|Press release||Danish bank
Holmen’s Channel 2 – 12
DK-1092 Copenhagen K
Phone +45 45 14 14 00
February 2, 2023
C.Customer activity stay good When progress in cOre banking activity of a Challenging operating environment
further progress upon of sustainability agenda When ambitious sustainable financial targets and clear commitment to green transition
Net loss DKK’s Five.1 a billion and returns on equity in -3.1% One year period
Danske Bank has announced its 2022 financial results.
Chief Executive Officer Carsten Egeriis commented on the financial results.
“2022 is important economic uncertainty and high volatility.We stays close to you, helps you navigate, Supporting homes, businesses, and society whole.
G.Higher client activity throughout the year and higher lending volumes in the corporate segment drove net interest income in the eight corporate segments.time consecutive quarters and robust Level of net fee income. Unprecedented volatility, particularly in interest rate markets, impacted our trading revenues and insurance business. saw Positive trend towards the end of the year.In addition, the underlying costs will continued to a downtrend.
to have net loss on the bottom line of course not satisfied. but,come as a result of conclusion of The Estonian problem was an important turning point for Danske Bank. W.We can now focus more on creating value for our customers the same as all of us other Stakeholder When upon continueare doing reinforce our commercial momentum.
Methis challenging macro economy environment, we continued Execution of plans to become a simpler and better bank for stakeholders. our Efforts throughout the year Have place us flat more strongrye at the tellmilliseconds to reach the goal.This is also our focus for his 2023, and we are confident that we achieve our ambition.”
Annual reports are available at www.danskebank.com. Here are some highlights:
2022 vs 2021
Total revenue of DKK 41.2 billion (down 3%)
Operating expenses DKK 26.5 billion (+3%)
Loan impairment of DKK 1.6 billion (2021: DKK 348 million)
Estonia project and goodwill impairment allowance: DKK 15.4 billion
Net loss of DKK 5.1 billion (2021: profit of DKK 12.9 billion)
-3.1% return on equity after Estonia deal and goodwill impairment allowance
A solid capital base with a total equity ratio of 22.1% and a CET1 ratio of 17.8%
be in a strong position to support our customers of tradeare doing important uncertainty
A weaker macroeconomic outlook and rising interest rates are expected to hit both businesses and households, but loan quality remains strong, with loan impairment charges largely driven by management’s increased buffers. kept low. This allows us to continue supporting our customers as they navigate through difficult macroeconomic conditions.
2022 has been a year of almost unprecedented uncertainty and volatile markets due to rising geopolitical tensions and rapid inflation, especially in energy prices. tighten. As a result, our customers have had to navigate the most challenging environments in decades. These conditions continue into his fourth quarter of 2022, with the macroeconomic outlook continuing to deteriorate, meaning a decline in economic activity is most likely in 2023.
But towards the end of the year, risk appetite rose, albeit from low levels, among financial market investors towards the end of the year, indicating that both energy prices and central bank rate hikes have peaked, at least for now. There are some signs. Moreover, labor markets and consumer spending in the Nordic countries remain resilient, providing a strong starting point for weathering the coming economic slowdown.
Core banking activities continue to deliver results good result
Through 2022, our business model will continue to be a commercial strengthened the momentum. In particular, the market share of bank lending in the Danish business increased over the year. Fee income remained firm, but weakened toward the end of the fiscal year. Activity-driven fees in particular held up well, and client demand for our risk advisory solutions was strong. In the fourth quarter of 2022, more constructive market conditions continued to improve income lines related to financial markets.
Higher mortgage rates boosted re-mortgage activity in 2022 and had a positive impact on fee income. Market share of new mortgages increased from 2021 levels despite lower customer activity in the housing market and falling home prices.
Demand for credit from corporate customers was particularly strong in 2022 as capital markets became more expensive and less accessible. Factors such as rising energy prices have also increased the need for working capital. Danske Bank’s strong liquidity and capital base enabled it to support customers across the domestic market, supporting corporate customers with additional lending of over DKK 40 billion.
Net trading income recovered in the second half as market conditions became more supportive. Income from the insurance business was also negatively impacted by the financial market turmoil in 2022. As the interest rate environment normalized, the results stabilized towards the end of the year as values adjusted. Underlying business remains strong, with continued improvement in health and accident businesses.
Efforts to improve efficiencies have shown underlying costs to continue to trend downwards. However, total costs continued to be impacted by high fix costs due to efforts to fix legacy issues. In August 2022, it communicated an expedited resolution of the debt collection case and said further sample checks related to the customer compensation model were required. These sample checks confirmed the validity of the model proposed in August. The work we have done so far has made the model even more robust across different customer segments and provided a clearer picture of compensation levels. As a result, in the fourth quarter of 2022 he decided to make an additional provision of DKK 310 million.
At the start of the Better Bank plan, we had clear goals to simplify our business, improve efficiency, facilitate digitization, strengthen compliance, and strengthen our commercial focus. 2022 was a year of many achievements, including the restructuring of the Personal and Business Customers divisions, significant progress in remediation work and consistent steps towards a complete digital banking solution across the segments. We are focused on meeting his 2023 goals and will provide investors with an update on his 2023 and beyond medium-term financial goals before reaching the end of the first half of 2023. .
“Core banking continues to perform good result Throughout the year, dIn spite of the Low macroeconomic visibility and high volatility in financial markets.Increase in net interest income for eight peopletime consecutive quarters – and 14% Year after year – as a result of increased lending, especially by corporate customers; and normalized interest rate. Net trading income recovered in the second half as market conditions became more supportive, despite lower risk utilization. Our efforts to increase efficiency have led to underlying cost reductions. in the meantime of close Percentage of Legacy Issues with Expensive Remediation Costs. We note strong commercial momentum, efficiency gains and transparency provided in our core banking activities almost Our legacy problem, while resolution oWhat Of course, Estonia’s problems greatly affected the results. this progress We are confident that we will reach our 2023 target.” Chief Financial Officer Stephen Engels said:
maintain the ambition to become leader in sustainability
The financial sector plays a key role in the transition to a more sustainable society. Danske Bank has continued to support our clients’ transition to the environment with related sustainable financial products and advisory services. We continued our net-zero path to achieve our goal of becoming one of the leading banks in sustainable finance in the Nordic countries.
To support our customers in the transition, we will set ambitious 2030 targets in early 2022 for reducing carbon emissions related to corporate lending in the key sectors of oil and gas, shipping and utilities. Set up. Building on this commitment, in January 2023 we will launch the Danske Bank Climate Action Plan. This sets new emission reduction targets for Paris, not only for our financial activities, but also for our own operations. To ensure we meet our commitments under the Paris Agreement, these goals encompass our entire business and all our activities. The new plan builds on the standards and guidance of the Science Based Targets initiative. The new plan reinforces our commitment to supporting and enabling our customers’ sustainable transition journeys by continuing to develop products across our segments and staying at the forefront of this increasingly important agenda.
Danske Bank also has a strong lead among international banks in helping customers reduce their carbon footprint. Recent Bloomberg Intelligence Research Unit survey, published in October 2022, ranks Danske Bank #1 among 54 international banks for setting targets to reduce the carbon footprint of their lending activities it was done.
In 2022, we increased the volume of sustainable financing from DKK 192 billion at the end of 2021 to DKK 273 billion at the end of 2022, thus fulfilling our commitment to raise DKK 300 billion in sustainable financing by the end of 2023 approached. Investments in green transition increased from his DKK 33.5 billion to DKK 37.7 billion, approaching his 2023 target of DKK 50 billion.
It also maintained its position as the leading arranger of sustainable bonds in the Nordics by the end of 2022 and ranked first in Bloomberg’s global ranking of green bonds. 16.
On 27 October 2022, Danske Bank made an additional provision of DKK 14 billion in relation to the Estonian matter. Therefore, the Board of Directors plans to propose at the 2023 Annual General Meeting that he will not pay the 2022 dividend. Danske Bank’s dividend policy remains unchanged, targeting a dividend of 40-60% of net income. Danske Bank has a strong capital and liquidity position and the Board remains committed to its capital allocation policy.
〇Outlook for 2023
We expect net profit in 2023 to be in the range of DKK 15-17 billion.
“Our outlook is in line with our 2023 financial targets and is based on our expectation of increased revenues from our core banking operations in 2023. This will be driven by higher net interest income and continued efforts to drive commercial momentum. The income line, on the other hand, is linked to financial markets and is expected to recover from that level in 2022, albeit with a high degree of uncertainty. In addition, despite inflationary pressures, we expect our continued focus on cost management to be reflected in cost reductions. Credit quality remains strong and impairments are expected to increase, primarily due to the deteriorating macroeconomic outlook impacting model-driven impairments.,” Stephen Engels says.
The outlook is subject to uncertainty and is subject to economic conditions.
For more information on Danske Bank’s financial results, please visit www.danskebank.com/reports.