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Danske Bank Q1 net profit almost flat YOY as market volatility bites

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Danske Bank Q1 net profit almost flat YOY as market volatility bites

Danske BankA/S reported first-quarter consolidated net profit attributable toshareholders of the parent company of 4.78 billion Danish kroner, compared tothe year-ago 4.83 billion kroner.

EPS for the period was 5.0 kroner, up from 4.9 kroner in thesame quarter in 2015.

"Despite challenging financial markets and negativeshort-term interest rates, we had a satisfactory start to the year, whichreflects the strength of our business model," CEO Thomas Borgen said.

On an IFRS basis, net interest income declined year overyear to 8.05 billion kroner from 8.40 billion kroner. Fee income came in at3.81 billion kroner, compared to the year-ago 3.89 billion kroner.

The bank booked a net trading loss of 1.87 billion kroner inthe quarter, compared to net trading income of 11.44 billion kroner a yearearlier, mainly attributable to a decline in customer activity and an increasein negative value adjustments. The group said net trading income remains subjectto customer activity and volatility in the financial markets in 2016.

Other income increased on a yearly basis to 1.62 billionkroner from 879 million kroner. The figure included a gain of about 800 millionkroner from the sale and lease-back of its head office buildings in Copenhagen.

Danske Bank booked a write-back on loan impairments chargesof 128 million kroner, compared to charges of 366 million kroner a year earlier.The bank said the figure reflected ongoing work to improve credit quality, as wellas general improvements from a stable macroeconomic climate and highercollateral values.

The bank noted that impairments increased in theagricultural and oil sectors, reflecting weak market conditions. It said,though, that it expects overall loan impairments to remain "at a lowlevel" for the remainder of 2016.

At the end of March, the bank's common equity Tier 1 andtotal capital ratios, calculated under Danish FSA transitional rules, were15.0% and 20.1%, respectively, compared to 16.1% and 21.0% at the end of 2015.The liquidity coverage ratio was 124% at March 31.

Danske Bank noted that the decline in CET1 capital ratio wascaused by the initiation in February of a 9 billion kroner share buybackprogram.

The group maintained its guidance that net profit for 2016will be in line with net profit before goodwill impairments in 2015.

As of April 28, US$1was equivalent to 6.58 Danish kroner.