Danske Bank’s Northern Ireland business has had a busy start to the year with profits climbing on the back of a buoyant housing market and growing economy.
In its first quarter results it said it had benefited from “increased transactional activity and higher UK interest rates” with both lending for mortgages and to the small and medium-sized business sector increasing while lending to large businesses remained subdued.
Pretax profits for the first quarter of the year reached £16.7 million, up from £15.8 million in the same period last year and taking into accound a £2.1 million hit for loan impairments.
The total amount of loans from the bank in Northern Ireland dropped to £5,459 million for the quarter from £5,656 million last year while deposits climbed to £10,397 million from £9,793 million.
Vicky Davies, CEO of Danske Bank UK, said the housing market had helped boost profits for the bank, with transaction levels strong despite successive rate hikes. Evidence from Danske Bank’s mortgage customers suggest the trend of increasing rates is expected to continue.
“The housing market has remained buoyant in 2022 and successive Bank of England rate rises have not impacted transaction levels,” Ms Davies said. “Mortgage lending approvals at Danske Bank in Northern Ireland are up 25% year-on-year and in Q1 (the first quarter) 2022 88% of customers opted for a fixed rate product - providing certainty around future payments.”
She attributed to increase in lending to small and medium sized to increased confidence in investing in the wake of Brexit while the subdued lending to large businesses is the result of many carrying “excess liquidity”.
Looking ahead, the war against Ukraine, Brexit and soaring inflation are potential headwinds for the months ahead.
“Russia’s invasion of Ukraine has introduced additional economic uncertainty – adding to existing challenges associated with the pandemic, Brexit, supply chain constraints and rising inflation,” Ms Davies said. “We continue to monitor these factors closely, in particular how our personal customers are being impacted by rising costs of living, and heightened cost burdens for business customers.”
