Danske Bank warns of more layoffs after profit beats estimates

The Danske Bank logo is seen in Copenhagen, Denmark

Danske Bank’s falling second-quarter net profit beat expectations on Friday but it warned of further layoffs as part of a four-year strategy of cutting costs.

The Nordic lender is struggling to recover from the consequences of a 2017 money-laundering scandal in its Estonian branch, which has seen thousands of clients jump ship and put the bank under investigation by authorities in several countries.

“To ensure adequate progress, we will take additional cost-reduction measures, which unfortunately will have to include further staff reductions,” Chief Executive Chris Vogelzang said, without specifying how many layoff there would be.

Late last year, Danske pledged to get costs and compliance under control by 2023. But it said on Friday that expenses were 7% higher in the first half of this year due to compliance and costs relating to the Estonian case.

“Costs continue to be a priority to ensure that we can remain competitive in a highly competitive, low-margin market,” Chief Financial Officer Stephan Engels said, adding the bank would need to focus even more on bringing costs down.

As part of efforts to reduce operation expenses next year of between 8-10%, Danske will make staff cuts across the bank’s divisions, this year and the next, Engels said.

Danske reported a net profit of 2.33 billion Danish crowns ($356 million) in the second quarter, down around 42% from a year earlier, but topping the 992 million crowns average forecast by analysts in a poll on Danske’s website.

Impairment charges, a keenly watched measure during the COVID-19 pandemic, came in at 1.02 billion crowns, below the 1.72 billion crowns average forecast by the analysts.

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