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Danske Bank sticking with region despite Danish chiefs’ shock over UK voting to leave Europe

By John Mulgrew

Danske Bank's parent company is committed to its Northern Ireland business despite the Brexit vote, its local boss has said.

Kevin Kingston spoke out after the bank posted pre-tax profits of £117m for last year.

The chief executive insisted there was no sales process in place for Danish-owned Danske Bank's local operation, but conceded that changes in legislation and regulations would have some impact once the UK leaves the EU.

He also stressed that bosses in Copenhagen had "struggled to understand" why the UK voted to leave the bloc.

While the bank's pre-tax profits fell during the course of the year, dropping by 17% from £141.9m to £117m in 2016, that was largely down to less reliance on so-called writebacks - cash set aside to cover expected loan losses that can then be released.

Overall, it saw its operating profits grow to £91m for last year, buoyed by a 5% boost in lending including mortgages.

The mortgage market made up just under £2bn of total lending during the period. Total loans increased to £4.54bn.

Danske Bank's Northern Ireland business represents approximately 6% of the group's total profits.

It operates 44 branches across Northern Ireland.

The bank's staff numbers remained flat during the year at around 1,300 workers.

Mr Kingston insisted there were no plans to put the bank up for sale.

"No... autonomy has been great for us," he said.

"We still have access to the group technology platform, but we are able to chart our own destiny in terms of delivering for customers in Northern Ireland.

"Are we a safe and liquid bank? Absolutely we are a safe and liquid bank.

"Do the Danes particularly understand what the UK did when we voted to leave the EU?

"No, I think it's fair to say that they have struggled to understand that.

"But that is separate to their position on the bank in Northern Ireland. Of course there will be changes in legislation and changes in regulation as a result of the decision (to leave the EU).

"Remember, we are a relatively simple bank in that we are focused on Northern Ireland. We haven't got offices in Shanghai and New York."

"To that extent, passporting and those complexities don't impact on us the way they might if you were to try and separate HSBC from London."

As for the mortgage market here, Mr Kingston said between 80% and 90% of mortgages taken out were now fixed rate, given the low Bank of England base rate of 0.25%.

Speaking about a reduction in impairments, Mr Kingston also added it was "reflective of an improvement in the economy".

Danske Bank's parent company posted net profits of €2.67bn for last year.

On Brexit's impact here, Mr Kingston said: "It remains to be seen how the EU referendum result will impact on confidence levels and economic conditions in 2017".

"In my opinion, 2017 is almost overshadowed by uncertainty."

Among the factors causing this uncertainty are the triggering of Article 50, the election in the US of President Donald Trump, snap elections here and a decidedly unclear future for the Executive.

Mr Kingston said looking ahead "operating in an environment of historically low interest rates for a prolonged period... will affect our profitability moving forward."

"Despite the prospect of significant change in the external environment, we remain fully committed to our role as a driver of growth in the local economy," he added. "We have the capacity to support substantial new lending to both personal and business customers.

"In 2017 our strong position in the marketplace will be complemented by the introduction of more innovative banking solutions and a drive to improve overall customer experiences".

Speaking more generally about the results, Mr Kingston stressed: "I am pleased with what is a strong financial performance in 2016."

During the year the bank was involved in a number of major corporate financing deals.

That included Bloomfield shopping centre in Bangor and The Gallery apartments in Belfast.

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