Jyske Bank lowers outlook, rival Sydbank hikes interest rates (updated)

Spar Nord Bank A/S

30/10/2019 10:57

(Adds analyst, detail on Sydbank results)
    COPENHAGEN, Oct 30 (Reuters) - Shares in Jyske Bank
 JYSK.CO  shed more than 5% after the Danish lender cut its
full-year profit outlook, while rival Sydbank  SYDb.CO  said it
would charge more on deposits, as negative interest rates
dampened quarterly results on Wednesday. 
    European banks have struggled with earnings under negative
rates imposed by central banks, and Danish banks have been among
the first to transfer costs on to private clients.
    Jyske, Denmark's third largest bank, saw profits drop by 27%
in the first nine months of 2019. It said it now expects profit
after tax of approximately 2 billion Danish crowns ($298
million), lowering a previous estimate of 2-3.3 billion.
    "The negative rate level is hitting us with full force,"
Jyske CEO Anders Dam told Reuters, adding next year looked "very
unpleasant".  
    Dam said one-off gains from divestments and value
adjustments had shielded the bank from negative rates up until
now. 
    Sydbank, which also published third-quarter results on
Wednesday, said it would now charge minus 0.75% interest on
amounts exceeding $111,000, down from an earlier threshold of
$1.12 million.
    It will also initiate a cost-cutting programme, including
staff reductions, so costs in 2020 would equal slightly rising
costs this year.   
    "We believe it is time to lower our deposit rates in the
corporate and retail segments so as to adapt our business model
to market conditions," Sydbank CEO Karen Froesig said. 
    The bank said the interest rate changes and other measures
would net the bank an additional 200 million crowns annually. 
    Danish lenders Jyske, Sydbank, Spar Nord  SPNO.CO  and
Ringkjoebing Landbobank  RILBA.CO  have imposed negative rates
on both private and corporate deposits.  urn:newsml:reuters.com:*:nL5N26O2A7
    Jyske, the first Danish lender to announce negative rates on
client deposits, said 11,000 clients would be affected by
negative interest rates as of Dec 1, amounting to about 10
billion crowns. 
    It expected deposits to decline by 3-4 billion crowns as a
result.
    Anders Dam said he could not rule out imposing further
negative rates on the remaining 50 billion crowns worth of
private deposits currently standing at zero interest. 
    "I hope not, but I cannot promise, that it will not happen".
  
    The bank posted a pretax profit for the first nine months of
1.83 billion crowns, down 27% from a year earlier, and saw net
interest income fall 7% to 3.97 billion.
    "There is a lack of concrete initiatives to lower costs, not
just a little, but markedly, to counter the very real pressure
on earnings," Nordnet analyst Per Hansen said in a note on
Jyske. 
    The bank said it would propose no ordinary dividend but
raise its existing share buyback programme by 500 million crowns
and extend it until March 31, 2020.  
    Shares in Jyske Bank were down 5.06% at 1031 GMT, while
Sydbank shares were down 1.99%. 
    ($1 = 6.7200 Danish crowns)

 (Reporting by Nikolaj Skydsgaard; editing by Jason Neely)
 ((Nikolaj.Skydsgaard@thomsonreuters.com;))