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DBRS Morningstar: Danske 9M19 Net Income Down 14%, Investments Costs Yet to Peak

DBRS Morningstar published a commentary reviewing 9M19 results of Danske Bank A/S (Danske or the Bank). The Bank posted a 14% drop in net income in 9M19 reflecting pressure on revenue and operating costs while impairment charges increased. In addition, even though there have been no direct conduct or litigation costs so far, a major concern remains as to what extent potential fines could negatively impact profitability or capital levels.

Key highlights from DBRS’ commentary discussing the earnings include:
• Danske posted a 14% drop in net income in 9M19 to DKK 10 billion reflecting pressure in multiple areas, including lower net interest income and lower trading income, higher operating expenses reflecting increased invesments in compliance and AML-related activities, and higher impairment charges.
• At the same time, DBRS Morningstar views the Bank’s franchise in its domestic market as remaining strong despite the high-profile ongoing money laundering scandal.
• While Danske’s flexibility in accessing the capital markets remains strong with DKK 58 billion non-preferred senior debt issued YTD in 2019, additional capital requirements due to increased Pillar II add-ons are reducing the Bank’s large capital cushions.

“DBRS Morningstar will continue to monitor the Bank’s ability to generate earnings and maintain solid capital levels in a context of low interest rates, a less favorable macro-environment, and most importantly ongoing uncertainty with regards to potential fines related to the Estonian money laundering case” said Vitaline Yeterian from DBRS Morningstar’ Financial Institutions team.
This commentary “Danske 9M19 Net Income Down 14%, Investments Costs Yet to Peak” is available at