Frontpage News 2014 2013: Weak return ...

2013: Weak return on equity in the banks

25 February 2014

The earnings in the country's banks last year were still low compared to equity.

​The Danish Bankers Association has made a preliminary statement, which covers 90 percent of the banking market in terms of assets. For the included banks, the return on equity in 2013 sneaked up to 6.0 percent.
 
"It is positive that the earnings in the banks are increasing. Not least due to a general improvement in the economy, which has reduced write-downs," said Deputy Chief Executive Officer at the Danish Bankers Association Louise Mogensen.
 
"That said, profitability is still low compared to other sectors and previous years. The market demand is often significantly higher, and the banks have not yet succeeded with the earnings. Therefore, there will be a continued focus on reducing the banks' costs," Louise Mogensen says.
 
The final accounts for the entire sector will not be available until this summer. This estimate, however, is a good indicator for the sector because of the high market share included in the statement.
 
Figure 1. Trends in bank earnings and equity, 2007-2013

Source: Financial statements and the Danish Bankers Association’s calculations.
Note: Data is collected for seven of the largest banks in Denmark, including Danske Bank, Nordea Bank Denmark, Jyske Bank, Sydbank, Nykredit, FIH Erhvervsbank and Spar Nord Bank. They cover a total market share of 90.4 percent in terms of assets.
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