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Danske Bank profits plunge on writedowns

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Danske Bank profits plunge on writedowns
Danske Bank CEO Thomas Borgen presented the 2014 results on Tuesday. Photo: Nils Meilvang/Scanpix
16:24 CET+01:00
Despite a ten percent revenue growth, "expected weaker long-term macroeconomic developments" made 2014 a tough year for Danske Bank.
Denmark's largest bank, Danske Bank, on Tuesday reported a 46 percent drop in annual profits as it wrote down the value of some operations due to macroeconomic factors.
 
"The macroeconomic environment did not offer much support as the year saw a continuation of low interest rate levels and slow growth," chief executive Thomas Borgen and chairman Ole Andersen said in a joint statement.
 
"Despite this, we managed to increase the topline [gross sales] across our business as a result of a firm focus on delivering value to customers," they added.
 
Net profit was in line with analysts' expectations, falling 46 percent to 3.58 billion kroner (481 million euros, $545 million) as revenue grew ten percent to 43.87 billion kroner.
 
The company in December announced that it would write down the goodwill valuation of its operations in Finland, Northern Ireland and Estonia.
 
Excluding an estimated 9.1 billion kroner for goodwill impairment blamed on "expected weaker long-term macroeconomic developments", profits rose 82 percent to 12.9 billion kroner.
 
The goodwill valuation represents the difference between a company's assets and what a potential buyer would be willing to pay for it.
 
In 2015, the group expects net profit to exceed 14 billion kroner.
 
Net interest income rose five percent "despite persistently low interest rates", while loan impairment charges fell 32 percent, the bank said.
 
Danske Bank has been cutting costs since Denmark became the worst-hit Scandinavian country in the 2008 financial crisis, and the group has struggled to keep pace with rival Nordic banking group Nordea.
 
The Copenhagen-based bank said it had decided to scrap its personal banking operations in the Baltics since the business did not have "sufficient scale to generate an acceptable return".
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