Danske Bank Irish division reports pretax loss of €17.4m for second quarter

Danske Bank’s Irish division reported a pretax loss of €17.4 million during the second quarter of this year, up from an €8.8 million loss during the previous three months.

Loan impairment charges increased from €5.5 million at the end of March to €15.4 million at the end of June. However total income rose to €15.7 million, from 14.6 million in the previous quarter, and the company cut costs slightly, reducing pre-provision losses to €2 million.

Terry Browne, head of Danske Bank in the Republic, said: “Non-interest income now accounts for 40 per cent of the bank’s income as compared with 34 per cent in 2012.

“Mortgage arrears [remain] relatively low at 4.25 per cent versus an industry average of 12.3 per cent.

“While significantly lower year on year, we are still guiding €750 million in impairments by the end of 2014.”

The combined loan book at Danske Bank Ireland fell to €2.9 billion, however, customer deposits rose 8 per cent to €3.4 billion.

In Northern Ireland the bank reported a pretax profit of £200,000 during the quarter and said that it’s return to profitability was “driven by reduced impairments”.

The firm added that overall loan balances fell by 6 per cent year-on-year and business activity levels remained “slow [with] mortgage balances marginally higher”.

However, the bank’s deposit balances were up 12 per cent year on year and its overall deposit to loans ratio remained above 100 per cent.

“Demand for lending remains subdued although it shows some very encouraging signs of improving,” said Gerry Mallon, head of Danske Bank in the UK and Ireland.

“We have the appetite and capacity to lend and are successfully winning good new business.”

Overall the Danske Bank group cut its profit outlook for the year from 7.5-10 billion kroner (€1-1.34 billion to 6.5-9 billion kroner (€871,000-€1.2 billion).

Trading income dropped 26 per cent to 2.15 billion kroner but the bank said loan losses declined to their lowest level since Q2 2008.

The group’s chief executive, Eivind Kolding, said the results are a “a considerable improvement compared with the same period in 2012”.

“The difficult macroeconomic environment with low interest rate levels combined with the volatility in the financial markets in June, however, have led us to revise our guidance for full-year 2013.”