Fourth consecutive quarter in profit for Danske Bank NI
Danske Bank in Northern Ireland has reported a pre-tax profit of £17.2m for the first quarter of 2014. This continues the improvement in underlying profitability over the last number of years, with the outcome driven by reduced impairment charges alongside improved revenue performance.
Core operating income has increased by 11% year on year. Lending volumes continue to stabilise while deposit balances are 3% higher than the same period last year. The Bank’s overall deposit to loans ratio is maintained well above 100%. Whilst total costs are reported higher year on year, the underlying cost base is falling as the Bank continues to work hard to manage its expenditure. Impairment charges are significantly lower than in the same period last year.
As at 31st March 2014, the Bank’s solvency ratio stood at 18.6% and tier 1 capital ratio at 13.4% in line with the new CRD IV capital requirements. Commenting on the results, Danske Bank UK CEO Gerry Mallon said: “I am very pleased to report a £17 million profit for the first quarter of 2014, our fourth consecutive quarter back in profit.
“The underlying performance of the business has significantly improved while at the same time impairments have continued to fall. Total income is up 13% on last year and our underlying cost base is lower as a result of a tight control of expenditure.
“The first quarter of the year has been a particularly strong one for Business Banking. As the economy continues to recover we are seeing an increase in demand from new and existing customers wishing to invest in their businesses to support further growth. We have both the appetite and capacity to meet that increased demand. It’s been particularly encouraging to see that the first quarter of 2014 has been our strongest quarter on record for the acquisition of ‘new to bank’ business customers and, at this stage, the rest of the year also looks very promising.
“The strength of our brand among the business community and the support the team provides to businesses across Northern Ireland was recognised recently when Danske Bank was named Insider NI Corporate Bank of the Year for the fourth year in a row.
“In Personal Banking we have continued to focus on growing our mortgage business. We continue to offer a 95 per cent loan to value mortgage for both first time buyers and switchers and are approving nine out of ten mortgage applications. In the first quarter of this year we have seen an increase in mortgage applications resulting in an almost 50 per cent increase in mortgage approvals compared to the same period last year. To help further stimulate the mortgage market we are hosting a range of dedicated regional events from this month for first time buyers, home movers, mortgage switchers and the self-build market.
“This week we introduced another innovative new service for our customers when we became the first local bank in Northern Ireland to participate in the new UK wide mobile payments service, Paym. This service means personal customers can send and receive money using just a mobile number, making it even easier to send payments to friends or family quickly and securely.
“We can confidently say Northern Ireland is experiencing an economic recovery. It’s clear that businesses are starting to invest and look towards growth while Danske Bank’s own survey shows that consumer confidence is at its highest level in nearly six years. Our focus for 2014 remains firmly on supporting our customers whether they are seeking to buy a home or take their business to the next level. We are in a very strong position to do just that.”
The Dankse Bank group overall posted a profit before tax for core activities of DKK 4.3 billion (EUR 570.9 million). The net profit represented an increase of 46% from the level in the fourth quarter of 2013. The return on shareholders’ equity after tax for the first quarter was 7.7% p.a., against 4.3% p.a. for the first quarter of 2013.
Danske BAnke CEO Thomas F. Borgen commented: “Our financial performance in the first quarter of 2014 is encouraging. Although our income is challenged by the subdued economic activity, our financial results show a number of positives. Our cost programme is driving the fall in expenses, and impairments continue to decline. All in all, net profit increased 91% from the level in the first quarter of 2013.
“A top priority is still our commitment to strengthen our market position and improve customer satisfaction. This is a challenge and achieving our goals will take time. The encouraging trend in customer satisfaction among our largest Nordic corporate and institutional clients is a sign that we can succeed in reaching our ambitious targets also for personal and business customers.”