- Danske Bank raises its net profit outlook for 2021
- Economic recovery leads to lower loan impairment charges
- Shares increase by 4%
- Preliminary second quarter net profit better than forecast
COPENHAGEN, July 8 (Reuters) – Denmark’s largest lender Danske Bank (DANSKE.CO) has raised its net profit outlook for this year as signs of a post-pandemic economic recovery reduce charges for loan depreciation and drive customer activity.
Banks around the world have had to impose significant depreciation charges in the face of the effects of the COVID-19 pandemic on the global economy, but Danske Bank now expects a net profit of over DKK 12 billion ( $ 1.9 billion) in 2021, up from previous forecasts of between SEK 9 billion and 11 billion.
The bank’s shares have risen about 14% year-to-date and gained 4% on Thursday at 8:05 am GMT.
“We are adjusting our net profit forecast for the year based on lower than expected loan impairment charges – due to a faster than expected macroeconomic recovery – as well as higher customer activity,” said CEO Carsten Egeriis said in a statement.
A gain of up to SEK 500 million from the merger of its MobilePay service with two other mobile payment platforms – announced in late June – was not included in the revised outlook, the bank said.
Danske’s preliminary depreciation charges in the second quarter would be around 200 million kroner, he added, below the 745 million kroner expected by analysts in a poll conducted by the bank.
Depreciation charges, which reflect a bank’s estimate of the macroeconomic situation and how many of its loans could go wrong, are now expected to be no more than SEK 1.5 billion this year, down from a previous forecast of no more. of 3.5 billion crowns.
Danske Bank said it expects second-quarter net profit to be around 2.8 billion kroner, compared to 2.5 billion kroner expected by analysts.
The bank is due to release final first-half results on July 23.
($ 1 = 6.3020 Danish kroner)
Reporting by Stine Jacobsen Additional reporting by Nikolaj Skydsgaard Editing by Mark Potter and David Goodman
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