk/reward in NOBA, Morrow and Enity into Q2

We see a positive risk/reward into the Q2'26 reports for Enity, Morrow

Bank and NOBA. Enity benefits from low expectations after two weak

quarters, a sector-discount valuation, and supportive avg. NOK/SEK FX

given its Norway exposure.