Danske Banke profits up despite drop in corporate lending
Corporate lending to Danske Bank customers fell by 30% during the first quarter of the year as Brexit uncertainty meant customers put off investment, its chief executive has said.
Kevin Kingston spoke as the bank's results for the first quarter of the year showed a 63% year-on-year increase in pre-tax profits to £24.7m for the first three months of the year.
Profit before loan impairments was up 3% to £23.1m.
However, corporate lending was down, Mr Kingston said, "with the heightened uncertainty around Brexit during quarter one persuading some our larger customers to delay planned investments until later in the year".
But overall business banking lending - of which corporate lending is part - had increased by 8%, mainly to existing customers.
The chief executive said many business banking clients had been pursuing growth plans, but that others were extending their borrowing to prepare themselves "for any economic challenges that could be associated with the Brexit process".
The bank's income was also up slightly year-on-year to £58m, up from £56.6m. Its lending volumes were also 8% higher year on year, while deposits grew by 7%.
Costs were up, Danske Bank said, as it continued to invest in customer technology.
Mr Kingston said the underlying performance of the bank continues to be strong, as he welcomed the rise in profit before loan impairments, and an 8% rise in lending volumes.
New mortgage lending was also strong, he said, with an increase of 4%.
The rise in pre-tax profits was due to recoveries in net impairments of £1.6m compared to a charge of £7.3m a year earlier.
In February, the bank announced it is to close branches on Belfast's Lisburn Road and in Bangor next month, leaving it with a network of 40.
Mr Kingston said: "Despite the obvious Brexit-related challenges, as Northern Ireland's biggest bank we believe we are well-positioned to continue to make more possible for our customers in the year ahead and we remain resolute in our determination to support the local economy."
During the year the bank also introduced a new team specialising in fraud and cyber-crime.
And it also opened a new hub in collaboration with technology specialist Catalyst. The Catalyst Belfast Fintech hub now has 75 business members.