Danske Reports OK Second Quarter; We Maintain Our Fair Value Estimate

We maintain our DKK 170 fair value estimate for Danske after an OK set of results. Profit before tax declined 7% to DKK 3.8 billion on lower income and higher expenses in the second quarter compared with the first. Income was down 3% primarily on lower net fee and net trading income, which declined 6% and 19%, respectively. Fee income remains elevated, however, despite the decline quarter over quarter, supported by high capital markets activity. Trading income tends to be volatile, and the first quarter was also positively affected by a DKK 227 million gain on the sale of Danske’s Visa stake. Taking this into account, we view performance as better than a first glance would suggest.