Reuters: Financial Services and Real Estate: UPDATE 1-Jyske Bank sees higher 2012 loan writedowns

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UPDATE 1-Jyske Bank sees higher 2012 loan writedowns May 7th 2012, 08:08 Mon May 7, 2012 4:14am EDT (Adds details, quotes, share price) * Sees 2012 loan writedowns of 1.6-2.0 bln Danish crowns * Bad loans rise as accounting rules tighten * Q1 pretax profit more than doubles to 502 mln crowns * Shares down 1.3 percent COPENHAGEN, May 7 (Reuters) - Denmark's Jyske Bank warned stricter accounting rules would push loan impairment charges higher this year as bad loans stained an otherwise strong first quarter. Jyske Bank, which reported a more than doubling of first-quarter pretax profit, said it expected loan impairment charges and provisions for guarantees in the full year 2012 to be in a range of 1.6 billion to 2.0 billion Danish crowns ($282 million to $353 million) - up from 1.48 billion last year. The expected increase in loan write-offs would result from stricter Danish rules on loan impairments which the bank will begin to implement in the second quarter, it said. First-quarter pretax profit at the second-biggest Danish bank by market capitalisation rose to 502 million crowns in January-March from 200 million in the 2011 period, helped by improvements in its core banking business and higher investment income. "Overall, it is a nice result," Alm. Brand Markets analyst Stig Nymann said. Results were held back by an increase in loan impairment charges and provisions for guarantees to 398 million crowns in the first quarter from 250 million a year earlier. "The level of impairment charges is still above the historical, long-term average," Jyske Bank said in its report. In the first quarter, the credit quality of customers for whom impairment charges had already been booked was still under pressure due to "very modest economic development" in Denmark, the bank said. It said that 86 percent of loan impairment charges and provisions were related to corporate loans and advances. BAD LOANS STING Denmark's financial sector, fragmented into over 100 banks, have been stung by bad loans, primarily through exposure to the property market, with some seeing higher writedowns from farm customers feeling the economic slowdown. Banks have also been affected by higher funding costs. Last week Denmark's third-biggest lender, Sydbank, warned loan losses would rise this year, as it writes down debt secured on property to comply with tighter regulations. The country's biggest banking group, Danske Bank , is due to report its first-quarter results on Thursday. Net interest income, reflecting the bank's core banking business, rose to 1.26 billion crowns in the first quarter from 1.15 billion a year earlier, and earnings from investments rose to 192 million crowns from 72 million, the bank said. "Jyske Bank's capital base is solid," Chief Executive Anders Dam said in the statement. "Therefore we have the necessary and desired liberty of action to expand the business volumes over the coming years." Dam told Reuters he was open to acquisitions. Shares in Jyske Bank fell 1.3 percent by 0753 GMT, but held up better than the Copenhagen blue-chip index which was down more than 2 percent. ($1 = 5.6712 Danish crowns) (Reporting by John Acher; Editing by Jon Loades-Carter) Link this Share this Digg this Email Reprints

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