PROFITS in Danske Bank’s Northern Ireland business more than doubled in the first half of 2023.
Income at the north’s biggest lender hit £171.5m in the first six months of the year, £52.6m more than the same period in 2022.
The high interest rate environment has proved incredibly profitable for Danske.
The pre-tax profit of £109.8m in the first half of the year was more profit than it made in the whole of 2022 (£103.3m), and the equivalent of £606,000 profit per day in 2023.
Danske Bank said the performance was driven by increased transactional activity, balance sheet growth and higher UK interest rates.
But even with lending up £204m (4 per cent) to £5.76 billion, UK banks have benefitted from higher interest rates in 2023.
UK Chancellor Jeremy Hunt last month said banks were "taking too long" to pass on increases in interest rates to savers.
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It followed sharp rises in mortgage rates, which lenders have passed onto their customers.
Danske Bank’s chief executive Vicky Davies said: “Interest rate rises set by the Bank of England are of increasing concern for mortgage holders.
“At Danske Bank we are working to support customers beyond the UK Government’s Mortgage Charter, with our own additional measures that further assist those with money worries.”
However, the bank boss said mortgage arrears levels are currently “extremely low”, and in line with those seen before the pandemic.
“This tells us that the vast majority of our customers are managing to keep up with their payments. “However, we are being proactive, and reaching out to customers on variable rates, tracker products, interest only and those we have identified as being most likely to potentially struggle with higher payments.”
Danske Bank said it had seen a slowdown in new mortgage business volumes compared to previous years. But mortgage approvals doubled in the second quarter of 2023, compared to the first.
“This indicates that despite rising interest rates, a healthy level of demand is likely to continue across the year,” said Ms Davies.
Danske Bank said the majority of its customers had opted for fixed rate mortgages in the first half of the year, with 53 per cent opting for a 2-year term.
“This is a notable turnaround from last year, when 67% of new fixed rate mortgage customers opted for a 5-year term, she said.
Meanwhile, Danske said it had logged around 15,000 visits since launching its online ‘Money Worries’ hub for personal customers and the ‘Rising Cost of Doing Business’ hub for small businesses.
“Our advice to customers worried about affordability is to always contact us at the earliest possible opportunity,” said Vicky Davies.
“We will take an empathetic and supportive approach, with a range of tailored forbearance options in place to meet their individual circumstances.
“These include, for example, a period of reduced payments, extending mortgage terms or a temporary switch to interest-only. Across our local mortgages and financial difficulties teams we have highly skilled and trained people who are empowered to help.”
