Danske Bank: NI lender makes £16m pre-tax profit so far in 2021

Danske Bank is one of the so-called 'big four' banks in Northern Ireland

Danske Bank in Northern Ireland made a pre-tax profit of almost £16m on turnover of £47m in the first quarter of 2021.

The bank is one of four major lenders in Northern Ireland.

Its local chief executive has given an upbeat assessment of economic prospects as lockdown ends.

Kevin Kingston said the lender believed "the economic cycle is starting to turn".

"In quarter one investment support requests from medium to large business customers have steadily increased," he said.

The bank did not make any new loan loss provisions in the first quarter.

These provisions are money the bank must put aside to cover loans, which they assess are unlikely to be repaid in full.

'Improved economic outlook'

In 2020 the bank made provisions of just over £45m compared to just £0.8m in 2019.

It said that "given ongoing government economic support measures and an improved economic outlook, no increase in loan impairment provisions was required in the quarter".

Like other banks, Danske has experienced a surge in customer deposits over the last year as customers make forced or precautionary savings.

Deposits were up by 28% year-on-year from £7.6bn to £9.8bn though deposit growth rates are now slowing.

Mr Kingston said there was an expectation that businesses which have cash would start to invest.

"Many businesses have investment plans that have been sitting on a shelf through the Brexit and Covid-19 uncertainty of the past two years," he said.

"We understand from speaking to customers that many feel the time is now right to re-assess their investment ambitions."

Meanwhile there is evidence that the DIY and home improvement sector was one of the best performers during lockdown.

The Grafton Group, which trades as MacBlair in Northern Ireland, said it had a strong start to the year with sales of £847m in the first quarter.

That was up by 33% on the same quarter in 2020 when some of its stores could not trade due to lockdowns but it was also up 8% on the same period in 2019.

"We now expect that adjusted operating profit for the current financial year will be circa 15% to 20% ahead of consensus forecasts of £206m for 2021 as a result of the stronger than anticipated growth in revenue in March and April," the company said.