Interim report for the
first nine months of 2015

October 29, 2015

Press release:
Danske Bank reports net profit of DKK 13.1 billion (EUR 1,755 million)

for the first nine months of 2015

Danske Bank has announced its financial results for the first nine months of 2015.

"In the first nine months, we continued to benefit from our diversified business model and posted a satisfactory result despite the ongoing adverse effects of the negative interest rate environment. The result was driven by solid customer activity that was particularly high in the first half of 2015 and lower impairments," says Thomas F. Borgen, Chief Executive Officer.

"Our underlying business remains robust with good customer development and increased demand for our products in most of our markets that offset the adverse effects of the negative interest rate environment. Total income was at the same level as in the first nine months of last year even though the third quarter of 2015 was somewhat weaker than the first two quarters. We continued to execute on our strategy to become a more customer-centric, simple and efficient financial partner. Among other things, we launched a number of initiatives aimed at making daily banking easier and improving the customer experience.

We maintain our guidance for a net profit of above DKK 16 billion (EUR 2,145 million) for 2015."

The interim report is available at www.danskebank.com/reports.

Highlights are shown below.

First nine months of 2015 vs first nine months of 2014
  • In the first nine months of 2015, Danske Bank posted a profit before tax from core activities of DKK 16.9 billion (EUR 2,261 million). The net profit was DKK 13.1 billion (EUR 1,755 million) and was up 28% from the level in the first nine months of 2014. The net profit is satisfactory, with the improvement being driven by our diversified business model, solid customer activity that was particularly high in the first two quarters of 2015, ongoing cost optimisation and lower impairments.


  • The return on shareholders’ equity after tax was 11.5% p.a., against 9.1% p.a. for the first nine months of 2014.


  • Total income amounted to DKK 33.0 billion (EUR 4,425 million), matching the year-earlier level
    • Net interest income fell 2% to DKK 16.2 billion (EUR 2,168 million) owing to the pressure on deposit and lending margins and as well as adverse exchange rate effects.


    • Net fee income amounted to DKK 9.0 billion (EUR 1,202 million) and was up 12%. Net fee income benefited from a high level of mortgage refinancing in the first two quarters of 2015, as many of our customers took advantage of the historically low interest rates. Net fee income also benefited from increased customer activity at all banking units and positive developments at Danske Capital.


    • Net trading income totalled DKK 5.3 billion (EUR 707 million), which represented a decrease of 9% from the year-earlier level that benefited from the sale of our shares in Nets.

    • As a consequence of a continued cost focus, operating expenses were down 4% to DKK 16.0 billion (EUR 2,139 million). The cost/income ratio improved to 48.3% despite the higher customer activity.


    • Loan impairments in core activities fell 90% to DKK 0.2 billon (EUR 26 million). The decline in loan impairments reflected the ongoing work to improve credit quality and improved macroeconomic conditions. Impairments equalled 0.01% of lending and guarantees, against 0.14% a year ago. The positive development was seen across all business units.


    • Total lending was up 2% from the level at the end of 2014, with increases recorded at all banking units. Total deposits were up 8%, with increases recorded in particular at Corporates & Institutions.

    Third quarter 2015 vs second quarter 2015
    • Profit before tax from core activities amounted to DKK 4.7 billion (EUR 632 million), against DKK 5.9 billion (EUR 787 million) in the second quarter of 2015, as the strong customer activity in the first two quarters of the year as expected did not continue into the third quarter.


    • Total income fell 10% from the second quarter of 2015, mainly because of lower customer activity in the financial markets and lower remortgaging activity in the third quarter.


    • Supported by continued improvements in credit quality, loan impairments in core activities showed a net reversal of DKK 0.1 billion (EUR 12 million), against a net reversal of DKK 0.2 billion (EUR 29 million) in the second quarter.

    Strong common equity tier 1 capital ratio and total capital ratio
    Our ongoing work to optimise the capital structure resulted in strong capital ratios. The common equity tier 1 (CET1) capital ratio and the total capital ratio were 15.7% and 20.6%, respectively, against 15.1% and 19.3% at 31 December 2014. At 133%, the liquidity coverage ratio (LCR) remained solid.

    On 30 March 2015, we initiated a share buy-back programme of DKK 5.0 billion (EUR 669 million). At 30 September 2015, we had bought back shares for a total of DKK 4.1 billion (EUR 546 million).

    Net profit guidance maintained
    We maintain our guidance for a net profit of above DKK 16 billion (EUR 2,145 million) for 2015.


    Danske Bank


    Contacts:
    Thomas F. Borgen, Chief Executive Officer, tel. +45 45 14 14 00
    Henrik Ramlau-Hansen, CFO, tel. +45 45 14 14 00

    Conference call
    Danske Bank will hold a conference call at 2.30pm CET.
    You can follow a live webcast of the conference call.

    Online reports
    View Danske Bank’s online reports at: www.danskebank.com/onlinereport.
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