Strong business performance and positive outlook underpinned by
robust customer activity and slightly improved macroeconomic
environment Net profit of DKK 11.5 billion for the first half of
2024
Press release |
|
Bernstorffsgade 40
DK - 1577 København V
Tel. +45 45 14 14 00
19 July 2024 |
Strong business performance and positive
outlook underpinned by robust customer activity and slightly
improved macroeconomic environment
Net profit of DKK 11.5 billion for the first half of
2024
Carsten Egeriis, Chief Executive Officer, comments on the
financial results:
“The financial result for the second quarter
continued the very positive development we saw in the first
quarter. Persistently strong net interest income and a sustained
fee uplift contributed to higher core banking income in the first
half of the year, resulting in an 11% increase relative to core
banking income in the same period last year. Combined with
continually strong credit quality with a net impairment reversal in
the second quarter, this led to an increase in net profit, which
also reflects robust customer activity across the
business.
We see the recent rate cuts by the ECB and the Danish
central bank as a positive step that is likely to benefit economic
activity. The rate cuts have also benefited our customers in the
period, as we both launched new offerings and improved existing
ones on the loan side as well as in relation to savings and
investments. We also have a strong advisory setup and
continually develop our digital solutions, all of which enables us
to maintain our position as an attractive bank for all
customers.
We continue to make progress on our strategy as we strive to
improve the bank to the benefit of all stakeholders. We have taken
important steps, such as introducing a self-service welcoming
journey, upskilling advisers to continuously improve business
customer satisfaction, and increasing the number of products
available via our digital platform for business customers. Keeping
in mind that it is still early days in the strategy period, we
continue our efforts to strengthen our position as a leading bank
in the Nordic region in a digital age.”
H1 2024 vs H1 2023
Total income of DKK 28.0 billion (up 9.5% against the first half of
2023)
Operating expenses of DKK 12.8 billion (up 1.4% against the first
half of 2023)
Loan impairments of DKK -99 million (against DKK -28 million in the
first half of 2023)
Net profit of DKK 11.5 billion (up 12.7% against the first half of
2023)
Return on shareholders’ equity of 13.1% (against 12.4% in the first
half of 2023)
Strong capital position, with a total capital ratio of 22.5% and a
CET1 capital ratio of 18.5%
Macroeconomic environment slightly improved
During the second quarter, the macroeconomic outlook turned
slightly more positive. The outlook for economic growth in Denmark
and the wider Nordic region has thus improved, and recent economic
data points, such as inflation and employment levels, have been
better than expected. Furthermore, GDP growth in 2023 was revised
upwards in Denmark, leading to a stronger picture of the wider
economy and not just the pharma sector, also relative to the rest
of Europe.
In the second quarter, we revised our guidance for full-year
2024 net profit to DKK 21-23 billion from DKK 20-22 billion based
on a small net loan impairment reversal and continually strong
credit quality, backed by a better macroeconomic outlook. In the
current macroeconomic landscape, our solid financial results,
well-capitalised balance sheet and strong liquidity position
continue to allow us to help our customers and other stakeholders
navigate the macroeconomic and geopolitical uncertainty by
providing expert advisory services and credit.
Strong core banking performance
In the first half of the year, we continued to deliver on our
strategic ambitions as we improved profitability and reported a
strong return on equity. The progress was driven primarily by a
sustained, strong net interest income, while high customer activity
across the business drove a fee uplift, with net fee income up 13%
from the level in the same period last year. At our Personal
Customers unit, our favourable savings and investment products
continued to attract deposits, leading to a further improvement in
deposit volumes. In a period of uncertainty and a challenging
operating environment, our Business Customers unit saw increased
lending volumes across our Nordic markets, and our Large Corporates
& Institutions unit continued to see an increase in cash
management fees and a strong activity in Debt Capital Markets,
maintaining our status as the leading Nordic bank by volumes
supported.
Operating expenses are as expected, reflecting a strict cost
focus in general simultaneously with rising costs in some parts of
the business due to planned investments made under the strategy.
This led to an improved cost/income ratio of 45.8, down from 49.4
in the first half of 2023. As a result of the commercial momentum,
robust customer activity, strong credit quality and cost focus, we
increased the return on equity from 12.4% to 13.1% for the first
six months.
“Our diversified business model and core activities
continued to deliver good results. Significant increases in both
net interest income and net fee income, the latter due to robust
customer activity also in the capital markets, and costs developing
according to plan led to improved profitability in the
first half of the year. Our continued commercial momentum and focus
on operational efficiency thus resulted in a cost/income ratio of
45.8 and a return on equity of 13.1%. We continue to invest in our
capabilities to provide a better customer experience as set out in
Forward ’28, and we have also completed our accelerated capital
distribution with interim dividends for both the first half-year of
2023 and 2024. This will not be repeated from 2025 and onwards as
we will revert to paying dividend annually,” says Stephan Engels,
CFO.
Strategy execution progressing as planned
We continued to progress towards delivering on the targets set out
in Forward ’28. Our focus on execution and our efforts to improve
Danske Bank to the benefit of all stakeholders are progressing as
expected.
During the first half of 2024, we took several important steps
to advance our sustainability agenda, including the publication of
our Climate Action Plan Progress Report and the inclusion of
sustainability as one of the strategic themes in our Forward ’28
strategy.
We are accelerating our digital transformation across our
business to enhance customer journeys, improve the customer
experience, and reduce costs and operational risks.
Overall, we are confident that the initial implementation
progress of our Forward ’28 strategy during the first six months
has built a robust foundation for continued execution.
Personal Customers
During the first half of 2024, we continued to support our
customers in managing their finances in a market environment
characterised by rising equity prices and a stable interest rate
level with only one rate cut across our markets at the end of the
period. Our Danske Bolig Fri home finance products continued to be
in high demand throughout the first half of 2024. Additionally, we
saw increased customer activity in the investment area driven by
favourable financial markets, resulting in increased market shares
for Danske Invest retail funds. Loan impairments amounted to a net
reversal as impairments benefited from the improved macroeconomic
outlook. Profit before tax amounted to DKK 5.0 billion in the first
half of 2024, representing an increase of 39% from the year-earlier
period, which was affected by a one-off provision.
Business Customers
In the first half of 2024, we saw the economic landscape improve,
due primarily to a stabilisation of interest rates followed by
interest rate cuts by the central banks towards the end of the
period. Although the effect of the rate cuts on customer activity
levels remains to be seen, we continued to expand our customer base
in our focus segments as well as to make strategic pricing
adjustments, just as we supported our customers by providing the
best possible advice tailored to their needs. While especially net
fee income developed positively, we saw higher loan impairment
charges that were driven by a few cases in our leasing organisation
as well as by allocation of post-model adjustments. In the first
half of 2024, profit before tax amounted to DKK 4.1 billion, a
decrease of 16% from the same period last year.
Large Corporates & Institutions
In the first half of 2024, macroeconomic uncertainty persisted,
though sentiment and indicators were more positive than expected.
We continued to see a positive underlying momentum, particularly in
our fee business as higher fees from assets under management and
from everyday banking and capital markets activities mitigated the
decline in net trading income, thus demonstrating the value of our
diversified business model. Furthermore, we continued to leverage
our strategic commercial strengths as reflected in growth in our
corporate customer portfolio outside Denmark, an increased market
share of cash management services and the maintaining of our
leading position in sustainable finance. Profit before tax amounted
to DKK 8.0 billion, which was on par with the same period last
year.
Danica Pension
The investment return on our pension customers’ savings in the
first half of the year followed the upward trend from the last 12
months and was driven by a strong performance in the investment
portfolio, especially in equities. However, we continued to see
people suffering from physical or mental health problems, which had
a negative effect on the insurance result for the health and
accident business in the first half of 2024. Net income at Danica
Pension increased to DKK 949 million in the first half of 2024, up
38% from the first half of 2023 due mainly to an increase in the
net financial result.
Northern Ireland
Our focus in Northern Ireland is to remain a stable, strong and
risk-astute bank, consolidating our market-leading position
alongside pursuing select low-cost growth opportunities in the rest
of the UK. The strong underlying financial performance reflects
business growth in an environment of higher interest rates. Profit
before loan impairments was 16% higher than in the first half of
2023, while profit before tax of DKK 938 million reflected a
broadly unchanged level year-on-year.
Outlook for 2024
On 26 June 2024, we revised the outlook for 2024 upwards to a net
profit in the range of DKK 21-23 billion. At the release of our
annual report for 2023 on 2 February this year, we guided for a
full-year 2024 net profit in the range of DKK 20-22 billion. The
profit upgrade follows our continually strong credit quality and
reversals of impairment charges for the second quarter of 2024. We
therefore now expect full-year loan impairment charges to be up to
DKK 0.6 billion. For the financial targets for 2026, we maintain
our assumption for loan impairment charges of approximately 8 basis
points through the cycle.
Danske Bank
Contact: Mads Sixhøj, Chief Communications Consultant, tel. +45
45 14 14 00
More information about Danske Bank’s financial results is
available at danskebank.com/reports.
- Danske Bank press release 19 July 2024
- Danske Bank Interim Report first half 2024
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