Danske Bank Earnings: Loan Loss Reversal and Distributions Shine; Shares Fairly Valued

For 2024, narrow-moat Danske Bank reported profits before tax of DKK 31.2 billion, versus our own DKK 28.5 billion estimate. The bank outperformed our expectations on both income and expenses slightly, but the largest delta came in the form of DKK 0.5 billion in loan loss reversals. Underlying credit losses remain low, which is good, but the strong performance was primarily driven by post-model adjustments. We don’t expect such post-model adjustments to benefit loan losses structurally. Danske also announced further shareholder distributions consisting of a second-half-year dividend of DKK 9.35 per share, a special dividend of DKK 5.35 per share, and a new share repurchase program worth DKK 5 billion. We maintain our DKK 233 per share fair value estimate and reiterate our narrow economic moat rating. Shares are fairly valued.