Danske Bank posts loss

Danske Bank reported a fourth-quarter net loss attributable to shareholders of 6.37bn kroner (€855m) after writing down 9bn kroner in goodwill in December.

That compares with a profit of 1.92bn kroner a year earlier. Net profit before goodwill impairment charges was 2.81bn kroner.

Net profit in 2015 will exceed 14bn kroner, the bank said. Danske raised its 2015 target for return on equity to 9.5%, from 9%, and its long-term target to above 12.5% from 12%.

The bank reported an increase in last year’s return on equity (ROE), to 8.5% before impairments, compared with 5% in 2013. The bank does not disclose figures for its Irish operations.

“In the past 18 months, we have successfully refocused our business in Ireland and are now concentrating our efforts on leveraging our technology and advisory expertise to deliver a superior service to corporate and institutional clients,” said country manager for Ireland, Terry Browne.

“Our continued focus on our corporate and institutions business reflects the wider Danske Bank Group’s proven ability to deliver differentiated solutions for clients in this segment.

“We have delivered a strong performance in corporates and institutional banking in Ireland in 2014 and are well positioned to support our clients in the growth of their business both at home and abroad.”

Danske, Denmark’s biggest bank, said it will return cash to investors by buying back shares for the first time since before the financial crisis.

The bank said it will buy back own stock for 5bn kroner, the first such programme since 2004. The bank also proposed a 5.5-krone dividend a share compared with 2 kroner last year, and raised its payout ratio target to as much as 50% of net income compared with 40% previously.

The share buy-back plan was “unexpected,” Sydbank said in a note to clients.

“Although we still have some way to go to meet our ambitions and realise the full potential of Danske Bank, the progress confirms that we are on track to deliver on our targets,” Thomas Borgen, Danske Bank’s chief executive, said.

Danske has struggled to keep pace with its Swedish competitors, which last week announced they were raising dividends after building up excess capital. Nordea Bank shares have surged 19% this year after paying out 70% of its 2014 profit to owners.