The good news is that Danske’s stated aim of reducing its headcount by 2,000 over the next two years is unlikely to require enforced redundancies.
The bad news, the bank’s quarterly and nine-month results showed today, is that, with a focus on cost-saving and reductions through attrition and retirement, even “in-fill” hiring is now likely to be muted, let alone the prospect of much in the way of additional recruitment.
As the bank explained: “The group expects that a substantial number of the reductions can be made without redundancies, provided that attrition and retirements at the group remain at the usual levels.”
What’s more, after a torrid six months in which Danske and five other Danish lenders saw their rating downgraded by Moodys, the bank also today announced the retirement of its chief executive Peter Straarup, although it stressed he would remain in post until a replacement had been appointed.
Pre-tax profit for the first three quarters of 2011 was DKK3.59bn against DKK5.00bn at the same point last year, while net profit came in at DKK1.52bn (down from DKK2.59bn), with the decline blamed on a combination of “low interest rates, low economic growth and turbulent capital markets”.
Danske Markets and Treasury saw profits before impairment charges slump to DKK 2.50bn, down from DKK4.14bn a year earlier.
There was little optimism looking forward either, with the bank predicting that European economies would be reporting lower growth for 2011 than 2010.
“The Danish economy is set to grow at a slower pace than the euro zone generally, whereas the other Nordic economies are likely to see higher growth rates,” it added.
The bank has also launched a three-year cost-savings programme that it is intended will reduce expenses by some DKK2bn between 2012 and 2014.
However, one brighter note was sounded by the Danske Capital asset management business, which reported an increase in profits before loan impairment charges to DKK586m from DKK497m, with the better performance driven by higher average assets under management and wider margins.
To this end, its 558 employees saw bonuses increase in the period, with expenses up 11%, though part of this was also attributed to the cost of moving its Danske Invest to a shared Danske Bank IT platform.