Danske Bank profit almost doubles as writedowns fall

Denmark's largest bank, Danske Bank, on Thursday reported a near doubling of quarterly net profit and raised its earnings target for the full year as loan losses narrowed. "Our financial performance in the first quarter of 2014 is encouraging," chief executive Thomas Borgen said in a statement. "Although our income is challenged by the subdued economic activity, our financial results show a number of positives," he added. Net profit in the first quarter almost doubled to 2.812 billion kroner (312 million euros, $523 million) from 1.472 billion in the corresponding period a year ago, beating a Dow Jones Newswires analyst consensus of 2.53 billion kroner. Loan losses in the quarter narrowed to 641 million kroner from 1.438 billion, falling far below analyst expectations of 1.74 billion. The group said it now expects "net profit for 2014 to be at the higher end of our previously communicated range of nine to 12 billion kroner." "We expect low demand for loans and thus a slight decrease in lending volumes, with the effect on net interest income being offset by lower funding costs," it said. Danske Bank, which was hard hit by a downturn in its Irish operations, said its cost cutting programme was going to plan, with expenses falling 18 percent from the previous quarter to 5.4 billion kroner. "We expect non-core Ireland impairments to be below our previous guidance and expect impairments of up to 1.5 billion kroner in 2014," said the bank, which is winding down its Irish operations. The group has also suffered from a sluggish Danish economy, which has lagged the other Nordic countries due to a burst housing bubble and bad loans to the farming sector. "A top priority is still our commitment to strengthen our market position and improve customer satisfaction," Borgen said. A controversial advertising campaign launched under former chief executive Eivind Kolding was widely seen as alienating thousands of customers, and the bank has subsequently admitted that it was too quick to close some branches. Danske Bank fired Kolding in September after just 19 months on the job, saying the post required someone with more banking experience.