Danske Bank Ireland's quarterly losses mount

Thursday 01 August 2013 12.26
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Danske Bank Ireland reports Q2 loss of €17.4m
Danske Bank Ireland reports Q2 loss of €17.4m
Danske Bank Ireland boss Terry Browne says bank seeing the benefit of its recent reorganisation
Danske Bank Ireland boss Terry Browne says bank seeing the benefit of its recent reorganisation

Danske Bank Ireland has reported bigger before tax quarterly losses as its impairment charges increased.

The bank said its losses before tax rose to €17.4m for the second quarter from €8.8m in the first quarter.

The bank, formerly known as National Irish Bank, said that its impairment charges for the three months to the end of June rose to €15.4m from €5.5m in the first quarter of the year.

Total income for the three month period came to €15.7m, up from €14.6m in the previous three month period.

Danske Bank Ireland boss Terry Browne said the bank was seeing the benefit of its recent reorganisation.

He said its personal banking division continues to bed down its new operating model while maintaining the focus on credit management. He noted that mortgage arrears at the bank have remained relatively low at 4.25% versus an industry average of 12.3%.

''While significantly lower year on year, we are still guiding €750m in impairments by the end of 2014,'' Mr Browne stated.

Customer deposits at Dankse Bank Ireland rose by 8% in the quarter to €3.4 billion, while costs were down 1% compared to the first quarter.

Denmark's Danske Bank reports 46% rise in Q2 profits

Danske Bank said its profit rose 46% in the three months from April to June after loan losses at Denmark’s biggest bank dropped as the economies of its main markets picked up.

The bank said net income rose to 2.18 billion kroner, beating expectations, after loan losses fell 45% to 924 million kroner. Profit last quarter was the highest in five years.

The bank will be able to maintain the current level of impairments in coming quarters, Danske's chief financial officer Henrik Ramlau-Hansen said.

Danske, which has navigated its way through burst property bubbles in Ireland and Denmark, said loan losses declined to their lowest level since the second quarter of 2008.

Denmark is showing signs of emerging from its housing slump as property prices start to rise, while the economies of Norway and Sweden, where Danske also operates, are growing at a faster rate than the rest of Europe.

Danske now sees net income from 6.5 billion kroner to 9 billion kroner for 2013, compared with a previous range of 7.5 billion kroner to 10 billion kroner. Net interest income for the second quarter slipped 3.7% to 5.5 billion kroner. Trading income dropped 26% to 2.15 billion kroner.

“The difficult macroeconomic environment with low interest rate levels combined with the volatility in the financial markets in June have led us to revise our guidance for full-year 2013,” the bank's chief executive Eivind Kolding said.

Danica Pension, Danske’s pension and life insurance unit, reported a loss of 346 million kroner, its first since the third quarter of 2011. Kolding, speaking to reporters after presenting the bank’s earnings, ruled out talk of a sale of Danica.

Danske has not paid a dividend since 2007, a trend the bank says it will reverse once reserves are big enough. Its CFO Henrik Ramlau-Hansen has said that the lender plans to pay a dividend for 2013 if the bank meets its targeted results.