Danske Bank predicts profit boost from economic recovery – Metro US

Danske Bank predicts profit boost from economic recovery

FILE PHOTO: A Danske bank sign is seen on a
FILE PHOTO: A Danske bank sign is seen on a bank’s headquarters in Copenhagen

By Stine Jacobsen

COPENHAGEN (Reuters) -Denmark’s biggest lender Danske Bank has increased its net profit outlook for this year as signs of a post-pandemic economic recovery lower loan impairment charges and boost customer activity.

Banks worldwide have had to make large impairment charges in the face of the COVID-19 pandemic’s effects on the global economy, but Danske Bank now expects net profit of more than 12 billion Danish crowns ($1.9 billion) in 2021, up from previous guidance of between 9 billion and 11 billion crowns.

Shares in the bank are up about 14% since the start of the year and gained 4% by 0805 GMT on Thursday.

“We adjust our net profit guidance for the year based on lower than expected loan impairment charges – due to a faster than anticipated macroeconomic recovery – as well as higher customer activity,” Chief Executive Carsten Egeriis said in a statement.

An up to 500 million crown gain from the merger of its MobilePay service with two other mobile payment platforms – announced late in June – was not included in the revised outlook, the bank said.

Danske’s preliminary second-quarter impairment charges would be about 200 million crowns, it added, below the 745 million crowns expected by analysts in a poll compiled by the bank.

Impairment charges, which reflect a bank’s estimation of the macroeconomic situation and how many of its loans could turn bad, are now expected to be no more than 1.5 billion crowns this year, down from a previous forecast of no more than 3.5 billion crowns.

Danske Bank said it expects net profit for the second quarter to come in at about 2.8 billion crowns, compared with 2.5 billion crowns expected by analysts.

The bank is due to release final first-half results on July 23.

($1 = 6.3020 Danish crowns)

(Reporting by Stine JacobsenAdditional reporting by Nikolaj SkydsgaardEditing by Mark Potter and David Goodman)