Danske Earnings: Good Start to the Year Driven by Higher Rates

Narrow-moat Danske reported a good start to 2023 as the bank saw higher interest rates lift net interest income despite loans contracting slightly (down 2%). Deposit margins continued to widen across all segments, driving the bulk of 8% increase in net interest income. Although this dynamic is expected to slow as customers start shifting deposits into savings products, Danske still expects DKK 700 million per 25-basis-point rate changes for future interest-rate increases. Positive as well, lending margins have remained fairly stable, supporting the net interest income uplift. We maintain our DKK 170 per share fair value estimate.