Danish banks boost profit forecasts on mortgage boom, low rates

Vestjysk Bank A/S

08/10/2019 14:33

COPENHAGEN, Oct 8 (Reuters) - Danish lenders Vestjyske Bank
 VJBA.CO  and Spar Nord  SPNO.CO  raised their profit guidance
on Tuesday, saying they expect a boost from high activity in the
country's mortgage business which has been fuelled by negative
interest rates.
    Two other smaller Danish banks, Skjern Bank  SKJE.CO  and
Kreditbanken  KRE.CO , made similar announcements on Monday.    
    Banks across Europe have seen their earnings hit by negative
rates set by central banks, but in Denmark, lower borrowing
costs have cushioned the blow for some banks and spurred a
record number of Danes to try to improve their mortgage loans.
    "Vestjysk Bank has ascertained an exceptionally high level
of activity, primarily in relation to re-mortgaging activities
in mortgage lending," Vestjysk said in a statement on Tuesday. 
    The bank, Denmark's eighth largest, upgraded its guidance
for full-year profit after tax to an interval of 420-460 
million Danish crowns ($113.27 million) from an earlier 360-410
million Danish crowns and said it expected lower impairment
losses.
    At the end of July, Danish homeowners took advantage of
ultra-low interests rates to pay down mortgages worth 137
billion Danish crowns, the biggest refinancing wave yet.
 urn:newsml:reuters.com:*:nL8N24R30X
    Lender Spar Nord hiked its full-year guidance on Tuesday,
crediting its mortgage business and "positive value adjustments
on bonds due to the persistent decline in interest rates."
 urn:newsml:reuters.com:*:nFWN26S0SX 
    Last week, Spar Nord became the third bank in Denmark this
year to start charging wealthy clients on large deposits in a
bid to transfer some of the costs of negative rates to private
clients. 
    The two banks followed similar hikes to profit outlooks on
Monday by rivals Skjern Bank and Kreditbanken, as well as last
week by the country's fourth biggest bank, Ringkjoebing
Landbobank.    
    ($1 = 6.7981 Danish crowns)

 (Reporting by Nikolaj Skydsgaard; Editing by Jacob
Gronholt-Pedersen and Bernadette Baum)
 ((Nikolaj.Skydsgaard@thomsonreuters.com;))