Danske Bank (DANSKE) Pre-Close Call summary

Executive summary

• Inflation in the Nordics is normalizing, with stronger-than-expected growth in Norway and Denmark, supported by stable unemployment and wage development, and a healthy macroeconomic outlook, especially in Denmark, driven by pharmaceuticals.

• Consumption is slowly increasing, aided by rising real wages and declining interest rates, supporting a gradual recovery in the housing market from low levels.

• The outlook remains positive but subject to risks from ongoing geopolitical uncertainty.

Trading performance and revenue trends

• Central banks in Denmark and Sweden cut policy rates in Q4, prompting reductions in retail and business customer rates, with muted credit demand and stable interest day effects.

• Wholesale funding issuance reached DKK 75 billion for the year, meeting the funding plan, with notable green and senior debt issuances.

• Net interest income (NII) for 2024 is estimated at DKK 36.5 billion, including the impact of the Norwegian business sale, with NII sensitivity at ±DKK 500 million per 25 basis points change.

• Fee income trends are mixed, with positive investment fund performance and seasonality in performance fees, but subdued remortgaging and housing activity.

• Trading income was subdued in Q4 due to market conditions, with significant spread widening in fixed income and negative spreads in Danish government bonds versus Germany.

Profitability and margins

• Full-year expenses are expected around DKK 25.8 billion, with cost reductions from the Norwegian business sale estimated at DKK 0.5 billion annually.

• Insurance results are expected at the lower end of the DKK 1.4–1.6 billion range due to negative model updates in the health and accident business.

• Other income is negatively affected by declining asset values in leasing, but positively impacted by the sale of Danske Invest funds to Nordea.