- Profit before tax of £147.5 million
- Lending balances up 9% year-on-year
- Total income up 1%, despite the impact of prevailing low interest rates
- Expenses down 18%, primarily as a result of a one-off restatement of pension liabilities
|FINANCIAL RESULT* (GBP millions)||Full Year 2017||Full Year 2016||Index 17/16|
|Profit before loan impairment charges||118.3||91.0||130|
|Loan impairment net recovery / (charges)||29.2||25.9||113|
|Profit before tax||147.5||117.0||126|
|Loans (end of period)||4,947||4,536||109|
|Deposits (end of period)||6,648||6,330||105|
Danske Bank in Northern Ireland reports a profit before tax of £147.5 million for the full year to the end of 2017.
Total income is up 1%, with lending growth at 9% - largely reflective of continuing success in the mortgage market and in corporate banking. Financial performance was also notably supported by the proceeds from the one-off sale of the wealth business and changes to pension arrangements - more than offsetting the negative impact of the prevailing lower interest rate environment.
The year-on-year reduction in expenses primarily reflects the accounting impact of the changes in pension arrangements. This reduction is partially offset by increased investment in new technology, improved customer solutions and additional investment in new skills -designed to ensure the Bank can continue to fully meet customer needs and expectations into the future.
As in 2016, Danske Bank reports a net credit in loan impairments as improvements in property values, and in the trading results of the Bank’s business customers, means that provisions made in previous years against potential distressed lending are now no longer required.
Danske Bank continues to have capacity to support further lending growth as demonstrated by a loan to deposit ratio of 74% at 31 December 2017.
Commenting on the results, Danske Bank UK CEO Kevin Kingston, said:
“We are pleased to publish a strong set of financial results for 2017. Restructuring and organisational change helped strengthen the results, but at the core was an improved underlying business performance. Lending balances are up 9% year-on-year and deposit growth has also been marked, rising by 5%.
“2017 was another strong year for our mortgage business. There was a 28% increase in new mortgage lending year-on-year, with our market activity share now having more than doubled since 2015. We have assisted the mortgage business through the introduction of a digital system for the third party broker network. This investment has made brokers’ online interactions with our products slicker, reducing their workload and in turn improving customer experience. We have also expanded our own mortgage consultant team, making this service more readily available.
“In the small business sector, we completed a programme of relocating our small business advisers back into key branches throughout Northern Ireland. This decision was taken as a result of strong feedback from small businesses and it has allowed our people to be more accessible and closer to customers. These changes have made a tangible impact, with an average of 37 new small business relationships being established every week.
“Lending to medium to larger-sized businesses was also up, 3% higher year-on-year. Enhancements to our customer proposition included the introduction of a new digital invoice finance system. The corporate sector in particular remained buoyant, despite ongoing economic uncertainty as a result of the EU referendum.
“Digital innovation continues at a strong pace, and is expected to accelerate further in 2018, partly because of increasing customer expectations and the advent of Open Banking in the UK.
“In 2017, our work to progress the digital agenda was further strengthened by the appointment of a Chief Digital Officer. We saw further customer adoption of our digital channels, with more than 4 million digital logons per month and a19% increase in digital transactions year-on-year. New offerings in 2017 included the introduction of Apple Pay, Fitbit Pay and the launch of a new mobile optimised website focused on enhancing user experience.
“Another example of ongoing digital investment has been our focus on upgrading key branches, making them more digitally interactive and conducive to good customer experiences. Five of our flagship branches underwent transformational change in 2017, with more planned for development in 2018. At the same time, we also closed two branches in response to the continuing changes in customer behaviour.
“We have also continued to focus on cost efficiencies and business simplification. Such an approach has, in turn, allowed us to ensure we have the resources and investment capabilities to continue to deliver innovative customer solutions.
“In 2017, organisational change included the disposal of our wealth business, and the realisation of a new customer solution through partnerships with two external wealth providers. We also leased one of the floors of our head office to professional services firm, Grant Thornton. In addition, we re-assessed our defined benefit pension arrangement, closing it to future accrual. This relates to employees who joined the bank before 31 December 2003. From October 2018, all staff will avail of a competitive defined contribution pension arrangement.
Making more possible
“We have entered 2018 with an ambition of making more possible for our customers. Whilst the macro environment remains challenging, I firmly believe Danske Bank is very well positioned to further support the Northern Ireland economy, whilst continuing to assist customers in realising their ambitions”.