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Investing.com -- Danske Bank A/S (CSE:DANSKE) shares rose more than 2% on Friday after the lender reported third-quarter earnings that met expectations, with stronger capital levels and lower loan impairments helping offset weaker trading income.
Denmark’s largest bank posted a net profit of DKK 5.52 billion for the quarter, 1% ahead of consensus expectations of DKK 5.46 billion.
Return on equity stood at 12.6%, broadly unchanged from the previous quarter. Pre-provision profit came in at DKK 7.38 billion, 1% below forecasts, reflecting slightly lower revenues partly offset by cost savings.
Net interest income totaled DKK 9.07 billion, 1% higher than expected and flat from the prior quarter. Jefferies said Danske benefited from higher lending and deposit volumes and improved lending margins.
Jefferies added that “the deposit hedge helped mitigate the impact of lower rates on deposit margins.”
Fee and commission income rose 3% above estimates to DKK 3.50 billion, supported by stronger investment-related fees.
Assets under management reached an all-time high of DKK 954 billion, up 11% from a year earlier, driven by improved market conditions.
Trading income declined to DKK 626 million, compared with expectations of DKK 757 million. Jefferies noted that Danske saw “stable customer activity which was offset by lower income from hedging and funding activities in Treasury.”
Operating expenses were in line with projections and fell 1% year over year, as higher staff costs were offset by lower fees to the resolution fund and reduced financial crime compliance costs. The bank reiterated its full-year 2025 cost guidance of up to DKK 26 billion, against consensus of DKK 25.8 billion.
Credit quality improved, with a net impairment reversal of DKK 8 million versus market expectations for a DKK 246 million charge.
Jefferies said that “a few single-name impairments [were] offset by workout cases,” resulting in the net reversal.
The post-model adjustment buffer, or PMA, remained flat at DKK 5.7 billion, equal to roughly 30 basis points of loans.
Danske’s Common Equity Tier 1 ratio stood at 18.7%, 30 basis points above forecasts and unchanged from the previous quarter.
The improvement reflected lower risk-weighted assets and profit generation, partly offset by the temporary effect of calling a Tier 2 instrument at its insurance subsidiary Danica, which Jefferies said is expected to reverse in 2026.
The brokerage continues to target a CET1 ratio above 16%, maintaining a 390-basis-point buffer over regulatory minimums.
The Copenhagen-based lender said it now expects 2025 net profit to be at the upper end of its DKK 21-23 billion guidance range, with consensus at DKK 22.2 billion.
Impairments for the year are projected at no more than DKK 0.6 billion, revised down from about DKK 1 billion previously.