Danske Bank warned this morning that its profit could almost halve this year as continued fallout from a €200bn money-laundering scandal and negative interest rates weigh on the Danish lender.
The bank’s 2019 net profit was flat at 15.1 billion Danish crowns (£1.7bn), but Danske forecast that the total would fall to eight to 10 billion crowns in 2020.
Chief Executive Chris Vogelzang said results were as expected, but negative interest rates, margin pressure and increased costs related to compliance had a “negative effect”.
“All in all, our financial performance remains under pressure,” Vogelzang said.
Danske, Denmark’s biggest bank, admitted in 2018 that suspicious payments totalling €200bn from Russia and elsewhere flowed through its branch in Estonia.
The lender remains under criminal investigation by the US, France, Denmark and Estonia over the scandal, which led to the ousting of its chief executive and chairman.
Danske has also endured over seven years of negative interest rates in Denmark, with no end in sight as the country’s main policy rate remains at minus 0.75 per cent.
Late last year, Danske announced plans to get costs and compliance under control by 2023, while also aiming for a return on shareholders’ equity of nine to 10 per cent.
Danske Bank achieved a 9.6 per cent return on equity in 2019, and said it expects that number to be between five and six per cent this year.
The lender’s most anticipated result, net interest income, came in 12.6 per cent above analysts’ expectations at 5.54 billion crowns in the fourth quarter.
Jyske Bank analyst Anders Haulund Vollesen said today’s results were “fairly undramatic”, but added that costs were higher than expected.
“It is not very good, when a bank disappoints in that area in times, where costs are everything,” Vollesen said.