Danske profit rises despite ongoing challenges in market

Income and profit rose at Danske Bank in 2016, despite a challenging market, the company said.

Its Irish corporate and institutional business also showed a strong performance, Danske said.

Net profit at the group for the year was 19.9 billion Danish krone (€2.67 billion), a rise of 12 per cent year on year as business volume increased and costs and impairments fell. Exceptional items also had a positive impact on the results.

Total income was up 5 per cent overall at 48 billion Danish krone, as net interest income, net trading income and other income rose. Net interest income was 3 per cent higher for the year at 22 billion Danish krone.

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"The year 2016 was another year of solid progress for Danske Bank. In a challenging environment, we delivered satisfactory financial results while at the same time strengthening our market position." said chief executive Thomas Borgen. "The results reflect our diversified business model and our efforts to become a more customer-centric, simple and efficient bank."

The bank also delivered a return on shareholders’ equity of 13.1 per cent last year, compared with 11.6 per cent before goodwill impairments in 2015.

The bank said remortgaging activity normalised, with recent financial market movements dampening customer activity in its investment products. That led to a 6 per cent decline in net fee income for the year to 14.2 billion Danish krone.

Higher customer activity

That decline was offset by a 26 per cent rise in net trading income, which climbed to 8.6 billion Danish krone over the year. This was driven by higher customer activity in the second half of 2016, while the sale of Visa Europe and Danmarks Skibskredit also contributed.

Operating expenses fell 3 per cent to 22.6 billion Danish krone as Danske’s contribution to the Danish Resolution Fund and the Guarantee Fund fell, and it found savings from greater efficiencies in the business.

There was positive news for the company's Irish operations too. "Despite a demanding business environment, we delivered a strong performance across our Irish corporate and institutional division," said Terry Browne, country manager and head of corporate and institutional banking at Danske Bank Ireland. "We remain focused on supporting our clients, some of the leading corporates and institutions based in Ireland."