Friday 18 January 2019

'Satisfactory' start to year for Danske Bank despite lower customer activity

Danske’s Irish headquarters in Dublin
Danske’s Irish headquarters in Dublin
Louise Kelly

Louise Kelly

Danske Bank posted a net profit of DKK 4.9bn and a return on equity of 12.6pc in the first quarter of 2018.

The profit in the first three months of the year represents a decrease of 12pc from the same period last year.

Return on shareholders’ equity after tax was also slightly down, 12.6pc against 14.4pc in the first quarter of 2017.

Total income at Danske dropped 9pc to DKK 11.5bn, in a comparison with 2017 Q1.

Decreases in net fee income and net trading income more than offset growth in net interest income, according to the bank.

Its activities in Sweden were especially noted as contributing to Danske's lending growth, which was attributed to driving a 1pc increase to DKK 5.9bn in net interest income. 

However, net fee income dropped 4pc to DKK 3.8bn, largely due to lower customer activity at Corporates & Institutions and Wealth Management.

Net trading income dropped 43pc to DKK 1.4bn in a quarter comparison with 2017. Danske said that the level of trading activity was high in the first three months of last year, and also reported a lower investment result form the health and accident business.

"We had a satisfactory start to the year despite financial market developments that caused lower activity compared with the same period last year," CEO Thomas F. Borgen said.

"Across our business, the underlying trend was good, with customer demand for credit remaining positive, just as our partnership agreements in Norway, Sweden and Finland continued to attract new customers and create good activity."

Operating expenses fell 2pc to DKK 5.6bn from the level in the first quarter of 2017. This figure was positively affected by lower activity and ongoing efficiency measures and negatively affected by costs related to compliance and continued digitalisation, according to the bank.

Terry Browne, country manager at Danske Bank Ireland, said that the bank had a good start to the year overall.

"The Group’s continued investment in industry-leading technology has allowed us continue to deliver solutions that create value for our clients and to increase our participation in powering the Irish wholesale financial services market," he sid.

"Other key drivers were increased activity in Ireland by our Nordic multinational clients and the expanding global footprint of our Corporate and Institutional clients.”

Danske said that the cost/income ratio rose to 49pc from 45.3pc in the first quarter of 2017.

Meanwhile, loan impairment charges had a net reversal of DKK 330m for the first quarter of 2018.

At the end of March 2018, total lending was up 2pc compared with the end of March 2017 while total deposits were up 6pc.

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