The year 2007 is expected to be another satisfactory year for the Danske Bank Group.
The Group's outlook is based on the restated pro forma financial highlights for 2006 shown in the table below. The Sampo Bank group was consolidated in February 2007 and not, as originally expected, in January 2007. However, the Group's outlook for profit before credit loss expenses for 2007 is unchanged from the outlook given in the Annual Report for 2006.
In 2007, Europe is likely to see a rise in average interest rates and moderate economic growth. The Group expects aggregate growth in its principal markets to slightly outperform average euro-zone growth.
Income
Net interest income is expected to rise by 8-10%, primarily as a result of double-digit lending growth in the markets on which the Group operates and the likely rise in average interest rates.
Net fee income is likely to be slightly higher than in 2006, due mainly to an increase in trading volume on the securities markets and despite expenses for the credit default swaps entered into in connection with the financing of the acquisition of the Sampo Bank group. Mortgage finance activities are expected to remain roughly unchanged.
Net trading income is expected to be 7-9% lower than the high level recorded in 2006. The Group expects to maintain its market position, but trading income will continue to depend greatly on trends in the financial markets, including the level of securities prices at the end of the year.
Other income is likely to fall by 7-9% as the Group does not expect to realise income from the sale of property on the scale recorded in 2006.
The Group does not expect to achieve an investment return from its insurance business similar to the high return generated in 2006. Overall, net income from insurance business is expected to fall by 13-15%. This result will, however, also depend greatly on trends in the financial markets.
ExpensesThe Group expects operating expenses to rise by 5-7%, including 3 percentage points from total integration costs. The increase in activities and the general rise in salaries and inflation are expected to account for the remaining 2-4 percentage points.
Profit before credit loss expenses
Consequently, profit before credit loss expenses is expected to roughly match the level recorded in 2006.
Credit loss expenses
The Group does not expect to realise a net positive entry for credit loss expenses for the whole of 2007 as was the case in 2006. However, the Group assumes favourable economic trends and satisfactory loan portfolio quality and therefore expects to record relatively modest credit loss expenses in 2007.
Profit before taxPre-tax profit for 2007 is therefore expected to be somewhat lower than the level recorded in 2006.
Tax
The Group expects its tax rate to be 27% calculated on the basis of current tax law.
Updated overview of outlook for 2007
| Net interest income |
22,610 |
8 - 10 |
| Net fee income |
8,877 |
0 - 2 |
| Net trading income |
7,280 |
(7) - (9) |
| Other income |
2,952 |
(7) - (9) |
| Net income from insurance business |
1,355 |
(13) - (15) |
| Total income |
43,074 |
1 - 3 |
| Total operating expenses |
22,640 |
5 - 7 |
| Profit before credit loss expenses |
20,434 |
(2) - 0 |
Previous overview of outlook for 2007
| Net interest income |
22,290 |
8 - 10 |
| Net fee income |
9,214 |
0 - 2 |
| Net trading income |
7,500 |
(7) - (9) |
| Other income |
3,101 |
(12) - (17) |
| Net income from insurance business |
1,355 |
(13) - (15) |
| Total income |
43,460 |
0 - 2 |
| Total operating expenses |
22,759 |
4 - 6 |
| Profit before credit loss expenses |
20,701
|
(2) - 0
|
Archive
Last updated/revised on May 1, 2007