COPENHAGEN (Reuters) - Denmark’s Jyske Bank (JYSK.CO) reported its first quarterly loss since 2014 after setting aside a precautionary 1.6 billion Danish crowns ($234 million) as a buffer against bad loans during the coronavirus crisis.
As a result, Denmark’s third-largest lender also on Tuesday downgraded its forecast for full-year net profit to 0 to 1.5 billion crowns, from a previous forecast of 1.8 billion to 2.2 billion crowns.
Banks across the globe have built up large loan provision buffers in the first months of 2020 to shield themselves against expected losses as the economic rout caused by the coronavirus pandemic will leave some clients unable to pay their debts.
Jyske reported a first-quarter loss of 780 million crowns, primarily due to a loan loss provision of 1 billion crowns. That put the bank’s total war chest of provisions against bad loans at 1.6 billion crowns.
“The bottom line looks worse than it is. It’s self-inflicted damage,” Jyske’s Chief Executive Anders Dam told Reuters in a phone interview.
“Now we have 1.6 billion crowns we can live off before we start getting hit on our core operations again,” Dam added.
Last week, the Nordic region’s biggest lenders Nordea NDASE.HE and Danske Bank (DANSKE.CO) set aside of 154 million euro and 4.3 billion Danish crowns for impairment charges, respectively.
Jyske, however, said it had seen close to no individual impairment charges in the first quarter and that it was less exposed to industries severely hit by the economic downturn, such as airlines, retail industries and hotels and restaurants.
Purged of one-offs and the effects of the coronavirus crisis, the lender said the first quarter result after tax was just shy of 200 million crowns, compared to a 610 crown profit in the same period last year.
“There is neither cause for worry or for getting your hands over your head,” Jensen said, adding that the new profit outlook was in line with market expectations.
Shares in Jyske were down 1.54% at 1012 GMT, after initially rising slightly. They have lost 30% since the start of this year on concerns about the economic impact of the coronavirus.
“They are dealing with the losses in the first quarter, just like every other bank. The underlying development in the first quarter is actually pretty good for Jyske,” Sydbank analyst Mikkel Jensen told Reuters.
($1 = 6.8485 Danish crowns)
Reporting by Nikolaj Skydsgaard; Editing by Susan Fenton