Belfast Telegraph

Danske profits up by 40%, as Brexit creates uncertainty

By John Mulgrew

Businesses in Northern Ireland are putting off key investments amid uncertainty ahead of a vote on whether the UK should exit the EU, the head of Danske Bank has said.

Kevin Kingston was speaking as the bank saw its profits soar to £140m for 2015 - up 40% on the same period a year earlier.

He said: "Anything which makes trade with Europe more complex and more difficult has to be bad news."

Profits were once again buoyed heavily by so-called writebacks - additional cash clawed back from loan impairments.

But when taking that out of the equation, Danske still saw strong profits of £85m. That was up from £65.5m in 2014.

Its overall income increased by 4%, up to £217.5m for the full year.

But Mr Kingston reiterated the message from Danske's overall chief executive Thomas Borgen, that its Northern Ireland arm is not up for sale.

Meanwhile, mortgage lending increased, buoyed by a strengthening housing market here with borrower confidence on the rise.

There were around £235m worth of approvals during the year, driven by home movers, rather than first-time buyers.

"Mortgages is a big growth area for us, and we are putting a lot of interest into growing that market share," Mr Kingston said.

Lending at the bank increased for the first time since the recession.

Both loan values and deposits increased during the period. Loans rose to £4.3bn, up 2%.

But deposits, the amount of cash being paid into Danske accounts, also rose by 5% in 2015.

Danske has also been reducing its costs and overheads over the last few years. In 2015, it was no different.

It reduced its staff numbers to 1,450 - down from 1,500 in 2014 - and slashed its branch numbers by more than half since 2005.

"Our lending book was up 2%, year-on-year," Mr Kingston said.

"That is really significant for us. That's the first time we have seen our lending book grow since the recession.

"For the first time, we are seeing more borrowing than repayment. Equally, our deposits were up 5%. The relationship between those two figures is an important one.

"There were a lot of businesses making money, earning, with discretionary power, that they were leaving in their bank account, that wasn't being spent."

Overall, a surge in the first half of the year helped deliver Danske its positive results, according to Mr Kingston. As for business lending, there was an upsurge in confidence, helping loan levels rise.

But profits for Danske are unlikely to remain as high over the next year or two, as writebacks become less a part of its numbers.

"We are through the vast majority of it (writebacks) at this stage. I would expect it to reduce significantly this year, and I would doubt it would be significant in the 2016 accounts," Mr Kingston said.

Belfast Telegraph