Danske Bank Sees Profit Doubling in 2021, Proposes Dividend

(Bloomberg) -- Danske Bank A/S said it expects profit this year to be at least double the level reached in 2020 as the lender continues to cut costs even as markets improve.

Net profit will grow to a range of 9 billion kroner ($1.45 billion) to 11 billion kroner, compared with the 4.6 billion kroner reached in 2020, Denmark's biggest bank said on Thursday. Analysts had on average expected a profit forecast for 2021 of 9.6 billion kroner.

Shares in the bank rose about 4% when trading started in Copenhagen. Analysts at Jyske Bank noted that Danske's costs in 2021 look like they're going to be “considerably lower” than expected, suggesting that consensus estimates for the bank “need to be revised up about 8-10%.”

“This marks solid progress on our ambitions to become a better bank for all our stakeholders,” Chief Executive Officer Chris Vogelzang said in the statement.

Vogelzang, who's been CEO since mid-2019, has struggled to restore Danske's status as a respected bank in Europe amid ongoing investigations of money laundering. Danske has had to spend more on compliance, while cutting costs elsewhere to improve profits and keep investors happy.

The bank, whose share price has been roughly halved over the past three years, proposed paying a dividend of 2 kroner per share. Danske said that's “slightly below” its return policy but in line with the financial watchdog's recommendations. The bank said its policy remains unchanged.

For the fourth quarter, Danske missed analyst estimates by about 10% for net income, reporting profit of 1.45 billion kroner. Net interest income was also slightly lower than expected, while impairments weren't as bad as feared.

Read More: Danske Bank 4Q Net Income Misses Estimates

Vogelzang pointed to the economic resilience of Danske's home market, which his counterpart at Nordea Bank Abp also noted as a factor supporting profits.

“While 2020 was dominated by the corona crisis and the subsequent lockdown of societies, the Nordic economies held up relatively well,” Vogelzang said.

Danske maintained its goal of returning of 9-10% on shareholders' equity in 2023.

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