Northern Bank, NIB add €8.3 m to Danske profits

National Irish Bank and Northern Bank have contributed profits of €8.3 million to their parent, Danske Bank, in the first half of its financial year.

Announcing its half-year performance yesterday, Danske Bank, Denmark's largest financial group, said it is on target to complete the integration of the two banks and to roll out its total range of products by the middle of next year.

Danske chief financial officer, Tonny Andersen, said National Irish Bank and Northern Bank, purchased last year, are performing according to expectations. "We are quite encouraged by NIB's performance. It is reflecting Ireland's strong economy with business growing by 15 per cent. We are very pleased to be in the fastest-growing economy outside of China," he said.

National Irish Bank posted income of €40 million in the six-month period, while Northern Bank's rose to €94 million. In its accounts Danske has set aside €40 million to cover the cost of integrating the banks' systems and other technical accounting adjustments. Mr Andersen said the bank expects to change some of NIB's branch locations next year and is planning to open new outlets in the Republic. The bank has signalled it intends to further shake up the Irish mortgage market by introducing innovative new products.

Earlier this year NIB began to offer a new offset mortgage that allows mortgage holders to shorten the length of their mortgage and save on the cost of interest payments. It is the first lender to offer this product in the Republic.

It intends to also introduce competitively priced products such as credit cards, trade finance, business online, cash management and customer packages. When it purchased the two banks for €1.4 billion, Danske told investors it expected NIB and Northern Bank to grow market share in the coming years and, ultimately, has ambitions to gain a 10 per cent share of the Irish banking market. Danske Bank group posted a stronger-than-expected rise in half-year profits to 6 billion Danish crowns (€800 million) up from 4 billion Danish crown in the same period last year. The figures were ahead of forecasts and the bank has raised its full-year earnings outlook on the back of strong lending and trading.

Danske said it expected pretax profits to rise by more than 10 per cent in 2005. Chief executive, Mr Peter Straarup, said all of its businesses were contributing to increased profit. The bank's earnings per share rose by 55 per cent to 9.6 Danish crowns. Income rose by 21 per cent to 16,863 million Danish crown, up from 13,960 million Danis crown in the first half of 2004.

Danske Bank shares have gained more than 10 per cent in the past three months. Nordic banks are being boosted by rising stock markets and strong mortgage borrowing.