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Danske Bank cuts FY'18 profit outlook over 'challenging' markets

Danske Bank A/S expects lower results for 2018 amid "challenging" financial market conditions in the fourth quarter.

The embattled Danish lender said its full-year 2018 net profit is expected to be approximately 15 billion kroner, compared to a previous guidance of between 16 billion kroner and 17 billion kroner. The bank added that its non-core unit is adversely affected by a 200 million kroner adjustment in value. Meanwhile, the outlook on all financial items, including net interest income, is unchanged.

"Deposits remain at a stable level, and we are seeing growth in lending, especially in Norway and Sweden, driven partly by our partnership agreements," CFO Christian Baltzer said.

Danske Bank is set to release its full-year 2018 results on Feb. 1, 2019.

The revised profit guidance came after Estonian authorities arrested 10 former employees of the bank's local branch in relation to a €200 billion money laundering fiasco. Among those nabbed was Juri Kidjajev, the branch's former head of international and private banking and co-author of the internal memo about billions of so-called mirror trades that set off the scandal, the Financial Times reported.

Although there is no indication if the memo was the reason for the arrest, the FT noted that the memo provides one of the clearest descriptions of the scale and methods used by Danske Bank's Estonian branch to carry out suspicious transactions from Russia and other former Soviet states.

The money laundering scandal has led to falling share prices for the bank and international regulatory scrutiny, with potential fines expected to reach billions.

As of Dec. 20, US$1 was equivalent to 6.54 Danish kroner.