Danske Bank was hit by an unexpected loss in the first quarter, its first since 2014, on Thursday as the global economic downturn caused by the coronavirus crisis triggered a jump in impairment charges.
Denmark's biggest lender reported a net loss of 1.3 billion Danish crowns £152 million, which compared with an average analyst forecast of a 474.2 million crown profit.
"The coronavirus pandemic impacted the results significantly towards the end of the quarter. The key drivers were impairments made mainly because of the assumptions of a worsened macroeconomic scenario," Chief Executive Chris Vogelzang said.
Danske's first quarter impairment charges, which reflect a bank's estimation of the macroeconomic situation and loans which could turn bad, totalled 4.3 billion Danish crowns, compared with 357 million crowns in the same period last year.
Shares in Danske were down 3.91% at 0845 GMT.
"Danske Bank's quarterly account is generally on the weaker side and is significantly scarred by an impairment level and need (for impairments) many times larger than its Scandinavian rivals," Nordnet analyst Per Hansen said in a note.
Rival regional bank Nordea on Wednesday said it was too early to assess the long-term outlook for loan-loss provisions, but reported a net loan loss of 154 million euro in the first quarter.
"It will not be the first quarter accounts that tells us which bank has the fewest losses and the strongest credit portfolio," Sydbank analyst Mikkel Emil Jensen told Reuters.
Jensen said Danske's loss quarter was a "rare" incident, but that it was due to a combination of a low interest rate environment, the global economic rout and the bank's heavy investments in its restructuring plan.
Late last year, Danske pledged to get costs and compliance under control by 2023, which it said will translate into spending of between 1.5 billion and 2 billion crowns this year on cost management and digitalisation.
Shares in Danske have lost more than two thirds in value since 2017, when it was embroiled in one of the world's biggest money-laundering scandals involving more than 200 billion euros flowing through its Estonian branch.
Danske, which had suspended its annual outlook in March, on Thursday forecast net profit of at least 3 billion crowns in 2020, down from a previous forecast of 8 to 10 billion crowns.
It said uncertainty around guidance was higher than usual but maintained its longer-term ambition of a 9-10% return on shareholder equity in 2023.
(Reporting by Nikolaj Skydsgaard; Editing by David Goodman and Alexander Smith)
