Danske Bank Q3 lags forecast, negative rates hurts
Published 29/10/2015 | 08:45
Danske Bank reported third-quarter pretax profit below forecasts on Thursday and Denmark's largest lender by market capitalisation said the negative interest rate environment has an ongoing adverse effect on the business.
The Copenhagen-based bank said pretax profit rose 5 percent from a year ago to 4.72 billion Danish crowns ($692 million) in July-September, lagging a forecast of 5.21 billion crowns.
"It's a challenge to manage a bank in a negative interest environment but is something we now have some practice in," Chief Executive Thomas Borgen said in the statement.
The Danish central bank has kept its key deposit rate below zero since September last year and has been at -0.75 since the start of this year.
The bank recorded for the second consecutive quarter a negative loan impairment charge of 86 million crowns and it helped to offset a falling top line.
"Q3 figures are clearly weaker than consensus on income but recent reports from peers also indicated this," wrote analyst Christian Hede from Nordea Markets in a note to clients.
The group kept its full-year outlook of a net profit of above 16 billion crowns.
Terry Browne, Country Manager and Head of Corporate & Institutional Banking at Danske Bank Ireland, said: “In Ireland, our Corporate & Institutions (C&I) business continues to benefit from the strong performance of the Irish economy and our Corporate clients."