You have been asked to estimate the expected growth in earnings for SBS bank, a regional bank that reported kr 20 in earnings per share in the most recent year on a book value of equity, per share, of kr 100. The bank paid out kr 5 in dividends per share.

1. Assuming that the bank can maintain the return on equity and payout ratio from last year for the next 5 years, estimate the expected growth rate in earnings for the next 5 years.
2. Now assume that the covid crisis will create the following changes: the bank will be required to raise its equity capital by 50% immediately by regulatory authorities, to set aside 20% of earnings each period to cover bad loans and to suspend dividend payments for the next 5 years. Estimate the new expected growth rate in earnings per share.