Danske Bank (OTCPK:DNKE.Y) Update / Briefing Transcript

Danske Bank Q3 2025 Pre-Close Call Summary Company Overview - Company: Danske Bank (OTCPK:DNKE.Y) - Date of Call: October 01, 2025 Key Points Macroeconomic Environment - Euro Area: Optimism is rising with health growth higher than expected and inflation under control [2] - Nordic Economies: Overall improvement expected, except for Sweden which faces high inflation and weak growth [3] - Danish Economy: GDP growth forecast revised down from 3.2% to 1.8% for 2025, aligning Denmark with average European growth [3] - Consumer Confidence: Remains low, but housing market activity is improving with positive outlook for housing prices [3] Financial Performance - Net Interest Income (NII): Interest rate sensitivity noted, with a DKK 650 million negative impact per 25 basis points cut and a DKK 450 million positive impact per 25 basis points hike [6] - Funding Costs: Decrease in CIBOR, STIBOR, and NIBOR rates during the quarter [5] - Wholesale Funding: On track with full-year funding plan of DKK 60 billion to DKK 80 billion, having issued DKK 65 billion year-to-date [6] Fee Income and Lending - Fee Income: Expected to be dampened by low consumer sentiment and summer period effects [8] - Investment Fees: Strong momentum in Assets Under Management (AUM) noted through August [8] - Lending Demand: Slight recovery in retail lending and solid corporate lending observed [9] Trading and Other Income - Market Conditions: Characterized by spread compression and lower volatility in the Danish mortgage market [10] - Other Income: Lower run rate confirmed due to reduced contributions from asset finance activities [10] Cost Outlook - Full-Year Expenses: Expected to be up to DKK 26 billion, with higher seasonal costs anticipated in Q4 [10][22] - Insurance Reimbursement: DKK 175 million recognized in Q3 2024, no similar items expected for Q3 2025 [11] Capital and Regulatory Considerations - CET1 Ratio: Expected reduction due to calling a €500 million Tier 2 instrument, impacting the ratio by approximately 50.5 basis points [11] - Dividend Policy: No interim dividends planned; annual dividend payments preferred in line with Danish regulatory expectations [17] Additional Insights - GDP Downgrade Impact: Downgrade attributed to statistical revisions and lower pharmaceutical export impacts, particularly from Novo Nordisk [14] - Remortgaging Fees: Anticipated slow activity in Q3 with a significant pickup expected in Q4 due to adjustable rate mortgages [16] Conclusion - Danske Bank's Q3 2025 pre-close call highlighted a mixed macroeconomic environment with specific challenges in Denmark. The bank is managing its financial performance with a focus on interest income, fee generation, and cost control while navigating regulatory expectations regarding capital and dividends.