Danske Bank's falling second-quarter net profit beat expectations today but it warned of further layoffs as part of a four-year strategy of cutting costs.
The Nordic lender is struggling to recover from the consequences of a 2017 money-laundering scandal in its Estonian branch.
This saw thousands of clients jump ship and put the bank under investigation by authorities in several countries.
"To ensure adequate progress, we will take additional cost-reduction measures, which unfortunately will have to include further staff reductions," Chief executive Chris Vogelzang said, without specifying how many layoff there would be.
Late last year, Danske pledged to get costs and compliance under control by 2023. But it said today that expenses were 7% higher in the first half of this year due to compliance and costs relating to the Estonian case.
"Costs continue to be a priority to ensure that we can remain competitive in a highly competitive, low-margin market," Chief Financial Officer Stephan Engels said.
He added that the bank would need to focus even more on bringing costs down.
As part of efforts to reduce operation expenses next year of between 8-10%, Danske will make staff cuts across the bank's divisions, this year and the next, Engels said.
Danske reported a net profit of 2.33 billion Danish crowns ($356 million) in the second quarter, down around 42% from a year earlier, but topping the 992 million crowns average forecast by analysts in a poll on Danske's website.
Impairment charges, a keenly watched measure during the Covid-19 pandemic, came in at 1.02 billion crowns, below the 1.72 billion crowns average forecast by the analysts.
The bank said the first half of 2020 was challenging due to the coronavirus crisis and the lockdown of societies, although the gradual reopening in the second quarter resulted in increased activity as consumer spending recovered somewhat.
It said that in general, the Nordic region and its customers have weathered the headwinds relatively well, and Danske Bank continues to have strong credit quality.
Danske Bank's chief executive Chris Vogelzang said the high degree of macroeconomic uncertainty led to an increase in requests for liquidity facilities from commercial customers and in the number of retail customers seeking advice.
He said this led to increased lending to corporate customers, some of which, however, is expected to be of a transitory character.
"So far, we have helped more than nine of 10 customers in need, and we will continue to offer a range of supportive measures to our customers to help them navigate the transition when the government support programmes are phased out", the CEO added.