* Q2 pretax 5 bln crowns vs f'cast 4.87 bln
* Sees FY net between 10 bln 13 bln, vs prev f'cast 9-12 bln
* Aims to increase market share in Sweden and Norway
* Share rise to highest level since May 2008
(Adds analyst comments, CEO comment, share price)
By Ole Mikkelsen
COPENHAGEN, July 24 Danske Bank A/S
has raised its 2014 net profit forecast after posting its best
quarterly result since the start of the global financial crisis
in 2008, sending its shares up 4.5 percent to a six-year high.
Denmark's largest lender said it now expected to earn
between 10 billion Danish crowns ($1.8 billion) and 13 billion
in net profit in 2014, against a previous forecast of hitting
the higher end of a 9 to 12 billion crown range.
The bank was hit hard by the European financial crisis,
especially its exposure to Ireland, the sluggish Danish economy
and a collapse in its domestic housing market. Its results have
been recovering, but only slowly, since 2013.
Executive Thomas Borgen said Danske Bank would invest in
Norway and Sweden where it wants to grow in coming years. Its
focus previously had been more on trimming costs rather than
expansion and investment.
"We have a 4 percent market share in both Norway and Sweden.
We can see that with some investment we can really be a
challenger in those markets," Borgen told Reuters. "We will
unquestionably be in those markets and develop those businesses
Shares in the bank rose by as much as 4.5 percent to 162.50
crowns, their highest since May 2008.
"They are doing well on cutting costs ... Costs were lower
than expected and so were loan impairment charges. So the bank
can really reap the benefits of its initiatives in this
quarter," said Bjorn Schwartz, chief analyst at Sydbank.
"I think we could (see) another upgrade later in the year if
the general development continues along the lines we have seen
so far this year," Schwartz said, adding that the bank could
reach a net result of between 11 and 14 billion crowns.
BETTER THAN EXPECTED
The company posted a pretax profit of 5 billion crowns in
the second quarter compared with 2.7 billion in the same quarter
a year ago. Net profit amounted to 4 billion crowns against 2.2
billion a year ago.
Analysts had on average forecast a pretax profit of 4.87
billion crowns and a net 3.69 billion.
The latest results were boosted by 1 billion crowns from the
sale of a stake in Nets Holding, a payment services company.
Danske Bank was formerly the Nordic region's top financial
institution by stock market value, before slipping to sixth
place as the financial crisis took its toll.
Its performance began to recover as of 2013, as it trimmed
back on loan losses and initiated cost-cutting programmes. Its
shares have outperformed Nordic peers so far this year.
In the second quarter of this year, its loan impairment
charges amounted to 626 million crowns, less than analysts'
expectations of 713 million and the 813 million it booked in
charges a year ago.
However Danske is the lowest-valued stock among the biggest
Nordic banks, with a price-to-book ratio of 1.08, according to
Handelsbanken is the highest valued with a ratio
of 1.87, Swedbank is second with 1.85, SEB
has a 1.66 ratio, Nordea a 1.41 ratio while Norwegian
DNB is second lowest on 1.29.
Shares in Danish lenders have gained 25 percent so far this
year, strongly outperforming their five Nordic peers which are
between little changed for Swedbank and just over 9 percent
higher for Handelsbanken.
($1 = 5.5411 Danish Crowns)
(Additional reporting by Teis Jensen; Writing by Sabina
Zawadzki; Editing by Pravin Char and David Holmes)