Arctic Sector Report: Financials - Savings banks Q2e: NII still under pressure, but should turn in H2

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Arctic Sector Report: Financials - Savings banks Q2e: NII still under pressure, but should turn in H2

Financials Banking

Banking | Sector Report | 30 June 2026 | 07:42

Savings banks Q2e: NII still under pressure, but should turn in H2 Key figures & indices

We’ve implemented a higher rate path from Norges Bank in our estimates, but the effect

is mostly offset by slightly lower margin and growth assumptions due to continued tough

competition, leaving our overall estimates for FY27-28 relatively unchanged for most of the

banks. In Q2 we expect relatively soft NII again due to margin pressure and higher funding

costs, but expect sequential improvement in Q3 and Q4 as the latest round of repricing takes

effect. Stronger seasonal non-interest income in Q2 should help offset however, leading to

a relatively decent quarter. The savings banks have had mixed performance YTD (+2% total

return on average for our coverage) and valuations are starting to look a bit more reasonable

at P/B ‘26e 1.3x and P/E ‘27e 10.8x on average, but given our expectation of weak earnings

momentum near-term we think the risk/reward remains overall neutral for now. We maintain

our Hold recommendations for the savings banks and continue to highlight DNB (Buy, NOK

325) as our top pick. Within the savings banks space we see MING and SOAG as offering

the best relative risk/reward at current valuations.

Q2e: Continued NII pressure, but some offset from stronger non-interest income

We’ve made only minor changes to our estimates and, as we flagged in our last sector report as

well, we expect a weak Q1 on NII to be followed by a similarly weak Q2 due to rising funding

costs (3m Nibor up 33bps q/q on average) and margin pressure from tough competition offsetting