Tuesday, January 31, 2023

Danske Bank cuts profitability target despite upbeat quarter By Reuters

-


© Reuters. FILE PHOTO: A Danske bank sign is seen on a bank’s headquarters in Copenhagen, Denmark October 22, 2019. REUTERS/Jacob Gronholt-Pedersen

COPENHAGEN (Reuters) -Danske Bank cut its 2023 profitability target on Friday, citing “significant challenges” such as compliance over the last two years, despite better-than-expected third-quarter earnings, buoyed by high client activity.

Danske, which also pointed to increased competition and margin pressure, now expects to report a return on equity (RoE) of between 8.5% and 9% in 2023. That compares to a previous target range of 9% to 10%.

“We have had to adapt to significant challenges over the past two years,” Chief Executive Carsten Egeriis said. Denmark’s largest bank has been dogged for years by a money laundering scandal.

“We now have more line of sight of our commercial challenges within retail banking, and the prolonged investments in strengthening our compliance and remediation efforts, leading us to adjust our financial targets for 2023,” Egeriis added.

In July, Danske had said it would stick to its profitability target of 9-10% RoE in 2023, prompting scepticism from analysts, who say further measures are needed, such as more cost cut initiatives or divestments.

“A smaller downward adjustment than expected, but at the same time also a plan that lacks a little more detail for how it should be fulfilled,” Sydbank analyst Mikkel Jensen said.

“I still think the market will be sceptical about whether they can deliver that. If they can, it will be better than what the market expects,” Jensen told Reuters.

Danske also said in a statement that it expected a cost to income ratio in the mid-50s in 2023, slightly worse than its previous target of “low 50s”.

The Danish lender reported net profit of 3.3 billion Danish crowns ($517.90 million) in the third quarter, above an average of 3.0 billion forecast by analysts in a company-compiled poll.

($1=6.3719 Danish crowns)

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.





Source link

LEAVE A REPLY

Please enter your comment!
Please enter your name here

FOLLOW US

0FansLike
3,679FollowersFollow
0SubscribersSubscribe
spot_img

Related Stories