Danske exceeds expectations, DNB well received

Danske Bank and DNB results announced this week were well received, although their figures and Swedish reporting this week confirmed the trend of the low interest rate environment affecting performance.

Danske on Tuesday released figures showing a pre-tax profit of Dkr5.3bn (Eu712m) for the fourth quarter — adjusted for a previously-announced Dkr9.1bn goodwill write-down — putting it 18% ahead of consensus expectations. According to an analyst, this was driven by revenues that came in 8% ahead of expectations.

“2014 was a year of considerable progress for Danske Bank,” said Danske CEO Thomas Borgen. “Our focus on delivering value to our customers helped strengthen our underlying business and our results.

“Although we still have some way to go to meet our ambitions and realise the full potential of Danske Bank, the progress confirms that we are on track to deliver on our targets. We will continue to diligently execute our strategy to become a more customer-centric, simple and efficient bank for the benefit of both customers and shareholders.”

The bank proposed a dividend of Dkr5.5 per share, up from Dkr2, and a Dkr5.5bn buy-back programme. It raised its 2015 outlook, guiding for a net profit of Dkr14bn, and raised its RoE target from 9% to 9.5% in 2015, and to 12.5% for the long term.

“We find the adjustment of the RoE target very shareholder friendly and it shows that management and board are listening to the market,” said the analyst.

Denmark is now facing negative interest rates (see separate article for more) and Borgen is reported to have said that a 50bp move further into negative territory would add Dkr700m-Dkr900m to costs without mitigating actions, although only Dkr100m-Dkr200m with mitigating actions.

Norway’s DNB announced a pre-tax profit of Nkr6.2bn (Eu718m) yesterday (Thursday). This was 5% below consensus expectations, according to the analyst, although he noted that the quality of DNB’s figures meant that overall the results were well received, with the bank’s shares rising in the wake of their release.

The lower-than-expected profits were attributed to trading gains coming in well below expectations, at Nkr300m. However, net interest income, commission generation and costs figures were all positively received, as was a 41% increase in dividends.

After Nordea and SEB reported last week, Svenska Handelsbanken and Swedbank released their results on Wednesday and Thursday, respectively. Handelsbanken’s pre-tax profit was 10% below consensus expectations, at Skr4.3bn (Eu457m), and Swedbank’s 8% below, at Skr4.8bn, with net items well below expectations for both.

Handelsbanken also announced Frank Vang-Jensen (pictured) as its new president and CEO, with Pär Boman moving to become chairman of the bank’s board. Vang-Jensen has been head of Handelsbanken in Sweden and was previously chief executive of Stadshypotek and head of Handelsbanken Denmark.

“In our opinion he is an excellent choice, having steered Handelsbanken’s Danish operation successfully through the Danish banking crisis,” said an analyst.