Saturday 24 August 2019

Danske says 'good' dividend on the way after Irish loan sale

Danske said its portfolio of performing Irish mortgage loans has a gross value of €1.75bn and is set to be sold off next month
Danske said its portfolio of performing Irish mortgage loans has a gross value of €1.75bn and is set to be sold off next month
Donal O'Donovan

Donal O'Donovan

Danske Bank has had a "super strong" development in its capital position in the third quarter of the year which ought to provide room for "good" payouts to shareholders next year, its chief financial officer told Reuters.

The Danish lender pulled out of much of its business in the Republic of Ireland in the wake of the crash, and has been managing down its assets here including last month's sale of a sought-after portfolio of good quality Irish home loans to a consortium led by Goldman Sachs.

Danske Bank yesterday raised its full-year guidance and beat forecasts for its third-quarter pre-tax profit, aided by "positive macroeconomic developments, high customer activity and increasing business volumes".

The results don't take account of the Irish sale, because it happened after the period.

However, in a note to the results, it states that the portfolio of performing Irish mortgage loans had a gross value of DKK13bn (€1.75bn) and that the sale is expected to take effect from mid-December.

While the bank has largely exited the market south of the border, it retains a significant presence in Northern Ireland, with 44 branches and 1,400 staff. The Northern Ireland unit recorded a pre-tax profit of £77.4m (€88m) for the first nine months of 2017, well down on last year.

The bank blamed last year's Bank of England interest rate cut, as well as higher costs. That rate cut was reversed yesterday.

Across the bank, pre-tax profit came in at DKK6.24bn for the period, ahead of a figure of 5.93bn crowns expected by analysts polled by Reuters.

Common equity tier 1 capital ratio, a standard measure of the bank reserves, rose to 16.7pc from 16.2pc.

"It is natural that with such a strong capital position then there should be good room for the shareholders to get good payouts next year," CFO Jacob Aarup-Andersen said in an interview, underlining that it is up to the board to decide on.

The result was down slightly from DKK6.27bn a year ago, mainly because trading income in the year-ago quarter was boosted by high market activity after Britain's decision to leave the EU and ahead of the US presidential election.

The bank lifted its forecast for full-year net profit to between DKK19bn and DKK21bn. (Additional reporting Reuters)

Irish Independent

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