Business

Danske banks £46m first half profits - but business lending ‘subdued' over Brexit

Danske Bank in Northern Ireland made profits of £45.9 million after impairments in the first half of this year
Gary McDonald Business Editor

PROFITS at Danske Bank swelled to £45.9 million in the first half of this year - up 13 per cent on the same period last year.

Before impairments, the profit figure was £47.8 million, and the first half bad debt number of £1.9m was just a third of the 2018 impairment of £5.8m.

Total income at the bank over the period lifted a fraction from £116m to £117.2m, which it said reflected balance sheet growth alongside higher average UK interest rates.

Despite the continued economic uncertainty, lending is 5 per cent higher year-on-year at £5,447 million, but new lending to businesses has been impacted by Brexit - with some larger customers delaying investment decisions.

“The underlying performance of the bank remains healthy,” Danske's UK chief executive Kevin Kingston said.

But he admitted: “In business banking, lending continues to be more subdued, largely as a result of the elongated Brexit process.

“Lending during the first six months of the year has been predominantly to existing business customers, some of whom are progressing growth ambitions, with others extending their facilities with us to ensure they are prepared for any economic challenges associated with Brexit.

“We, alongside the overwhelming majority of the business community, remain resolute in our view that a no-deal Brexit must be avoided.”

He added: “In personal banking, we continue to provide attractive mortgage rates, compelling home buying products and our mortgage lending volumes are at their highest ever level.

“We are continuing to support the not-for-profit organisation Co-Ownership and that Danske Bank is currently supplying finance for over 50 per cent of their applicants, helping more families get affordable homes.”

Danske - which in May was named Northern Ireland's Responsible Company of the Year by Business in the Community - maintained first half running costs at 2018 levels (£69.4m), while also allowing for ongoing investment in new customer solutions and skills to ensure customer needs are met.

The bank, which operates 40 branches and three regional business centres, employing 1,500 staff, says it continues to have capacity to support further lending growth as demonstrated by a loan to deposit ratio of 76 per cent as at June.

In the digital space Danske has seen more than four million log-ons from customers each month and a 19 per cent increase in digital transactions year-on-year.

Mr Kingston added: “As a result of these growing trends, we have made a significant investment in the development of new digital platforms.

“Our new mobile banking app for personal customers is available for download and we would encourage customers to switch over to it now, as from September 10 our old app will no longer be available.

“Later this year we will also launch a new business e-banking platform called District. These two platforms will provide customers with an enhanced, customisable digital user experience.”

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