Danske ‘to keep cutting costs’

Danske Bank will continue to trim its business as Denmark’s largest lender adjusts to a post-crisis client landscape that chief executive Thomas Borgen says is "changing rapidly".

The Copenhagen-based bank reported a 91% surge in net income to 2.81bn kroner (€376m) last quarter from a year earlier, it said. Impairments sank 55%, while costs dropped 6%.

The bank also said its cost/income ratio improved by 8.5 percentage points to 52.6% from the fourth quarter.

The bank is committed to a “strong cost focus”, Mr Borgen said.

Mr Borgen, who replaced Eivind Kolding in September, has re-organised Danske’s management team after a spate of consumer satisfaction surveys suggested the bank was falling out of favour. The 50-year-old has also focused on cutting debt, which this week paid off as Danske had its credit rating raised one step to A at Standard & Poor’s, helping bring down the lender’s funding costs.

Danske is surfacing from the financial hangover of burst housing bubbles in Denmark and Ireland, a market it entered in 2005 at the height of the nation’s property boom. In Danske’s home market, consumer demand for credit has remained subdued. The bank is responding by trying to streamline its offering through more online and mobile services, while the branch network will be cut back, Mr Borgen said.

“There’s no doubt customer behaviour is changing rapidly,” he said. “Demand for traditional bank products is declining while there is a pressure to cut costs across the industry. Danske Bank realised that fairly early and that’s what we’re seeing the results of now.”

— Bloomberg