Danske posts €2m loss as it axes branches and cuts staff
Danske Bank – the Danish institution that previously operated here as National Irish Bank – has said its business in Ireland made a €2m operating loss before impairment charges last year. That compared to an operating profit of €45m in 2011.
The Irish arm shouldered a €750m impairment charge in 2012 to cover soured loans, but the figure was 12pc lower than in 2011.
The bulk of those impairment charges relate to its commercial property loans. Danske said its €3.2bn Irish mortgage book is "satisfactory".
About €94m of the overall impairment charge related to its personal client base rather than its commercial base. Danske Bank said that equated to 4.9pc of lending and guarantees to personal customers.
"In 2012, house prices in Ireland stabilised and there were some signs of improvement in Dublin towards the end of the year," noted Danske Bank in its 2012 results.
The loan-to-value ratio on its Irish residential mortgage loan book was 109.2pc at the end of December – by far the highest in any of the countries in which Danske operates.
In Denmark, the figure is about 73pc, while in Norway it's 62pc and in the Baltics it's 79pc.
Within its 'non-core' Irish activities – which includes investment and commercial property loans – the loan-to-value ratio was 120.3pc at the end of December.
"The commercial property market in Ireland remains under pressure as the slight decline in prices continues and return requirements are historically high, even though they stabilised in 2012," said Danske. "The number of transactions rose marginally in 2012, but from a very low level, and the market continued to suffer from low activity."
It added that exposure to property developers at its Irish unit was reduced to €254m in 2012, or 10pc of the total exposure at its non-core Irish loan book.
"Impairment levels remain high but are down 12pc year on year, and we're satisfied they are moving in the right direction," said Terry Browne, the head of Danske's Irish unit. "While reduced demand resulted in a 13pc year-on-year reduction in total income, non-interest income increased by 22pc, reflecting the success of the bank's advisory model."
Danske Bank's income in Ireland in 2012 declined 13pc to €122m as customer demand waned. Non-interest income rose 22pc to €18m, while pre-tax losses were €751m compared with €805m in 2011.
Danske Bank has been scaling back its presence in Ireland, but has continually insisted it remains committed to the market despite the bruising it has received.
The group shut its 27 branches around the country in November.
Retail customers now have to use phone or internet services, post offices or one of just a few advisory centres to conduct business with the bank here. Roughly 100 staff also left its operations here.