COPENHAGEN (Reuters) - Two weeks into his new job as head of Danske Bank (DANSKE.CO), Thomas Borgen is confident he can repair the bank's bruised image and revive returns for shareholders through keeping costs down, being more efficient and by sheer hard work.
Danske, Denmark's biggest bank, has had a tough time along with its peers partly due to a burst property bubble as well as a struggling agriculture sector and a weak overall economy. On top of that, an advertising campaign last year backfired and hurt the bank's image with customers.
Borgan has his work cut out as a result. The bank's profit growth has stagnated and its return on equity - a measure of profitability - is half that of some rivals.
The new CEO, who took over when predecessor Eivind Kolding was ousted last month after less than two years in the job, said winning back customers would be key and that there was scope for more efficiency and cost-cutting.
"We cannot over the long term accept to run a bank with sub-standard return to the shareholders," Borgen said at the Reuters Nordic Investment Summit on Wednesday. "Through hard work every day, the image will slowly return."
"The safest way for us to create shareholder return, is to make sure that we have satisfied clients," Borgen said. Once customers are won over, investor returns would follow, he said.
Borgen said this would be achieved partly through keeping up with new technology to ensure customers can shop and pay bills on their phones or tablets.
Danske's image with customers suffered after its advertising campaign in the autumn of 2012 was widely criticized on social media for using the image of an "Occupy" anti-capitalist protestor to promote the bank.
The bank said in August it had lost 40,000 customers in the first half of the year.
Danske's image rating was the 10th highest in Denmark in 2005, according to an annual banking image rating carried out by Berlingske Business Magasin. This year it had fallen to 125th in the Berlingske ratings.
In terms of profitability, Danske Bank has a long way to go catch its Nordic peers. Its return on equity in the second quarter of the year was 6.2 percent, compared with rival Nordea's 11.5 percent.
The bank, which has not paid a dividend in five years, has set a number of targets including a return on equity above 12 percent in 2015 and a dividend payout to shareholders of about 40 percent of annual results in 2015.
"I have no doubt that we will be able to achieve attractive returns to the shareholders," Borgen said. "It is our ambition to pay (a) dividend as soon as possible, he said.
The bank had flagged plans to restart payouts this year, but those were thrown into doubt in June when the country's financial regulator asked it to use tougher measures to calculate risk in its corporate loan book.
While the bank has already announced big job cuts, Borgen said he had no doubt that costs could be reduced further and efficiency improved.
"There is always room for improvement," he said. "To some extent, I need to see if we can be more efficient on non-customer related items," Borgen said.
Last year, the bank had said it would cut a further 1,000 jobs in addition to the 2,000 cuts in the 2013 to 2015 period that it had already flagged.
Borgen also aims to get Danske's credit rating upgraded. In July this year, Standard & Poor's became the latest to cut the bank's credit rating outlook.
"It is a clear ambition to get upgraded. We are working on all the levels necessary to get that," Borgen said.
Borgen has no plans for a new advertising campaign for the bank. "If you ask me directly whether I will launch a new campaign, the answer is no," he said.
"You will not create customer experience or even shareholder value by launching a new campaign."
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Reporting by Mette Fraende. Editing by Jane Merriman