|Holmens Canal 2 – 12
DK-1092 Köbenhavn K
Phone number +45 45 14 14 00
October 27, 2023
Strong progress continues despite the challenging operating environment, based on good customer activity and strong creditworthiness
Net profit for the first nine months of 2023 is DKK 15.5 billion
CEO Carsten Egelis commented on the results as follows:
“During the first nine months of this year, we continued to perform well despite a challenging operating environment. Progress was primarily driven by higher net interest income and higher loan volumes for corporate customers, while activity-based Fees performed very well towards the end of the period, with both net trading income and net insurance income recovering over the period. Expenses are on track and good credit quality continues to result in some impairment charges. I am.
We continue to grow the commercial momentum of our retail business in Denmark by offering our customers an attractive and competitive service by providing our customers with a mobile banking app that allows them to handle their daily banking tasks simply and conveniently. We are making sure that you are doing so. Positive interest rates on salary and budget accounts, higher interest rates on some types of savings accounts, and the provision of flexible housing finance products are expected to increase deposit volumes, increase bank lending volumes and increase new mortgage market share in Denmark. This is expected to increase.
Over the past four years, we have brought significant changes to Danske Bank. This is to ensure we have the right people, structures and controls in place to not only continue to deliver value to our customers, but also to deliver on our financial crime prevention transformation. We therefore continue to look forward to achieving his 2023 goals and have built a strong foundation for success in the next chapter of Danske Bank’s progress. This is our Forward ’28 strategy. ”
First nine months of 2023 and first nine months of 2022
Total revenue: DKK 38.6 billion (DKK 29 billion in 2022)
Operating expenses DKK 18.8 billion (compared to DKK 19.6 billion in 2022)
Loan impairment of DKK 294 million (DKK 794 million in 2022)
Net profit was DKK 15.5 billion (adjusted DKK 6.5 billion in 2022)
Return on equity 12.5% (adjusted 5.1% in 2022)
Strong capital base with total equity ratio of 23.2% and CET1 equity ratio of 18.8%
Supporting customers with a solid capital base
During the first nine months of 2023, geopolitical tensions and uncertainties increased further. In this difficult operating environment, we noted an improvement in macroeconomic sentiment, particularly in Denmark. Inflationary pressures have eased and the Nordic countries’ labor markets appear resilient. Nevertheless, housing market activity remained weak, which negatively affected credit demand and our banking activity. Although macroeconomic sentiment has improved, we note that the outlook remains uncertain and the full impact of the new interest rate environment is yet to be seen.
Credit quality remained strong, although credit deterioration was observed in the sectors of the economy that were first affected by interest rate increases. We remain cautious with important buffers in place and also note that Fitch Ratings has upgraded Danske Bank to his A+ rating..
Against this backdrop, Danske Bank continued to support its customers during this period to overcome the difficult environment.
Strong core bank performance
Despite the challenging operating environment, the Company continued to achieve its strategic objectives and reported a strong return on equity in both the third quarter and first nine months of 2023. This progress was primarily driven by an increase in net interest income, which was at about the same level. Due to an improvement in the interest rate environment, we have revised our full-year forecast. We want to make sure that our products are attractive and competitive for our customers. Therefore, we continue to increase interest rates on several types of savings accounts and now offer positive interest rates on salary and budget accounts as well. Loans to corporate customers increased during a period of great uncertainty. Year-to-date, fee income continues to be affected by lower-than-peak housing market activity, while investment activity remains stable and improved client activity in the capital markets has led to a third This led to an increase in fees for the quarter. Adjusted for one-time effects, revenues from insurance operations approached normalized levels in the third quarter, with net trading income slightly lower, primarily due to seasonality.
Operating expenses continued to decline in the quarter and year-over-year as underlying expenses remained in line with plan.
Return on equity increased from 5.1% to 12.5% in the first nine months as a result of commercial momentum, customer activity, strong credit quality and cost focus.
“In the first nine months of this year, we saw strong performance in our core banking business, with gross profit increasing 33%. Our strong net interest income was driven by the normalization of interest rates and our repricing. Net fee income, meanwhile, remained resilient due to increased client activity in corporate and capital markets, significantly outweighing the impact of the continued weak housing market. cost/earnings ratio of 48.7%, supporting improved profitability and continued cost focus. Some cyclical sectors are beginning to be affected, and macro models reflect an uncertain outlook. Our strong creditworthiness means that impairment remains low despite the We were able to help other stakeholders navigate the new normal of macroeconomic uncertainty and rising interest rates.” CFO Stefan Engels said:
Better Bank final touches – Forward ’28 execution underway
Four years ago, we launched an ambitious strategy called “Better Bank” to streamline and strengthen Danske Bank’s position as the leading bank in the Nordic countries. This includes four strategic commitments: to put our customers first, to value and develop our people, to contribute to society, and to deliver strong returns to our investors. Over the past four years, he has solidified all four pillars and is now finalizing the implementation of his Better Bank strategy. Therefore, we plan to provide more detailed and updated information in our Annual Report 2023.
To further strengthen our position and maximize Danske Bank’s potential, we announced in June our new Forward ’28 strategy, which will take effect from 2024. We have set our strategic direction for 2028, which reflects our ambition to achieve solid profits. While we are focused on finalizing our Better Bank strategy, we have already begun to lay the foundation for the next chapter. We have entered into a strategic partnership with Infosys to support our goal of becoming a leading bank in the digital era. We also entered into an agreement to sell our private customer business in Norway to further focus on our retail business.
Sustainability is at the core of our strategy and our progress in this area continued in the third quarter of 2023. Danske Bank and Realkredit Danmark have also strengthened their ESG efforts in the real estate sector with new reporting tools that make ESG reporting easier for real estate companies. Additionally, Danske Bank received an ‘A’ score in Position Green’s annual assessment of his ESG report of 300 companies in Denmark, Norway and Sweden.
In the first nine months of 2023, retail customer net interest income increased 77% year-on-year. This is primarily a result of increased deposit income due to repricing measures and market developments. Although fee income decreased by 18% year-on-year, customer activity recovered in the third quarter of 2023 compared to the previous quarter, which had a particularly positive impact on service fees. Also, fees associated with loan origination and mortgage refinancing increased from the previous quarter’s levels, but the first nine months’ levels were still significantly lower than the first nine months of his 2022. . Credit quality remained strong and loan impairment charges were relatively flat. Go to the previous year period.
Pre-tax profit for the first nine months of 2023 amounted to DKK 6.17 billion, an increase of 111% compared to the same period in 2022. This increase was driven by higher net interest income and lower operating expenses.
Business customers continued to show strong momentum due to higher market interest rates and repricing activity, which had a positive impact on total revenue in the first nine months of 2023. The sale of used assets of leasing companies also contributed to the positive development. On the negative side, fee income remained under pressure due to weak customer activity, which impacted activity fees and new loan fees. We continued to support our customers with expert financial advisory services tailored to their needs.
Pre-tax profit for the first nine months of 2023 amounted to DKK 7.1 billion, an improvement of 42% on the level for the same period in 2022.
Large companies and organizations
During the first nine months of 2023, risks primarily related to central bank interest rates and inflation continued to weigh on the economic outlook. Even in the face of uncertainty, we remained committed to supporting our customers with advisory services and solutions to help them navigate the complex financial environment. We continue to see strong underlying business momentum, supported by a strong balance sheet and signs of improving capital market activity. In the debt capital market, we remained the Nordic leading bank in the European debt capital market in terms of support volume. In addition, further new customer inflows and market share growth in cash management services in Sweden supported net interest income, which increased by 28% compared to the same period in 2022. Furthermore, we have continued to be a trusted company. As an advisor to clients on sustainable finance solutions, we maintained a leading market position in sustainable bonds and sustainability-linked loans.
Pre-tax profit increased by 66% year-on-year to DKK 6.7 billion, mainly due to higher net interest income and net trading income.
Financial markets were relatively stable in the third quarter of 2023, with a slightly positive trend. The beginning of 2023 was marked by a very strong development, especially for the US tech index, but the latest quarter saw the rest of the world market almost catching up. Despite continued focus on the possibility of a recession, it did not materialize and the negative impact from 2022 was partially offset by positive developments in his 2023.
Danica Pension’s net profit reached DKK 900 million in the first nine months of 2023, restoring the level of the same period in 2022, as positive developments in financial markets improved the net financial performance.
Our focus in Northern Ireland is to remain a stable, strong and risk-resilient bank, strengthening our market-leading position while pursuing smart low-cost growth opportunities in other parts of the UK. There is something to do. This is underpinned by a continued strong profit and profitability performance, with pre-tax profits of DKK 1.5 billion for the first nine months of 2023.
Outlook for 2023
Danske Bank’s outlook for 2023 has narrowed as it now expects net profit to be in the range of DKK 19.5 billion to DKK 20.5 billion. This was due to satisfactory performance in the first nine months and lower than expected loan impairment charges due to continued strong credit quality. This guidance includes a number of temporary items recognized over the first nine months.
The outlook is uncertain and depends on volume growth and macroeconomic conditions.
Contact: Stefan Singh Kailay, Head of Media Relations, Tel: +45 45 14 14 00
For more information on Danske Bank’s financial results, please visit danskebank.com/reports.
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Danske Bank Press Release October 27, 2023