trending Market Intelligence /marketintelligence/en/news-insights/trending/a0ENVmoPS8z8bgj-6okAbw2 content esgSubNav
In This List

Sydbank to impose negative interest rates as Q2 profit slides YOY

Podcast

Street Talk Episode 87

Blog

A New Dawn for European Bank M&A Top 5 Trends

Blog

Insight Weekly: US banks' loan growth; record share buybacks; utility M&A outlook

Blog

Banking Essentials Newsletter 2021: December Edition


Sydbank to impose negative interest rates as Q2 profit slides YOY

Sydbank A/S said it would introduce negative interest rates to retail clients amid a "worsened" interest rate environment, as its profits in the second quarter and first half both dropped year over year.

The Danish lender will introduce a negative interest rate against retail deposits of over 7.5 million kroner, with the rate to be determined case by case and subject to individual agreement with the bank. Without an agreement, the negative rate to be charged on deposits would be minus 0.6% per year. The move reflects expectations that the negative interest rate environment will continue for several years, Sydbank said.

The bank posted a profit of 184 million kroner in the second quarter, down from 238 million kroner in the year-ago period. Core income in the quarter fell year over year to 905 million kroner from 987 million kroner, as did trading income, to 40 million kroner from 45 million kroner.

The bank booked impairment reversals on loans and advances of 20 million kroner, compared to the year-ago 44 million kroner. It also took an investment portfolio charge of 14 million kroner, down from 66 million kroner a year ago.

For the first half, Sydbank's group profit dropped on a yearly basis to 389 million kroner from 668 million kroner. EPS for the half also decreased to 6.0 kroner from 10.0 kroner a year ago.

Net interest income in the half fell to 850 million kroner from 956 million kroner a year ago. Fee and commission income dipped year over year to 1.08 billion kroner from 1.09 billion kroner, but fee and commission expenses climbed to 175 million kroner from 154 million kroner.

The bank's common equity Tier 1 ratio stood at 16.6% at June-end, down from 17.3% at 2018-end but up from 15.5% a year ago. The decline of the CET1 ratio compared with that as of 2018-end was primarily due to the bank's share buyback program.

For the 2019 full year, the bank said it expects its posttax profit to fall on the lower end of a range of 800 million kroner to 1.1 billion kroner. Total income for 2019 is also expected to decline year over year.

As of Aug. 27, US$1 was equivalent to 6.72 Danish kroner.