Danske Bank beats fourth-quarter net profit expectations

COPENHAGEN (Reuters) – Danske Bank <DANSKE.CO> beat fourth-quarter net profit forecasts on Wednesday and said it expects to earn a net profit between 8 to 10 billion Danish crowns ($1.18-1.48 billion) in 2020.

Chief Executive Chris Vogelzang said results were as expected, but negative interest rates, margin pressure and increased costs related to compliance had a “negative effect”.

“All in all, our financial performance remains under pressure,” Vogelzang said in a statement.

Late last year, Danske announced plans to get costs and compliance under control by 2023, while also aiming for a return on shareholders equity of 9-10%. It expects that number to be between 5 to 6% this year.

Danske, Denmark’s biggest bank, admitted in 2018 that suspicious payments totaling 200 billion euros from Russia and elsewhere flowed through branch in Estonia, triggering worldwide probes.

Jyske Bank analyst Anders Haulund Vollesen said today’s results were “fairly undramatic”, but added that costs were higher than expected.

“It is not very good, when a bank disappoints in that area in times, where costs are everything,” Vollesen said.

The bank however reported a net profit of 5.0 billion Danish crowns ($738.5 million) in the fourth quarter, topping the 4.4 billion forecast by analysts on average, Refinitiv Eikon data showed.

The bank’s most anticipated result, net interest income, also came in 12.6% above analysts’ expectations at 5.54 billion in the fourth quarter.

It said it expected net interest income to be lower in 2020 as margin pressure and higher funding costs would offset volume growth. Lending in 2019 grew by 3%.

It said it would pay a of 8.5 per share for 2019, above the 7.29 crowns forecast by analysts, and corresponding to 49% of reported net profit.

(Reporting by Nikolaj Skydsgaard; editing by Jason Neely and Louise Heavens)