Danske cuts profit forecast for 2019

Bloomberg

Danske Bank A/S, contending with negative interest rates and a money-laundering scandal, cut its outlook for profit this year after trading income fell short of expectations and compliance costs mount.
The Danish lender now expects profit of $1.9 billion to 15 billion kroner, down from a previous range of 14 billion to 16 billion kroner.
The company said second-quarter net income will probably be about 4 billion kroner, missing the 4.36 billion kroner projected by analysts.
Danske Bank may reveal next week a broad outline of how it will address its weak performance when it reports second-quarter earnings. Shares, which have fallen to levels not seen since 2013, dropped as much as 3.8 percent in Copenhagen.
“There’s still a risk that Danske can’t meet its forecast” despite the downgrade, Simon Hagbart Madsen, an analyst at Jyske Bank A/S, said.
The profit downgrade is the second major step taken in just weeks by Chris Vogelzang, Danske’s new chief executive officer, as he tries to right the bank after a $230 billion money laundering scandal was revealed last year.
The bank is under investigation in multiple jurisdictions, including the US. It faces potentially billions of dollars in fines, and has fired multiple executives, including former CEO Thomas Borgen.
Vogelzang took over last month and has already fired the head of Danish banking (who also had served as interim CEO) after employees and customers pointed out the bank was overcharging on some investment products.
Analysts got a hint of the bad news last month when Danske arranged pre-earnings calls, a routine practice intended to ensure market expectations don’t veer too much for reality. Shares fell then as much as 4 percent, and were followed earlier this month by lowered expectations.
“We now expect the generally weak momentum in income to continue,” Chief Financial Officer Christian Baltzer said in the statement.