Danske Bank A/S said that its 2016 profit soared year over year and that it is looking to merge its activities in Finland into a single branch.
The bank has initiated a dialogue with authorities about the plan, and expects to take initiatives in 2017 aimed toward achieving a uniform organizational structure across the Nordic markets. The planned change, believed to be primarily of a technical nature, is part of efforts to simplify the organization and improve efficiency.
Danske's full-year 2016 net profit attributable to the parent's shareholders totaled 19.20 billion Danish kroner, up from 12.52 billion kroner earned in 2015, when the group booked a 4.60 billion kroner goodwill impairment charge. The fourth-quarter 2016 profit figure came in at 5.41 billion kroner, compared to a loss of 129 million kroner in the year-ago quarter.
The increased profit in 2016 was driven by, among other things, higher income from a larger business volume, decreasing costs and low impairments. The result was also positively impacted by a number of special items, the bank noted.
Full-year 2016 net interest income amounted to 22.03 billion kroner, compared to 21.40 billion kroner in 2015. Fourth-quarter 2016 net interest income stood at 5.79 billion kroner, compared to 5.28 billion kroner a year earlier.
The bank reported annual net fee income of 14.18 billion kroner, compared to 15.02 billion kroner reported in 2015. For the 2016 fourth quarter, the bank reported net fee income of 4.03 billion kroner, compared to 4.04 billion kroner in the same period in 2015.
The company noted that the income statement for 2015 was restated owing to the treatment of Danica Pension under the new wealth management unit and the reclassification of equity finance income from net trading income and net fee income.
The bank added that its board proposed a dividend of 9.0 kroner per share for 2016, compared to 8.0 kroner for 2015. The board also approved a share buyback program of 10 billion kroner that will run from Feb. 3, 2017, to Feb. 2, 2018, at the latest.
Return on average shareholders' equity stood at 13.1% for 2016, compared to 8.5% in 2015. At 2016-end, the common equity Tier 1 ratio and the total capital ratio were 16.3% and 21.8%, respectively, against 16.1% and 21.0% at Dec. 31, 2015.
The bank expects net profit for 2017 to be in the range of 17 billion kroner to 19 billion kroner. It maintained its longer-term target for a return on shareholders' equity of at least 12.5%.
As of Feb. 1, US$1 was equivalent to 6.91 Danish kroner.