Morning Equity Briefing |
Banks
Danske expects Irish loan impairment charges to remain high
Emer Lang
FACTS: Danske has reported a Q4 pre-tax loss of DKK 1.1bn on its Irish operation (National Irish Bank), bringing its FY 2010 loss to DKK 4.6bn, compared with a loss of DKK 4.9bn in 2009.
ANALYSIS: The Q4 impairment charge rose to 691bps (annualised) from 561bps in Q3, although it remained below the Q2 2010 peak of 883bps. The charge takes cumulative provisions on its DKK 70bn Irish loan book (4% of the group total) to 12.44% specific and 1.16% collective, an aggregate of 13.6%. Elsewhere, an increase in deposits from DKK 31.7bn at the end of September 2010 to DKK 39.4bn shows that Danske has been a beneficiary of the deposit outflows suffered by the domestic banks. Retail deposits rose over 5% in the quarter to DKK 12bn, while corporate deposits increased by 35% to DKK 27.4bn.
DAVY VIEW: There are few surprises in the Danske figures with impairment losses continuing to take a heavy toll. The group notes that difficult market conditions persisted in 2010, and it expects loan impairment charges to remain high in Ireland.