• July 19, 2017
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Danske Bank releases 1st half 2017 financial results

“The first half of 2017 was characterised by sound macroeconomic development in our Nordic markets,” says Thomas F. Borgen, Chief Executive Officer.

“Customer activity was good throughout the period, contributing to a good income development. The increase was due partly to growth in Norway and Sweden, where we continued to attract new customers. Activity in the financial markets remained high, but subsided in the second quarter, although from a very high level in the first quarter. We have had a satisfactory first half-year, and developments over the past quarters indicate that our ambition to become an even more customer-driven, simple and efficient bank is paying off.”

“As a result of developments in the first half-year, we are revising our outlook to a net profit for the year in the range of DKK 18-20 billion.”

Danske Bank delivered a satisfactory result for the first half of 2017. Net profit was DKK 10.3 billion, against DKK 9.4 billion in the first half of 2016, which benefited from one-off gains. The return on shareholders’ equity after tax was 13.5%, against 12.4% in the first half of 2016. The strong underlying business momentum continued.

The Nordic economies saw positive trends in the first half of 2017. GDP growth in Denmark, Norway and Finland increased from modest levels, and the Swedish economy continued to perform well. Driven especially by our activities in Norway and Sweden, aggregate lending grew 1% in the first half of 2017 and was 3% higher than lending for the year-earlier period, despite currency headwinds.

In the first half of 2017, we saw good results from our efforts to realise our Nordic potential. At Personal Banking, our partnerships with Akademikerne in Norway and Saco in Sweden continued to generate good activity with customer inflows and increased volumes, and our new partnership with TCO in Sweden was off to a good start in the second quarter.

At Business Banking, we saw lending growth across markets, and at Corporates & Institutions, we saw higher customer activity than in the first half of 2016. At Wealth Management, total assets under management were 12% higher than for the year-earlier period. Net interest income and net fee income increased from the level in the first half of 2016, driven mainly by volume growth and higher customer activity, respectively. Net trading income was also higher, driven especially by high activity in the financial markets in the first quarter of 2017 as a result of geopolitical events.

Operating expenses were affected by increased activity and increased costs related primarily to compliance, regulation and digitalisation. We are investing significant resources in implementing regulatory requirements regarding, for example, financial instruments (MiFID II), data protection (GDPR) and payment services (PSD2). Credit quality remained strong, and we saw continued net reversals driven by improving macroeconomic conditions and higher collateral values in the first half of 2017.

Capital, funding and liquidity

Our capital position remained strong, with a total capital ratio of 21.1% and a CET1 capital ratio of 16.2%. On the basis of fully phased-in CRR and CRD IV rules and requirements, our CET1 capital ratio stood at 16.1%, versus our current, fully phased-in regulatory CET1 capital requirement of 12.0% and our target range of 14-15% in the short to medium term.

At 30 June 2017, DKK 4.2 billion of the DKK 10.0 billion share buy-back programme had been bought back. In the first half of 2017, issuance of covered bonds, senior bonds and additional tier 1 capital totalled DKK 40 billion. At 30 June 2017, our liquidity coverage ratio stood at 163%.

Customer satisfaction

Customer satisfaction remains a key priority. Business Banking and Corporates & Institutions continued the leading performance on customer satisfaction, while Wealth Management was stable and Personal Banking experienced intensified competition. We are working hard to constantly improve the customer experience.

Outlook for 2017

The outlook has been revised.

We expect net interest income to be higher than in 2016, as we will benefit from volume growth and lower funding costs. Net fee income is now expected to be higher than in 2016, subject to customer activity. Net trading income and Other income are expected to be less impacted by positive special items compared to 2016. Expenses are now expected to be around the level in 2016. Loan impairments are expected to remain low.

We now expect net profit to be in the range of DKK 18-20 billion. We previously expected net profit for 2017 to be in the range of DKK 17-19 billion. The outlook is subject to uncertainty and macroeconomic developments. We maintain our longer-term ambition for a return on shareholders’ equity of at least 12.5%.

Re-disseminated by The Asian Banker