Danske Bank reported third-quarter pretax profit below forecasts on Thursday and Denmark’s largest lender by market capitalisation said the negative interest rate environment has an ongoing adverse effect on the business.

The Copenhagen-based bank said pretax profit rose 5 per cent from a year ago to 4.72 billion Danish crowns ($692 million) in July-September, lagging a forecast of 5.21 billion crowns.

"It's a challenge to manage a bank in a negative interest environment but is something we now have some practice in," chief executive Thomas Borgen said in the statement.

The bank recorded for the second consecutive quarter a negative loan impairment charge of 86 million crowns and it helped to offset a falling top line.

"Third qurter figures are clearly weaker than consensus on income but recent reports from peers also indicated this," wrote analyst Christian Hede from Nordea Markets in a note to clients.

The group kept its full-year outlook of a net profit of above 16 billion crowns.

Danske Ireland country manager Terry Browne said its corporate and institutions business continued to benefit from the strong performance of the Irish economy during the quarter.

Reuters