Pre-tax profits down 94 per cent as Danske Bank factors in challenging months ahead
QUARTERLY pre-tax profits at the north's biggest lender is down by 94 per cent in the first three months of year as a result of coronavirus.
Danske Bank said the substantial fall from £24.7 million in the first quarter (Q1) of 2019 to £1.4m in the same period in 2020, was driven by provisions for potential future loan impairments made as a result of the Covid-19 pandemic.
Earlier this week, the bank forecast that the Northern Ireland economy will shrink by 7.5 per cent this year. As a result, the lender is expecting that a greater number of customers will experience financial difficulties in the months ahead.
Despite registering an operating profit of £21.1m in Q1, the Danish-owned lender factored in £19.7m in loan impairments over the quarter.
Danske Bank's reaction to the crisis to date has included over £120m of support for Northern Ireland businesses. More than half (£64m) was made up of loans paid out through the UK Government-backed Coronavirus Business Interruption Loan Scheme (CBILS).
On Monday, the lender said it had approved just under 90 per cent of the 289 applications it had received up to that point.
Danske Bank said its volume of business lending during the crisis is double what it lent during the same period last year.
It has also approved 4,500 mortgage payment holidays for personal customers, including buy-to-let landlords, and cancelled interest on all existing overdrafts for three months for personal accounts.
Danske Bank's Belfast-based UK chief executive, Kevin Kingston said the disruption from coronavirus began towards the end of the first quarter.
"The Bank mobilised and reacted at pace to help our customers, colleagues and wider society.”
He said the lender maintains a strong funding, liquidity and capital position, and pledged to use this capacity to support both personal and business customers through the current challenging times.
“I feel passionately that Danske Bank's role is to be a force for good both now and throughout the challenges ahead.
“Since the coronavirus disruption began to impact the economy at the end of quarter one, we have introduced a significant package of support measures.
“As the biggest bank in Northern Ireland, be assured that Danske Bank has the commitment and the capacity to continue to support customers, the community and the wider economy through these troubled times.”