Danske Bank (DANSKE) Pre-Close Call summary

Executive summary

• Inflation in the Nordics is normalizing, with stronger-than-expected growth in Norway and Denmark, and stable unemployment and wage development, especially in Denmark where pharma drives growth.

• Housing market shows early signs of recovery, supported by rising real wages and declining interest rates, though activity remains subdued and risks persist due to geopolitical uncertainty.

Trading performance and revenue trends

• Central banks in Denmark and Sweden cut policy rates in Q4, leading to lower retail and business customer rates; deposit rates were reduced, but transaction account rates in Denmark remain at 25bps for up to DKK 50,000.

• Credit demand stayed muted for both private and corporate lending in Denmark; currency fluctuations had minor effects, with GBP up 1%, SEK down 1%, and NOK flat against DKK.

• Wholesale funding costs decreased, with CIBOR, STIBOR, and NIBOR all lower; DKK 15.15bn issued in Q4, completing the full-year funding plan.

• Net interest income (NII) for 2024 is estimated at DKK 36.5bn, including the impact of the Norwegian business sale; NII sensitivity remains at ±DKK 500m per 25bps rate change.

• Investment fees saw mixed trends due to market performance; Q4 performance fees are seasonal, with DKK 0.3bn booked in Q4 2023.

• Activity-driven fees increased with a 3.1% rise in consumer spending in November, but overall sentiment remains negative; refinancing and remortgaging activity stayed low.

• Debt capital markets performed strongly, while equity and M&A activity improved from earlier lows; trading income was subdued due to wider spreads and market weakness.

Profitability and margins

• Full-year expenses are expected around DKK 25.8bn; cost base reduced by DKK 0.5bn annually from the Norwegian business sale.

• Insurance results (Danica) are expected at the lower end of the DKK 1.4–1.6bn range due to negative model updates in health and accident; this is a recurring challenge.

• Other income negatively affected by declining asset values in leasing; sale of Norwegian personal customer business and fund management adds DKK 0.1–0.2bn in Q4.