Danske Bank UK financial results - 6 months to end June 2018

  • New mortgage lending up 28% year-on-year
  • Operating profit up 9% year-on-year
  • Lending up 9% year-on-year
FINANCIAL RESULT* (GBP millions) H1
2018
H1
2017
Index 18/17
Total income 116.0 113.5 102
Expenses -69.5 -71.0 98
Profit before loan impairment charges 46.5 42.5 109
Loan impairments -5.8 15.2
Profit before tax 40.6 57.7 70
Loans (end of period) 5,177m 4,753m 109
Deposits (end of period) 7,073m 6,370m 111

Danske Bank in Northern Ireland reports a profit before impairments of £46.5 million for the six months to the end of June 2018.

Total income has increased 2% compared to the same period last year, this includes growth in lending and deposits and higher UK interest rates, partially offset by lower fee income following the sale of the Bank’s wealth business in 2017.

Lending was 9% higher year-on-year, while deposits rose by 11%.

Restructuring initiatives completed in 2017 enabled increased investment in new technology and customer solutions, whilst also supporting a net reduction in operating costs.

The combination of higher income and lower costs delivered a 9% increase in profit before impairment charges.

Profit before tax reduced year-on-year, reflecting net loan impairment charges over the six months compared to the net recoveries reported in recent years.

Danske Bank continues to have capacity to support further lending growth as demonstrated by a loan to deposit ratio of 73% as of June 2018.

Commenting on the results, Danske Bank UK CEO Kevin Kingston, said:

“I am pleased to report an operating profit of £46.5 million for the first half of 2018. The underlying performance of the Bank remains strong, with lending up 9% year-on-year.

“In Personal Banking we introduced a new remortgage product aimed at mortgage switchers, and this has further strengthened our overall mortgage customer proposition. Last year was a record year in terms of mortgage lending, and the upward trajectory has continued in the first six months of 2018 – with new mortgage lending up 28% year-on-year. Latest market data indicates that we are now funding 1 in 4 of all First Time Buyer mortgages across Northern Ireland.

“To improve personal customer experience, and after listening to customer feedback, we also re-evaluated our savings products and introduced a new notice account for longer-term savings, offering a return of 1.1%.

“In Business Banking new lending is up 19% year-on-year, as we continue to further strengthen our leading market share in the Corporate and Business segment. Notable deals included funding support in Belfast for Andras Hotel Group’s new £12 million ‘Hampton by Hilton’ nine-story hotel and their £5 million 60-bedroom extension at the Holiday Inn Express, as well as support to cloud provider Novosco, who through ongoing expansion are aiming to create 150 new jobs.

“In June we announced some changes to our branch network, with our Ballynahinch and Larne branches set to close in October 2018. As a business, we must respond to changes in consumer behaviour, therefore priorities for investment will adapt and change. Sometimes this can mean investing more in certain key branches - like the transformational upgrades we have carried out across nine different local branch locations over the past two years. On other occasions it means taking hard decisions to close branches.

“Also on the investment side, in June we announced that we plan to open up the ground floor of our Head Office at Donegall Square West in Belfast for use by fintech entrepreneurs. We are teaming up with the not-for-profit tech organisation Catalyst Inc to develop this new co-working space that will include 70 permanent and hot desks, a social meeting area and an event space that can seat around 50 people. This community space will be run as a partnership with Catalyst Inc, who bring extensive experience and a proven model for building collaborative ecosystems. It is scheduled to open in September 2018.

“We want to see the fintech sector grow in Northern Ireland and we want to put Belfast on the global map as a fintech hub. We believe, as Northern Ireland’s biggest bank, that we have a key role to play in making this happen”.

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