Spar Nord Bank A/S (SPNO), the regional lender acquiring Sparbank (SPB) A/S, declined to its lowest price in six weeks in Copenhagen trading on estimates third-quarter net interest income fell after the central bank cut rates below zero.
Spar Nord fell to as low as 24.50 kroner, its weakest price since Sept. 5. The stock declined 0.30 krone, or 1.2 percent, to 24.70 kroner at 10:37 a.m. local time, making it today’s second worst performer among listed lenders.
“Downward pressure on net interest income is intensifying,” Simon Christensen, senior analyst at Nordea Equity Research, said in a note.
Danish banks are struggling to generate interest income after the central bank in July began charging the industry to hold deposits for seven days. Copenhagen-based Nationalbanken cut the rate on certificates of deposit to minus 0.2 percent to stem an influx of investors seeking a haven from Europe’s debt crisis. The negative rate has carried through into the money markets as banks including Denmark’s largest, Danske Bank A/S, charge counterparties for deposits.
Net interest income at Aalborg, Denmark-based Spar Nord probably fell 2 percent in the three months through Sept. 30 from the previous quarter, to 368 million kroner ($64 million), Christensen said. He also cited narrower lending margins, lack of volume growth, and mortgage banks’ market share gains.
Spar Nord said Oct. 11 that its board and that of Skive, Denmark-based Sparbank A/S had agreed to the merger, with Spar Nord continuing as the remaining institution.
Christensen said he predicts Spar Nord Bank will announce more detail on its efforts to cut costs by the end of the year, following the takeover.
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