Moody's on Dec. 10 downgraded the long-term issuer ratings of Danske Bank A/S to A3 from A2 and revised the outlook on the rating to stable from negative.

The agency also downgraded the Denmark-based lender's baseline and adjusted baseline credit assessments to "baa2" from "baa1," its long-term counterparty risk assessment to A1(cr) from Aa3(cr), its long-term counterparty risk ratings to A1 from Aa3 and its long-term senior unsecured debt rating to A3 from A2. The outlook on the senior unsecured debt rating was revised to stable from negative.

Moody's said the actions follow the revision in the bank's earnings outlook for full year 2019. On Dec. 3, the bank said it expects its net profit for the year to be in the middle of a range of 13 billion Danish kroner to 15 billion kroner, then revised it again days later to around 15 billion kroner. The agency expects the actual outcome to bottom out an expected return on equity of between 5% and 6% in 2020.

Meanwhile, the bank's current baseline credit assessment reflects Moody's assessment that Danske Bank would be able to withstand within one year's earnings the potential fines and settlements that could arise from several local and international investigations on the alleged involvement of its now-defunct Estonian branch in money laundering.

At the same time, Moody's affirmed the bank's A2/Prime-1 long- and short-term bank deposit ratings, with the negative outlook maintained on the long-term rating, Prime-1(cr) short-term counterparty risk assessment and Prime-1 short-term counterparty risk ratings.

As of Dec. 10, US$1 was equivalent to 6.74 Danish kroner.