Millions of pounds in loans no longer at risk from pandemic - Danske Bank

Danske Bank has delivered a much more upbeat assessment on the north's economic prospects.

DANSKE Bank has declared that tens of millions of pounds in loans are no longer at risk from the Covid-19 pandemic in Northern Ireland.

Delivering a much more upbeat assessment of the north’s economy on Friday, the lender announced a pre-tax profit of £38.1 million for the first half of 2021.

That compared to a profit before tax of just £2.9m declared for the same period in 2020.

Last year Danske Bank feared the impact of Covid-19 could result in up to £30m of loan defaults, also known as loan impairments.

Twelve months on and that risk has largely disappeared thanks to government intervention and a much improved economic outlook.

While Danske Bank UK’s income did slip by 5.7 per cent to £96.8m in the first half (H1) of 2021, compared to H1 2020, it managed to reduce its expenses as well.

But the biggest factor over the past year has been the change in approach to loan impairment charges.

From building in a negative £29.8m provision to its H1 2020 bottom line, the lender has now factored in an extra £7.5m for H1 2021.

Danske Bank’s latest results also showed the continued trend of both business and personal customers depositing much more cash.

Deposit balances were up by £1.78 billion (21 per cent) on last year to £10.38bn, although that deposit growth rate is gradually slowing.

At £5.56bn, loans remained largely in line with H1 2020.

Kevin Kingston, who will depart his role as chief executive in September, said: “We continue to move forward with growing optimism, ensuring Danske Bank is playing a key role in the economic recovery and helping Northern Ireland grow again.”

The lender appears now to have stepped out of the pandemic fog and is geared toward winning new business.

Its recent initiatives include a £500 million business growth fund targeted at medium-large sized businesses. While the funding is there for existing customers, the bank has included extra incentives in a bid to convince other firms to switch lenders.

The recent upsurge in activity in the local housing market, also saw Danske Bank become one of the first lenders in the UK to re-introduce 95 per cent loan to value mortgages.

Mr Kingston, who will soon be replaced by Vicky Davies, the bank’s first female chief executive, was keen to highlight the efforts the organisation has initiated to reduce its carbon footprint, including the UK’s first mortgage product to be certified as carbon neutral by the Carbon Trust.

“As leaders globally, nationally and locally unite to build back better from the pandemic, the banking sector must play its part, and in Northern Ireland Danske Bank is fully committed to this goal,” he said.

“In September I will be retiring and making way for a new chief executive. It has been my privilege and honour to lead the bank over the past six years and to work with so many inspirational colleagues,” added Mr Kingston.

“I know that the incoming chief executive, Vicky Davies, and our strong local management team, will continue to prioritise customer experience, growing the business for the future and building back better.”

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