The Nordic lender is still struggling to recover from a 2017 money-laundering scandal in its Estonian business, which has led to thousands of clients jumping 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 layoffs there would be.

Late last year, Danske pledged to get costs and compliance under control by 2023. Vogelzang told Reuters on Friday he was still confident of reaching those targets.

"Our cost base next year will be substantially lower, 8-10%. That is a significant step towards 2023."

Expenses for Danske were 7% higher in the first half 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 ...low-margin market," Chief Financial Officer Stephan Engels said, adding the bank would need to focus even more on bringing them down.

As part of those efforts, Danske will make staff cuts this year and next, he said.

At least 1,000 employees have left the bank through layoffs or job cuts since Vogelzang took over as CEO in June last year.

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, closely watched during the COVID-19 pandemic, totalled 1.02 billion crowns, below the 1.72 billion crowns average forecast.

Danske, which reported charges of 4.3 billion crowns in the first quarter - more than most Nordic rivals - said it expected most impairments had now been taken for the year as a whole.

Most were related to the oil and gas industry or the adoption of new accounting standards, Engels said.

"You don't see companies here going bust by the day, which also is a reflection of the life support of the government still going on," he told Reuters.

Shares in Danske traded up 0.5% at 0909 GMT.

(Reporting by Nikolaj Skydsgaard; additional reporting by Jacob Gronholt-Pedersen. Editing by Pravin Char and John Stonestreet)

By Nikolaj Skydsgaard