Nov. 1 (Bloomberg) -- Danske Bank A/S, Denmark’s largest lender, reported a third-quarter loss when analysts had predicted a profit and said it will cut 2,000 jobs to adjust to a tougher operating environment.
The lender posted a 384 million-krone ($71 million) net loss, compared with a profit of 887 million kroner a year earlier, the Copenhagen-based bank said in a statement today. That missed the average estimate for a 763 million-krone profit in a Bloomberg survey of analysts. The bank targets 2 billion kroner in cost cuts over the next three years, and will cut 2,000 jobs to reach the goal, it said.
Danske Bank shares have plunged 44 percent this year, burdened by lackluster growth in the Danish economy and continued loan losses at its Irish business. Denmark’s economy has underperformed neighboring Sweden and Norway as a housing slump and banking crisis weigh on consumer demand, while bailout-reliant Ireland is still struggling to emerge from its burst property bubble.
“The global economy remains very fragile, and growth rates in the Western world are expected to be low in the remainder of 2011,” Chief Executive Officer Peter Straarup said in the report. “Structural challenges in the economies of southern Europe and Ireland and a heavy budget deficit in the U.S. are constraining economic growth and affecting the stability of the financial markets.”
Danske also said that Straarup, 60, wishes to retire as CEO in accordance with the terms of his employment contract. The board has started to look for a successor and Straarup will stay until a new CEO is found, Danske said.
Net interest income, the difference between what the bank earns from lending and what it pays on deposits, slipped 5.9 percent to 8.21 billion kroner in the quarter, while its fee income retreated 3.4 percent to 2.75 billion kroner. Danske said the slowing global economy could lead to higher loan impairment charges in the fourth quarter than in the third quarter, adding the charges for 2011 are still expected to be lower than 2010.
--Editors: Tasneem Brogger, Christian Wienberg.
To contact the reporter on this story: Adam Ewing in Stockholm at firstname.lastname@example.org;
To contact the editor responsible for this story: Frank Connelly at email@example.com