Danske Bank (DANSKE) Q4 2012 earnings summary

Executive summary

• 2012 net profit rose to DKK 4.749bn from DKK 1.723bn; income increased 10% and loan impairment charges fell 5% to DKK 12.5bn.

• Year-end Core Tier 1 ratio was 14.5% and LCR was 121%; 2013 net profit guidance was DKK 7.5bn–DKK 10bn.

Financial highlights

• Total income was DKK 47.7bn, up 10% YoY; expenses were DKK 26.6bn, up 2%, including one-offs, but DKK 0.4bn below full-year guidance.

• Q4 net profit was DKK 1.146bn versus DKK 1.317bn a year earlier; Q4 net interest income was flat YoY at DKK 6.2bn.

• Q4 fee income rose to DKK 2.7bn; trading income declined to DKK 1.4bn, down 20% QoQ, with lower activity weighing on results.

• Adjusted expenses declined to DKK 23.2bn from DKK 23.6bn; adjusted profit before tax excluding Non-core Ireland was DKK 13.2bn.

Outlook and guidance

• 2013 net profit guidance was DKK 7.5bn–DKK 10bn, equivalent to ROE of 5.5–7%; delivery depends on normalized trading and insurance income.

• Adjusted net interest income was expected flat at DKK 22.7bn; fee income higher, with trading and insurance income below 2012 levels.

• Expenses were expected flat at DKK 24.6bn; core impairments slightly below DKK 7.7bn and Non-core impairments significantly below DKK 4.9bn.

• Irish impairments were guided at DKK 2.5bn for 2013–2014, with most expected in the next two quarters; overall impairment charges were expected to decrease.

• 2015 ambitions included ROE above 12%, expenses below DKK 24bn and cost/income below 46%.