February 7, 2013 / 8:26 AM / 5 years ago

UPDATE 2-Danske Bank says crisis passing, profit beats forecasts

* Fourth quarter pretax profit 2.26 bln crowns 1.86 bln forecast

* Q4 loan impairments 2.62 bln crowns vs 2.89 bln forecast

* Sees 2013 net profit of 7.5-10.0 billion crowns

* Omits dividend for 2012, says expects 2013 dividend

* Shares rise 3.2 percent (Adds comments, details, background, updates share price)

By Mette Fraende and Ole Mikkelsen

COPENHAGEN, Feb 7 (Reuters) - Denmark’s biggest lender Danske Bank said it had reached a turning point after posting a nearly four-fold rise in quarterly pretax profits and offered its first full-year outlook since the financial crisis began.

Beating analysts’ forecasts for pretax profits and posting a bigger-than expected drop in loan impairments, the bank on Thursday joined a string of Nordic peers forecasting a rise in profitability.

“We believe we are leaving the financial crisis behind us, so you can call this a turning point,” chief executive Eivind Kolding, who took the helm at Danske in February last year, told Reuters on the sidelines of a press briefing.

In contrast to its Swedish rivals, the bank did not offer to pay a dividend to its shareholders in 2012, but said it expected to revive its dividend programme for this year.

“We expect to pay a dividend for 2013,” Kolding said.

Danske Bank has not paid dividends since 2007 and has refrained from offering annual outlooks since the start of the financial crisis.

On Thursday, it forecast net profit for 2013 in a range of 7.5 billion to 10.0 billion Danish crowns ($1.4 billion-1.8 billion), corresponding to a return on equity of 5.5 percent to 7.0 percent after tax.

The outlook was above its 2012 net profit of 4.75 billion, the bank’s best financial results since 2007, but lagged an average 10.66 billion crowns forecast in a Reuters poll.

“It is positive that they give guidance. It shows confidence and that they feel more certain about how the business is doing,” said Nykredit analyst Mads Thinggard.

Danske Bank’s shares traded up 3.2 percent at 107.80 Danish crowns at 1134 GMT, against a 0.8 percent increase in the Copenhagen stock exchange’s benchmark index


The bank has been stung by bad debts from a burst property bubble and writedowns on loans to struggling farmers. It has raised capital and laid off staff to turn its business around.

In October, the bank said it would cut 1,000 jobs in addition to the 2,000 cuts in the 2011-2014 period that it had announced last year.

It also raised 7 billion Danish crowns in a new share issue to try to establish itself among the top three Nordic banks and get an improved rating from agencies.

In May last year, ratings agency Moody’s cut the bank’s long-term rating to Baa1, while Standard & Poor’s lowered its rating to A-/A-2.

On Thursday, the bank repeated its goal to be among the top three Nordic banks in terms of return on equity in 2015.

“We are quite confident. It will be a lot of hard work, we are up against very tough competition,” Kolding said.

Danske Bank’s core Tier 1 capital ratio was 14.5 percent at the end of 2012, an improvement from 11.8 percent at the end of 2011. It has beaten an earlier target for a core Tier 1 capital ratio of at least 13 percent at the end of 2013.

In comparison, one of Europe’s most conservative lenders, Handelsbanken, on Wednesday boasted a core tier one capital ratio of 18.4 percent at the end of the year. That contrasts with an 8 percent ratio for Deutsche last week.

Danske Bank’s fourth quarter pretax profits rose to 2.26 billion Danish crowns, beating an average 1.86 billion forecast in a poll of analysts.

Loan losses fell to 2.62 billion crowns from 4.79 billion in the same quarter a year ago, better than an average forecast of 2.89 billion crowns.

Kolding acted in May last year to reverse rising loan losses in Ireland, announcing the bank would hive off $6 billion of bad loans at the unit as part of a reorganisation.

Its loan losses in Ireland, where the bank owns National Irish Bank in the Republic of Ireland and Northern Bank in Northern Ireland, would see a decline in 2013, chief financial officer Henrik Ramlau-Hansen said at the press briefing.

$1 = 5.7803 Danish crowns Additional reporting by Johan Ahlander and Stine Jacobsen; Editing by Mark Potter and Hans-Juergen Peters

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