60 seconds on the results
Continued recovery in the Nordic economies
While there are many reasons for optimism regarding the ongoing economic recovery, it is too early to conclude on the long-term macroeconomic implications of the corona crisis. In particular, it remains to be seen how both the rolling off of government support packages and tapering from the central banks, and the timing of these, might affect businesses in the most impacted sectors and the overall economies.
Credit quality remained strong, with a low level of actual credit deterioration and more normalised impairment levels than in the first half of 2020. Together with strong liquidity buffers, this means that we continue to be well-equipped to meet our customers’ needs during the ongoing economic recovery.
Higher customer activity drives income growth
In the first half of 2021, net interest income was positively impacted by deposit repricing initiatives that took effect at the beginning of 2021, however, the positive effect was offset by margin pressure across the Nordic countries, while the positive deposit inflow has continued.
Higher customer activity from our large corporate and institutional customers and an increase in consumer spending from the same period last year contributed to increased net fee income, as we have continued to support and assist our customers, including in their sustainability transition. Our capital markets strategy is delivering good results with record-high fee income across our activities, and Danske Bank is the number one Nordic bank in equity capital markets as well as in debt capital market European issuance, and at the same time, assets under management have increased. Furthermore, net trading income performed better than in the same period last year due to improving market conditions.
Expenses were lower in the first half of 2021 than in the same period last year as costs continued the downward trend driven by cost initiatives launched during the past year, and the level of underlying expenses is improving, despite primarily tax-related one-offs in the period.
We have a strong foundation for becoming a better bank for all of our stakeholders and are seeing good momentum with our efforts, and we are also making good progress on further execution of all planned commercial initiatives across our markets.
We have significantly upgraded our compliance-related IT systems and processes, and we have completed an update of Know Your Customer information for a significant part of our customer base. We have improved our customer journeys by digitalising processes and ensuring better adoption of already launched digital solutions. In Sweden, for example, 95% of mortgage applications now run through a digital flow, and we recently launched a new digital car loan process in Norway. We have taken a leading role within sustainable finance, and we have set a new, ambitious 2023 target of providing DKK 300 billion in sustainable finance, driven by strong customer demand. And we have continued to execute on our strategy to become a simpler and more efficient bank focusing on our core markets, most lately with the divestment of our international private banking activities in Luxembourg.
“In the first half of the year, our business delivered good growth in many of our Nordic markets, driven by high large corporate customer activity. While net interest income is holding up well despite margin pressure, our capital markets performance ensured strong net fee income and net trading income. Cost measures have had a tangible effect, and this continues to be a priority for us to ensure that we are competitive. With commercial momentum and strong credit quality, we are well on track to continue the progress we have made in the first six months of 2021.”
Stephan Engels
CFO, Danske Bank
Outlook for 2021
As stated in company announcement of 8 July 2021, the net profit outlook has been revised upwards, as we now expect a net profit of more than DKK 12 billion.
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Contact
Stefan Singh Kailay, Head of Media Relations
Tel. +45 45 14 14 00