Danske Bank maintains outlook despite Brexit fears

Danske Bank said its performance in the first half of the year was “satisfactory” despite difficult market conditions, with the bank maintaining its outlook for the year.

The bank reported a profit of DKK 9.4 billion (€1.26 billion) for first six months of the year, the same as the first half of 2015, against a backdrop of continued negative interest rates, low economic growth and subdued demand.

Worsening market conditions following Britain’s vote in June to leave the EU were also a challenge, but the bank said it was holding to its full-year outlook.

"Generally, the period has been characterised by low activity, except within financial markets," said chief executive of Danske Thomas Borgen. "The results reflect our well-diversified business model, increased lending and our efforts to become an even more customer-focused, simple and efficient bank."

In relation to Brexit, the bank said it did not see any significant short-term im-pact on Danske Bank. Its Northern Ireland business accounted for 3 per cent of total lending at the end of June, and 5 per cent of total income in the first half of 2016.

“The outcome will probably impact economic activity in all of our markets, however,” the bank said in a statement. “ It is too early to predict the extent of the impact, but uncertainty concerning future growth has increased.”

Over the six month period, Danske said its lending book grew, with impairments remaining at a low level.

Danske said its return on shareholders’ equity was 12.4 per cent.

Total income for the bank was DKK23.0 billion, a 3 per cent decline compared with the same period a year earlier as net fee and net trading income declined. Net fee income was DKK 6.7 billion, 10 per cent lower as remortgaging activity normalised, the bank said. Net trading income was 15 per cent lower at DKK 3.7 billion.

Its net interest income was unchanged from the first half of 2015, at DKK 10.7 billion and was unchanged from the year-earlier level, but a 4 per cent growth in lending and decreased funding costs offset pressure on margins.

Operating expenses fell 3 per cent to DKK 11.1 billion as the bank made a concerted effort to control costs, and its net contribution to the Danish Resolution Fund fell.

Danske Bank Ireland country manager Terry Browne said the bank's corporate and institutional division continued to perform strongly.