Danske Bank is not ruling out further large-scale job cuts in its pursuit of lower costs, its finance chief said on Friday after its third-quarter earnings beat forecasts and it raised its outlook for the full year.
The bank also signalled a strong performance in Ireland, with an 8 per cent rise in operation profits in its branch operation in the North.
Chief financial officer Jacob Aarup-Andersen said June’s Brexit vote in Britain has so far had less of an impact on Denmark’s biggest bank by assets than it anticipated.
“But what we have seen is rates moving down post the Brexit vote . . . and that is obviously hitting us as a bank. It has made the challenge of negative rates even tougher for us,” Mr Aarup-Andersen said.
The numbers extended a run of forecast-beating quarterly results this year that has helped Danske Bank’s share price significantly outpace most of its European peers, some of which have wilted under the impact of volatile financial markets, high loan impairments and ultra-loose monetary conditions.
In the North, Danske reported operating profits of £78 million (€87 million) and a drop in impaired loans from £38 million to £23 million.
In the Republic, Danske’s Irish operations – now concentrated in corporate and institutional banking – continues to generate “solid returns,” according to country manager Terry Browne. Separate figures for the Republic were not disclosed.
Voluntary redundancy
In mid-October, Danske Bank offered about 40 per cent of its 19,400 employees voluntary redundancy as part of efforts to bring costs down further and deliver a return on equity of at least 12.5 per cent by 2018.
Mr Aarup-Andersen said the bank remained “incredibly diligent” towards costs and that further major job cuts were possible.
“It’s not a paradigm shift in the way we approach costs . . . it’s part of our ongoing cost-efficiency programme and you should expect us to continue that,” he said.
“Whether that entails larger-scale job cuts is too early to judge. But we will constantly be adjusting our cost base in this environment.”
Danske Bank earlier reported strong results driven by trading income of 2.55 billion Danish krone (€342 million), well ahead of the consensus estimate of 1.66 billion krone in a Reuters poll
Net profit of 4.9 billion krone also beat the consensus, as the bank gained market share across much of its personal and business banking segments, Mr Aarup-Andersen said.
It forecast full-year net profit would now beat last year’s pre-writedowns figure of 17.7 billion krone.
The bank’s share price has risen about 15 per cent this year, compared with a fall of around 18 per cent across the Stoxx Euro 600 Bank Index.
