S&P stabilizes Danske Bank outlook

S&P said it revised its outlook for Danske Bank A/S to stable from negative and affirmed the A+ issuer rating as well as the ratings on the bank’s senior and hybrid instruments.

On Wednesday, Danske reported it will settle the Estonia money-laundering case will be settled by a one-time $2.06 billion payment. The payment was accounted for in Danske’s third-quarter financials.

“Our rating action reflects our expectation that Danske Bank's capitalization will remain a rating strength, providing it with a comfortable buffer following the bank's announcement of settling its major money-laundering case. This is indicated by our updated projection that Danske Bank's risk-adjusted capital (RAC) ratio will remain at 12%-13% through 2024, down from 13.4% at year-end 2021,” S&P said in a press release.

The agency said it expects Danske’s revenue to improve gradually, driven by widening net interest margins offsetting weaker business growth, and partly compensating weaker fee and market-sensitive income in volatile markets for 2023-2024.

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