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Financials

UPDATE 2-Danske Bank eyes profit rebound as money laundering case ends

(Adds details, analyst comment)

COPENHAGEN, Feb 2 (Reuters) - Danske Bank expects a massive rebound in earnings this year after losing money in 2022 as it will no longer be dogged by a money-laundering scandal that has plagued the lender for years.

Denmark’s largest lender expects net profit for 2023 to come in between 15 and 17 billion Danish crowns ($2.2-2.5 billion), it said on Thursday, while analysts on average have expected earnings of 15.8 billion according to a company-compiled poll.

In 2022 Danske Bank lost 5.1 billion crowns.

“To have a net loss on the bottom line is of course not satisfactory. However, it comes as a consequence of the conclusion of the Estonia matter, which marks an important turning point for Danske Bank,” Chief Executive Carsten Egeriis said in a statement.

Net profit for the fourth quarter of 2022 came in at 4.2 billion crowns, roughly in line with the 4.3 billion expected by analysts in the poll compiled by Danske.

Thursday’s report by Danske Bank is the first in more than half a decade not to be overshadowed by the threat of a massive fine by U.S. authorities over the lender’s involvement in one of the world’s largest money-laundering scandals.

In December, Danske pleaded guilty to bank fraud conspiracy, forfeiting $2 billion as part of an agreement with the United States to settle the investigation involving billions of dollars in illicit payments through its now-shuttered Estonia branch.

Danske expects costs in 2023 to come in between 25 and 25.5 billion crowns, slightly below the 26.5 billion reported in 2022, but at the higher end of an average of 25 billion expected by analysts.

“The costs are still too high and Danske Bank has more loss provisions than others. Danske Bank is heading in the right direction, but it is going slowly,” Nordnet analyst Per Hansen said in a note.

Danske expect loan impairment charges of up to 3 billion, mainly as a result of a weaker macroeconomic outlook. ($1 = 6.7579 Danish crowns) (Reporting by Nikolaj Skydsgaard; Editing by Terje Solsvik and Kenneth Maxwell)

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