Danske Bank Fourth-Quarter Profit Tumbles as Credit Losses Soar
Danske Bank A/S (DANSKE), Denmark’s largest lender, said fourth-quarter net income fell 81 percent as credit losses jumped 61 percent on continued bad loans in Ireland.
The lender reported a fourth-quarter profit of 201 million kroner ($36 million), compared with 1.07 billion kroner a year earlier, the Copenhagen-based bank said in a statement today. That missed the average estimate for a 296 million-krone profit in a Bloomberg survey of analysts.
Danske Bank shares have plunged 35 percent in the past 12 months, underperforming the 43-member Bloomberg index of European financials, as the lender grapples with the fallout of a burst housing bubble and regional banking crisis at home. At the same time, Danske's Irish business continues to lose money as households and corporations fall in arrears on loans.
“The European debt crisis that started in southern Europe escalated and affected the other EU countries,” Chief Executive Officer Peter Straarup, said today, in his last report before turning over the position to Eivind Kolding on Feb. 15. “Doubts about how the U.S. would cope with its massive budget deficit also put a damper on global economic growth. The uncertainty is likely to continue in 2012, and the foundation for economic growth appears weak. The economic situation remains unstable.”
Net interest income, the difference between what the bank earns from lending and what it pays on deposits, rose 1.9 percent to 6.18 billion kroner in the quarter, while its fee income retreated 7.4 percent to 2.22 billion kroner. Danske proposed to omit a dividend.
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