Danske Banka returns to profit
Danske Banka's financial results - first quarter of 2011
- Total income: LVL 0.853 million
- Net reversal of loan impairment charges: LVL 0.944 million
- Profit before tax: LVL 0.948 million
- Cost/income ratio: 99.5%
- Deposits: LVL 148.5 million, up 77%
- Customer base: 12,751, up 11%
- Bank branches: 4
- Employees: 115 (103 FTEs)
|
BANKING ACTIVITIES LATVIA (LVL 000s) |
Q1 2011 |
Q1 2010 |
Index 11/10 |
| Net interest income | 699 | 970 | 72 |
| Net fee income | (30) | (30) | 99 |
| Net trading income | 86 | (147) | - |
| (Market value adjustments of fin. instruments included in preceding item) | 2 | (194) | - |
| Other income | 98 | 172 | 57 |
| Total income | 853 | 965 | 88 |
| Operating expenses | 849 | 822 | 103 |
| Profit before loan impairment charges | 4 | 143 | 3 |
| Loan impairment charges/reversed charges | 944 | (1,455) | - |
| Profit before tax | 948 | (1,312) | - |
| Loans and advances, end of period | 224,882 | 215,302 | 104 |
| Personal customer loans | 135,181 | 152,361 | 89 |
| Business loans | 89,701 | 62,941 | 143 |
| Deposits, end of period | 148,547 | 83,817 | 177 |
| Allocated capital (avg.) | 11,631 | 8,824 | 132 |
| Profit before loan imp. charges as % p.a. of allocated capital | 0.1 | 6.5 | - |
| Pre-tax profit as % p.a. of allocated capital (ROE) | 32.6 | (59.5) | - |
| Cost/income ratio (%) | 99.5 | 85.2 | - |
Note: Deposits do not include MM Funds of LVL 13.8 million in 2011 and LVL 4.5 million in 2010.
In the first quarter of 2011, Danske Banka continued to strengthen its position in the business banking segment, by both solidifying its relationships with existing customers and attracting new ones. The bank’s activities led to substantial increases in business lending and deposits. Danske Banka’s pre-tax profit for the first quarter amounted to LVL 0.95 million.
Raivis Kakānis, CEO of Danske Banka, comments on the bank’s financial results for first quarter of 2011 as follows:
"The first quarter brought many positive developments at Danske Banka. Our business customer base continued to grow, we managed to gain the profits and our customers expressed their confidence in the bank by voting with their deposits. In the "Praise Excellent Service!" campaign in Latvia, Danske Banka was named the best bank in the country. We have always tried to give our customers the highest quality service, and we were pleased to receive this award. I want to thank our customers for their praise, which inspires us to strive to meet their expectations throughout the year.
"Our business customer base continued to grow rapidly, rising 25% since Q1 2010. We also continued to strengthen our relationships with existing business customers. As a result, we saw a significant increase in deposits as well as a slight rise in lending. The amount of new loans exceeded the natural amortisation of the portfolio. Danske Banka’s total lending portfolio grew 4% over the level a year before, with the business loan portfolio up 43% and the personal customer portfolio down 11%. We expect that business lending will continue to increase in the coming quarters.
"Deposits showed very strong growth. In the first quarter of 2011, Danske Banka’s deposit portfolio grew 77% over the level a year before and reached almost LVL 150 million, mostly because of a rapid rise in business customers’ deposits, a trend that continued from the preceding quarter.
"Interest rates remained at their historically lowest levels, putting pressure on net interest income. Another recurrent factor was relatively high ATM network maintenance expenses, which hurt the bank’s net fee income. On the other hand, economic stabilisation, sufficient individual impairment charges made in previous quarters, and companies’ improving financial positions enabled us to reverse a number of loan impairment charges.
"In order to further improve our competitiveness, we also continued to develop our online banking services. In April 2011 Danske Banka’s E-bank was upgraded with new functionalities that enable customers to trade in unit trusts, shares and bonds.
"Danske Banka’s priorities in the coming years are further growth in our business customer base, the development of additional investment and brokerage services for retail customers, and enhancing our competencies in order to maintain the high quality of our customer service."
The Danske Bank Group’s Interim Report – First Quarter 2011 is available at www.danskebank.com/reports.
DANSKE BANK GROUP’S CURRENT RATINGS:
Long-term: A1 (Moody's); A (S&P); A+ (Fitch)
Short-term: P-1 (Moody's); A-1 (S&P); F1 (Fitch)