COPENHAGEN: Danske Bank A/S unveiled a spate of dividend payouts as Denmark’s largest lender seeks to win back investors following a costly money laundering scandal.
The bank will pay an interim dividend this month for the first half of the year, and intends to distribute 5.5 billion Danish kroner or about US$800mil in the fourth quarter from the exit of the Norwegian retail banking business.
The remaining net income for 2024 will then be returned to investors next year, it said in a statement released alongside second-quarter earnings last Friday.
Danske shares rose the most in almost 21 months.
“There have been some years when it has been difficult to be an investor in Danske Bank,” chief executive officer Carsten Egeriis said in a phone interview. “It has obviously been a challenge to come out of the phase of cleaning up the past cases and then regaining the trust, both internally and toward the customers.”
The new plan is “showing management’s commitment to return excess capital. The total dividend payout is likely to be above 85% this year.
The bank may return around nine billion kroner from 2024 profit in the form of buybacks in 2025, as it intends to return all”, Bloomberg Intelligence said.
Profitability at the bank has soared after it closed the door on a money laundering scandal that cost it more than 16 billion kroner in settlements with US authorities and clients.
Earlier this year it started its first share buyback programme in six years.
Danske has pledged more than 50 billion kroner in dividends by 2026. In June, the lender raised its full-year profit forecast on the back of improved expectations for loan losses.
Net income in the second quarter came in 17% higher than a year ago, at 5.84 billion kroner, more than the 5.63 billion kroner expected by analysts.
Net interest income - or the difference between what it earns from lending and pays for funding – rose 7.4% from a year ago.
Last Friday’s announcements will allow the company to turn a page and “show that we mean it when we say we’re focused on our investors, and that we’re focused on payouts”, the chief executive officer said. “We do have something to prove.”
Shares of the lender rose as much as 8.5%, the most since October 2022, and traded 8.1% higher in Copenhagen last Friday afternoon. That brings gains this year to 19%.
Danske plans to return to annual dividend payments for 2025 and beyond, it said. — Bloomberg
