Danske Bank A/S's new wealth management division is in pole position to capitalize on the "mega-trends" of asset accumulation and aging populations in the Nordics, CEO Thomas Borgen told analysts during a call after the release of the bank's fourth-quarter 2016 results.
The Danish lender launched the unit in April 2016 and had 1,400 billion Danish kroner under management at the end of 2016, with the division generating almost half of the group's annual net fee income and 19% of its pretax profit.
"Various analysts estimate the underlying market development [of wealth management in the Nordics] will be 6% to 9% by 2020," Borgen said. "Where exactly we will be, we don't know, but we believe we are in a mega-trend. We plan to take an overproportion of that market growth."
The CEO declined to give any growth targets for the wealth management division but said there would be "more insights" in the near future.
The group's net fee income for the year fell to 14.18 billion kroner from 15.02 billion kroner in 2015, but net profit attributable to shareholders rose year over year to 19.20 billion kroner from 12.52 billion kroner. Borgen said Danske was hit by a slowdown in customer activity due to "global uncertainty" in the early months of 2016 but saw a rebound in the latter part of the year.
The uptick in profits at group level was attributable to lending growth, cheaper cost of funding and volume growth in the mortgage segment, CFO Jacob Aarup-Andersen told analysts during the call.
Business in Northern Ireland suffered "no significant hit" as a result of Britain's vote to leave the European Union, Aarup-Andersen said. However, movements in the value of sterling dealt a blow to the division, with pretax profit falling to 1.06 billion kroner in 2016 compared to 1.28 billion kroner a year earlier.
Speaking of Danske Bank's ambitions for neighboring Nordic markets, Borgen said he expects growth in Sweden and Norway in 2017, but added that the outlook for Finland was more muted due to a high level of competition in the banking sector and a slower economy.
In Sweden, Danske Bank grew its market share to 5.2% in 2016 from 4.9% a year earlier, and in Norway to 5.9% from 5.7%, while in Finland, its market share fell slightly from 9.6% to 9.5%.
The group's board proposed a dividend of 9.0 kroner per share for 2016, up from 8.0 kroner in 2015. The board also gave the green light to a 10 billion kroner share buyback program that will run from Feb. 3, 2017, to Feb. 2, 2018.
As of Feb. 1, US$1 was equivalent to 6.91 Danish kroner.