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Danske Bank posts pre-tax profits of £98m and says Brexit 'so far' has had no impact on economy

By John Mulgrew

Published 28/10/2016

Danske Bank posts pre-tax profits of £98m
Danske Bank posts pre-tax profits of £98m

Danske Bank has reported pre-tax profits of £98m for the first nine months of year.

Profits dropped on the same period last year, but the bank now has less reliance on so-called 'writebacks'.

And the bank says the vote for Brexit appears “so far” to have had no major impact on the Northern Ireland economy.

The bank's deposit levels increased to £6.14bn for the period from January to September.

Danske Bank chief executive, Kevin Kingston, said:

“We have continued to make good progress in quarter three, resulting in a £75m operating profit for the first nine months of 2016.

“As the volume of new economic data grows, the EU referendum result appears, so far, not to have had a major effect on the Northern Ireland economy. UK consumer spending, business activity, house prices and wage growth have all beaten forecasts. UK unemployment reached an 11-year low and, locally, our exporting customers have been helped by the weaker value of sterling.

“However, the longer-term effects once the formal withdrawal negotiations begin and the exit itself takes place, remain to be seen. Our Quarterly Sectoral Forecast report published last month suggests that Northern Ireland’s economy will grow by 1 per cent this year and 0.5% in 2017. This has been revised down from the previous report, in which growth of 1.6% had been expected for this year and 1.9% in 2017.

“More challenging from the Bank’s perspective is that we are now operating in a lower interest rate environment than we had anticipated. Whilst interest rates had generally been expected to start rising during 2016, post the EU referendum it seems clear that we will now be operating in an environment of historically low interest rates for a prolonged period.

Meanwhile, Ulster Bank owner Royal Bank of Scotland (RBS) has swung to a £469m loss in the third quarter and confirmed that it will miss a 2017 deadline to sell off its Williams & Glyn branch network.

The figure compares with a profit of £940m in the same period last year, when the bank's balance sheet was boosted by the sale of US bank Citizens.

RBS was stung by £425m in conduct and litigation charges, largely linked to the sale of mortgage-backed securities in the US, and £469m in restructuring costs.

The lender, which is still 73% owned by the Government, said that despite "positive discussions" with interested parties on the sale of Williams & Glyn, it will miss its 2017 deadline.

RBS must offload the Williams & Glyn branches by the end of next year as part of EU conditions linked to its £45bn bailout at the height of the financial crisis.

The bank said: "RBS is therefore in discussion with HM Treasury, and expects further engagement with the European Commission, to agree a solution with regards to its state aid obligations."

However, the lender is thought to be in discussions with a number of interested parties, including the owner of Clydesdale and Yorkshire banks, CYBG.

Online Editors

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