Danske Bank UK, the Northern Ireland arm of the Danish bank, has recorded a 15% ramp up in profits for the first half of the year on the back of an increase in transactions and higher UK interest rates.
It made pretax profits of £43.8 million for the six months to the end of June compared to £38.1 million in the same period last year.
Despite concerns around inflationary pressures, impairment levels – funds set aside to protect against bad debts, remain relatively low at around £4.4 million. Meanwhile, deposits remain high at £10,530 million, a legacy of the Covid-19 pandemic when lockdowns meant consumers were saving more money than usual.
While rising prices remain a concern, they don’t appear to be impacting the housing market. Danske Bank reported a 38% hike in mortgage lending in the first half of this year, a figure which backs recent surveys which show Northern Ireland’s housing market remains active.
Understandly given the inflationary environment, 91% of those taking out mortgages with Danske Bank are opting for a fixed rate mortgage in anticipation of further interest rate hikes from the Bank of England. Around 62% are choosing a five-year fixed rate product.
The central bank is tasked with keeping inflation at 2% and raises rates in an attempt to temper price rises. UK inflation currently stands at 9.4% and Danske Bank itself said it expects interest rates to rise again the second half of the year having climbed to 1.25% to 0.25% in the first half.
Vicky Davies, CEO of Danske Bank UK, said the bank had delivered a “solid financial performance”.
“Looking ahead, as Northern Ireland’s biggest bank, we will continue to play a key role in supporting the wider economy and we remain resolute in our commitment to support customers through what will be increasingly challenging months ahead,” she said.
Danske Bank Group, Dankse Bank UK’s Danish parent company, also reported its results for the first half of 2022. It makde net profit of 4.6 billion Danish Krone, a drop from 5.9 billion in the same period in 2021.
