COPENHAGEN, July 21 Denmark's biggest financial
institution Danske Bank is expected to report its
best quarterly result since the global financial crisis began in
2008, boosted by a one-off item from the sale of a stake in
payment services company Nets Holding.
Danske Bank's share price has outperformed Nordic peers so
far his year and analysts expect more to come after a strong
quarterly result on Thursday.
"I see opportunity for an upgrade of the full-year
guidance," Sydbank analyst Bjorn Schwarz said. Like other
analysts, he expects management to continue to bring down loan
losses and cut costs.
Danske Bank, the biggest Nordic financial institution by
market capitalisation a decade ago but now lying in sixth place,
was hit hard by a property market collapse in Ireland, where it
bought a bank before the crisis, and by a sluggish Danish
It is now expected to report pretax profit of 4.87 billion
Danish crowns ($885 million) and a net profit of 3.69 billion
crowns according to a Reuters poll. Even without the one-off of
around 1 billion crowns, the pretax profit would be the best
The quarterly results would have been helped by money saved
on interest payments after Danske Bank repaid a 24 billion crown
state loan in April.
The bank began recovering since early 2013 driven by lower
loan losses. Analysts are now looking for cost-cutting
"Business review news about new cost-saving initiatives or
the divestment of less profitable business units could fuel a
positive share price reaction," analyst Christian Hede from
Nordea wrote in a note to clients.
Danske Bank is the lowest valued stock among the biggest
Nordic banks with a price-to-book ratio of 1.07. Handelsbanken
is the highest valued with a price-to-book ratio of
1.84, Swedbank is third with 1.80, SEB with
1.63, Nordea with 1.39 while Norwegian DNB is
second lowest with 1.30.
Media report have suggested that Danske Bank wants to sell
its Swedish unit but Chief Executive Thomas Borgen told Reuters
in May that the bank was fully committed to Norway and Sweden.
Analysts, however, are still looking at the Swedish business
due to strong competition there.
"We expect management to explain further about the strategy
for Sweden - as the current market share of 5 percent for the
Swedish Retail Banking unit does not provide sufficient
economies of scale," analyst Thomas Eskildsen from Jyske Bank
wrote in a note.
Share prices for Danish lenders have gone up 23 percent so
far this year, strongly outperforming their five Nordic peers
which are between 2.1 and 7.4 percent higher. Shares in Swedbank
are down 2.9 percent for the year.
($1 = 5.5092 Danish crowns)
(Reporting by Ole Mikkelsen Editing by Jeremy Gaunt)