BUSINESSES in the north are setting aside billions of pounds for a post-Covid spending splurge, the boss of the north's biggest bank says.
And he adds: “We're spending so much time talking about the vaccines, but there is a massive shot in the arm for the economy in the current deposits figure.”
Danske Bank chief executive Kevin Kingston insists he is "taking the positives" from a challenging trading year in which profits nose-dived and the bank was forced to set aside £45 million to mitigate expected bad debt in the face of the pandemic.
But while pre-tax profits fell by 86 per cent in the 2020 calendar year from £90 million in 2019 to just £13 million, deposits soared by 27 per cent from £7.585 million to £9,626 million.
“I've ran out of superlatives and adjectives to describe that deposit figure of more than £2 billion. Let me repeat that - two billion pounds,” Mr Kingston said.
“In my time in banking, indeed in 200 years of this bank's history, I've never seen cash balances accumulate quite like this, and the economic potential hiding in that figure is phenomenal.
“When businesses have the opportunity to start spending, it it will bring a massive economic benefit."
Lending at Danske also rose by more than £1 billion last year due to unprecedented levels of support given to business customers during the pandemic, alongside mortgage lending, which has remained at healthy levels.
More than £450 million worth of coronavirus-related business support loans was approved in 2020, most (£395m) provided through government-backed schemes.
Danske said its assistance spanned around 10,000 local business-funding approvals.
But the bank also made significantly higher loan impairments (a provision of £45.4m against just £800,000 in 2019) to allow for the potential that a greater number of customers will experience financial difficulties over the months ahead.
Mr Kingston added: “It's clear that the challenges facing society and the bank will be with us for some time.
He said the furlough scheme is likely to have disguised a potential jobs tsunami going forward, and said the bank was predicting the unemployment rate will peak at 7 per cent (more than twice its current level).
“The Chancellor has been courageous, and what he has achieved has been remarkable considering the costs involved, but much will depend on when the furlough scheme ends. Certainly our business customers would be seeking an extension from April until the summer.”
In personal banking, Danske arranged more than 5,300 mortgage repayment holidays, with a further 675 personal loans and credit card repayment holidays. It also removed the interest on all of its existing personal overdrafts for three months, benefitting 86,000 personal customers.
Looking ahead, Mr Kingston added: “In 2021, we will continue to prioritise supporting our customers, looking after our colleagues, tightly managing costs and seeking strategic growth opportunities where we can.
“These growth opportunities will include pursuing pockets of opportunity in the rest of the UK.”
During the year Danske, which was the only main bank in the north to keep all its branches open, grew its staff numbers from 1,292 to 1,358, despite further reducing its retail network by closing branches in Ballycastle, Comber, Kilrea and Strabane just before Christmas.
