Strong business performance and positive outlook underpinned by robust customer activity and slightly improved macroeconomic environment Net profit of DKK 11.5 billion for the first half of 2024

19 Jul 2024 07:30 CEST

Press release

Bernstorffsgade 40
DK - 1577 København V
Tel. +45 45 14 14 00





19 July 2024

Strong business performance and positive outlook underpinned by robust customer
activity and slightly improved macroeconomic environment
Net profit of DKK 11.5 billion for the first half of 2024

Carsten Egeriis, Chief Executive Officer, comments on the financial results:

"The financial result for the second quarter continued the very positive
development we saw in the first quarter. Persistently strong net interest income
and a sustained fee uplift contributed to higher core banking income in the
first half of the year, resulting in an 11% increase relative to core banking
income in the same period last year. Combined with continually strong credit
quality with a net impairment reversal in the second quarter, this led to an
increase in net profit, which also reflects robust customer activity across the
business.

We see the recent rate cuts by the ECB and the Danish central bank as a positive
step that is likely to benefit economic activity. The rate cuts have also
benefited our customers in the period, as we both launched new offerings and
improved existing ones on the loan side as well as in relation to savings and
investments. We also have a strong advisory setup and continually develop our
digital solutions, all of which enables us to maintain our position as an
attractive bank for all customers.

We continue to make progress on our strategy as we strive to improve the bank to
the benefit of all stakeholders. We have taken important steps, such as
introducing a self-service welcoming journey, upskilling advisers to
continuously improve business customer satisfaction, and increasing the number
of products available via our digital platform for business customers. Keeping
in mind that it is still early days in the strategy period, we continue our
efforts to strengthen our position as a leading bank in the Nordic region in a
digital age."

H1 2024 vs H1 2023
Total income of DKK 28.0 billion (up 9.5% against the first half of 2023)
Operating expenses of DKK 12.8 billion (up 1.4% against the first half of 2023)
Loan impairments of DKK -99 million (against DKK -28 million in the first half
of 2023)
Net profit of DKK 11.5 billion (up 12.7% against the first half of 2023)
Return on shareholders' equity of 13.1% (against 12.4% in the first half of
2023)
Strong capital position, with a total capital ratio of 22.5% and a CET1 capital
ratio of 18.5%

Macroeconomic environment slightly improved
During the second quarter, the macroeconomic outlook turned slightly more
positive. The outlook for economic growth in Denmark and the wider Nordic region
has thus improved, and recent economic data points, such as inflation and
employment levels, have been better than expected. Furthermore, GDP growth in
2023 was revised upwards in Denmark, leading to a stronger picture of the wider
economy and not just the pharma sector, also relative to the rest of Europe.

In the second quarter, we revised our guidance for full-year 2024 net profit to
DKK 21-23 billion from DKK 20-22 billion based on a small net loan impairment
reversal and continually strong credit quality, backed by a better macroeconomic
outlook. In the current macroeconomic landscape, our solid financial results,
well-capitalised balance sheet and strong liquidity position continue to allow
us to help our customers and other stakeholders navigate the macroeconomic and
geopolitical uncertainty by providing expert advisory services and credit.

Strong core banking performance
In the first half of the year, we continued to deliver on our strategic
ambitions as we improved profitability and reported a strong return on equity.
The progress was driven primarily by a sustained, strong net interest income,
while high customer activity across the business drove a fee uplift, with net
fee income up 13% from the level in the same period last year. At our Personal
Customers unit, our favourable savings and investment products continued to
attract deposits, leading to a further improvement in deposit volumes. In a
period of uncertainty and a challenging operating environment, our Business
Customers unit saw increased lending volumes across our Nordic markets, and our
Large Corporates & Institutions unit continued to see an increase in cash
management fees and a strong activity in Debt Capital Markets, maintaining our
status as the leading Nordic bank by volumes supported.

Operating expenses are as expected, reflecting a strict cost focus in general
simultaneously with rising costs in some parts of the business due to planned
investments made under the strategy. This led to an improved cost/income ratio
of 45.8, down from 49.4 in the first half of 2023. As a result of the commercial
momentum, robust customer activity, strong credit quality and cost focus, we
increased the return on equity from 12.4% to 13.1% for the first six months.

"Our diversified business model and core activities continued to deliver good
results. Significant increases in both net interest income and net fee income,
the latter due to robust customer activity also in the capital markets, and
costs developing according to plan led to improved profitability in the first
half of the year. Our continued commercial momentum and focus on operational
efficiency thus resulted in a cost/income ratio of 45.8 and a return on equity
of 13.1%. We continue to invest in our capabilities to provide a better customer
experience as set out in Forward '28, and we have also completed our accelerated
capital distribution with interim dividends for both the first half-year of
2023 and 2024. This will not be repeated from 2025 and onwards as we will revert
to paying dividend annually," says Stephan Engels, CFO.

Strategy execution progressing as planned
We continued to progress towards delivering on the targets set out in Forward
'28. Our focus on execution and our efforts to improve Danske Bank to the
benefit of all stakeholders are progressing as expected.

During the first half of 2024, we took several important steps to advance our
sustainability agenda, including the publication of our Climate Action Plan
Progress Report and the inclusion of sustainability as one of the strategic
themes in our Forward '28 strategy.

We are accelerating our digital transformation across our business to enhance
customer journeys, improve the customer experience, and reduce costs and
operational risks.

Overall, we are confident that the initial implementation progress of our
Forward '28 strategy during the first six months has built a robust foundation
for continued execution.

Personal Customers
During the first half of 2024, we continued to support our customers in managing
their finances in a market environment characterised by rising equity prices and
a stable interest rate level with only one rate cut across our markets at the
end of the period. Our Danske Bolig Fri home finance products continued to be in
high demand throughout the first half of 2024. Additionally, we saw increased
customer activity in the investment area driven by favourable financial markets,
resulting in increased market shares for Danske Invest retail funds. Loan
impairments amounted to a net reversal as impairments benefited from the
improved macroeconomic outlook. Profit before tax amounted to DKK 5.0 billion in
the first half of 2024, representing an increase of 39% from the year-earlier
period, which was affected by a one-off provision.

Business Customers
In the first half of 2024, we saw the economic landscape improve, due primarily
to a stabilisation of interest rates followed by interest rate cuts by the
central banks towards the end of the period. Although the effect of the rate
cuts on customer activity levels remains to be seen, we continued to expand our
customer base in our focus segments as well as to make strategic pricing
adjustments, just as we supported our customers by providing the best possible
advice tailored to their needs. While especially net fee income developed
positively, we saw higher loan impairment charges that were driven by a few
cases in our leasing organisation as well as by allocation of post-model
adjustments. In the first half of 2024, profit before tax amounted to DKK 4.1
billion, a decrease of 16% from the same period last year.

Large Corporates & Institutions
In the first half of 2024, macroeconomic uncertainty persisted, though sentiment
and indicators were more positive than expected. We continued to see a positive
underlying momentum, particularly in our fee business as higher fees from assets
under management and from everyday banking and capital markets activities
mitigated the decline in net trading income, thus demonstrating the value of our
diversified business model. Furthermore, we continued to leverage our strategic
commercial strengths as reflected in growth in our corporate customer portfolio
outside Denmark, an increased market share of cash management services and the
maintaining of our leading position in sustainable finance. Profit before tax
amounted to DKK 8.0 billion, which was on par with the same period last year.

Danica Pension
The investment return on our pension customers' savings in the first half of the
year followed the upward trend from the last 12 months and was driven by a
strong performance in the investment portfolio, especially in equities. However,
we continued to see people suffering from physical or mental health problems,
which had a negative effect on the insurance result for the health and accident
business in the first half of 2024. Net income at Danica Pension increased to
DKK 949 million in the first half of 2024, up 38% from the first half of 2023
due mainly to an increase in the net financial result.

Northern Ireland
Our focus in Northern Ireland is to remain a stable, strong and risk-astute
bank, consolidating our market-leading position alongside pursuing select low-
cost growth opportunities in the rest of the UK. The strong underlying financial
performance reflects business growth in an environment of higher interest rates.
Profit before loan impairments was 16% higher than in the first half of 2023,
while profit before tax of DKK 938 million reflected a broadly unchanged level
year-on-year.

Outlook for 2024
On 26 June 2024, we revised the outlook for 2024 upwards to a net profit in the
range of DKK 21-23 billion. At the release of our annual report for 2023 on 2
February this year, we guided for a full-year 2024 net profit in the range of
DKK 20-22 billion. The profit upgrade follows our continually strong credit
quality and reversals of impairment charges for the second quarter of 2024. We
therefore now expect full-year loan impairment charges to be up to DKK 0.6
billion. For the financial targets for 2026, we maintain our assumption for loan
impairment charges of approximately 8 basis points through the cycle.


Danske Bank

Contact: Mads Sixhøj, Chief Communications Consultant, tel. +45 45 14 14 00

More information about Danske Bank's financial results is available at
danskebank.com/reports.

More information:
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623866_Danske Bank press release 19 July 2024.pdf
623866_Danske Bank Interim Report first half 2024.pdf