Danske Bank UK, one of Northern Ireland’s largest lenders, has seen its profits jump by two thirds last year on the back of an increase in transactions and high interest rates.
The Danish-owned bank notched up pretax profits of £103.3 million for the full year 2022, a jump of more than two thirds from the £61.3 million recorded the previous year.
In its accompanying commentary to the results release, it said it had noticed a slowdown in activity in the local housing market in the second half of the year, a trend it expected to continue this year. However, given a well-publicised lack of housing supply across the province, it didn’t expect demand for mortgages to ease significantly.
Nor had the bank experienced a “notable increase” in customer distress in regards to mortgage repayments in light of the inflationary pressures and rising interest rates, a situation it says has been helped by the relatively full labour market in Northern Ireland. The bank said it stress tested repayments when customers first took out loans to ensure affordability, although conceded the situation may worsen.
“Levels of distress may change, and we are well prepared to support customers when they need us,” Vicky Davies, CEO of Danske Bank UK, said.
Of the mortgages it wrote last year, 97% were on fixed rate deals, with 70% of those on a five year basis. Meanwhile, the growing importance of sustainability in customer’s minds was demonstrated by the fact half of all the banks new mortgage business last year was through its carbon neutral product, one where the carbon footprint of each mortgage is offset through wind energy projects in India.
Similarly, Danske announced it has launched a £35 million agri sustainability fund aimed at agri-businesses which are introducing more sustainable technologies.
For the business world as a whole, the bank said last year had been a challenge in light of rising energy costs, borrowing costs, staff retention issues, Brexit, supply chain challenges and changes in demand. It approved £850 million of business lending in 2022.
For the year ahead, Vicky Davies expected a difficult economic environment.
“With overall annual economic output in Northern Ireland expected to fall this year, our primary focus will remain on being there to support customers, the community and the wider economy.”
