- CEO keeps full-year outlook despite ‘more challenging’ market
- Negative interest rates continue to weigh on lending income
Denmark’s biggest bank said profit slipped 1 percent in the second quarter, missing analyst estimates, as income all but stagnated.
Danske Bank A/S reported net income of 4.26 billion kroner ($631 million), missing the 4.32 billion-krone average estimate of analysts. Net interest income was broadly unchanged at 5.49 billion kroner, according to the Copenhagen-based lender. The bank said it was maintaining its outlook for 2016, despite “more challenging” market conditions.
“We have had a satisfactory first half of 2016 despite difficult market conditions with continued negative interest rates, low economic growth and subdued demand,” Chief Executive Officer Thomas F. Borgen said in the statement. “Generally, the period has been characterized by low activity, except within financial markets.”
No other country has had negative interest rates longer than Denmark, which first tested the policy in mid-2012. Economists have warned that Britain’s decision to leave the European Union means central banks will need to commit to extreme monetary stimulus for longer. For banks like Danske, that means pressure on lending margins will persist, forcing it to seek alternative revenue sources.
The bank this year created a $200 billion wealth management unit from existing divisions including its pension business. The unit’s profit before tax slipped 9 percent in the second quarter from the first, after total income declined by 1 percent, Danske said on Thursday.