UPDATE 2-Danske Bank H1 net tops forecasts, repeats outlook

(Adds share price reaction, CEO comment)

COPENHAGEN, Aug 7 (Reuters) - Denmark's biggest financial group, Danske Bank (DANSKE.CO), reported a smaller-than-expected 24 percent fall in first-half net profit on Thursday and repeated its outlook for a fall in its full-year earnings.

The group reported a net profit for the first six months of 2008 of 5.8 billion Danish crowns ($1.21 billion), compared with 7.6 billion in the corresponding months of 2007 and an average of 5.4 billion in a Reuters poll.

Total income for the bank, the Nordic region's second-largest financial firm after Nordea (NDA.ST), was 21.8 billion crowns, with core income from lending and trading above analysts' expectations and net fee income slightly lower.

"Earnings conditions were difficult in the first half of 2008 as a result of the financial turbulence and the general economic slowdown," Peter Straarup, Danske's chief executive said in a statement.

"We are relatively well prepared to meet and exploit these challenges, however. Our diversification of activities, strong capital and liquidity, and planned cost reductions provide us with a solid foundation for earnings growth."

Shares in Danske were up 1.7 percent at 0720 GMT against a fall in the blue-chip Copenhagen index of 1.0 percent.

"Well, it should be up on the results. There is a lot of uncertainty in the banking sector and it must be worth something that they maintain their expectations on loan losses and in broader terms," said Gudme Raaschou analyst Stig Nymann.

SLOWDOWN

While the global sector has been hit by billions of dollars in asset writedowns after the subprime collapse in the United States, Nordic banks have been relatively resilient in recent quarters.

However, the global slowdown is beginning to bite.

Denmark is in a recession -- defined as two successive quarters of negative growth. Sweden's growth stagnated in the second quarter after anaemic growth in the first.

Danske's larger rival Nordea said in its second quarter report that 2008 would be weaker than it had previously expected, though it still sees profits growing.

Danske said its outlook remained the same as that given in the first quarter, when it cut its full-year forecast.

It said it expects profit before credit loss expenses for 2008, excluding net trading income and net income from insurance business, to be 10-20 percent up on 2007.