The bank is due to issue its interim report for 2022 on 22 July. Deteriorating market conditions have prompted the bank to trim its net profit forecasts.

Copenhagen-based Danske Bank has revised down its expected net profit outlook for 2022 to a range of between DKK10 to DKK12 billion ($1.35 to $1.62 billion), having initially estimated DKK13 to DKK15 billion, because of deteriorating market conditions, it said.

As far as the second quarter of 2022 is concerned, Danske said it expects net profit to be around DKK1.7 billion. Core banking income will be around DKK9 billion, while total income will be around DKK8.7 billion, it said in a statement late on Sunday.

Net trading income and net income from insurance business will result in a combined loss of DKK500 million, which includes the proceeds related to the sale of Danica Norway. Costs will be around DKK6.4 billion, reflecting continued elevated remediation costs and costs related to the Estonia case. (This refers to lapses of anti-money laundering controls that led to the bank being fined and a number of C-suite executives leaving in recent years.)

Credit quality remains strong, Danske said, and impairment charges for the second quarter of 2022 will be around DKK200 million.

“We have seen good commercial progress in our core banking activities in the first half of the year driven by volume growth, solid customer activity and a continued solid credit quality. Our core income lines clearly benefitted from this development at the same time as we continued to see good traction for our underlying cost development,” Carsten Egeriis, group chief executive, said. “However, due to unfavourable financial market conditions, and in particular from an adverse impact from the rapidly rising interest rates, we revised our net profit guidance for the year based on significantly lower expectations for trading income and income from our insurance business.” 

The bank will issue its interim report for 2022 on 22 July.

In the previous decade, the normally placid world of Scandinavian banking was rocked by the scandal of illicit financial flows through the Baltic. In February 2018, Estonia’s financial watchdog said it would open an investigation into Danske after media reports claimed that it had been aware of money laundering allegations at its Estonian business as far back as 2013. The Danish FSA, the national regulator, imposed eight orders and eight reprimands on the lender, among other actions. The affair snowballed into a broader European money-laundering episode, raising calls for tougher AML controls across the European Union.