Danske Bank, the biggest banking group in Denmark, published strong financial results and restarted buying back its shares. The shares jumped to DKK 190 on Friday, continuing a remarkable rally that started in 2020 when they crashed to DKK 63.20. Danske has emerged as one of the best-performing European banks during the pandemic era.

Danske Bank is benefiting from the ongoing high-interest rates environment. In a statement, the company said that its net interest income (NII) surged from DKK 25 billion in 2022 to DKK 35 billion last year. 

In addition, the net trading income rose to DKK 3.7 billion. This increase was offset by a drop in the net fee income, which dropped to DKK 11.7 billion. Other income also dropped to 562 million. As a result, the total revenues came in at over DKK 52 billion. 

Danske benefited from high-interest rates as the European Central Bank (ECB) has pushed them to a record high. At the same time, delinquencies were not as high as expected. As a result, the company moved from a big loss in 2022 to a net profit of over DKK 21 billion.

Therefore, with the company swimming in cash, the management decided to start buying back its stock for the first time since 2018. At the time, the company was forced to pause shareholder returns after a big fine for money laundering. It paid $2 billion to end the probe, leading to a big loss in 2022.

In addition to buybacks, the company boosted its forward revenue and profitability guidance. It expects to pay over 50 billion krona in dividends by 2026. The CEO said:

“At the end of December 2023, our CET1 capital ratio stood at 18.8%, leaving a buffer of around 450 bps to the regulatory requirement.”

Danske Bank’s performance is a contrast to what is happening in the UK, where companies like Barclays and Lloyds are not seeing strong returns. Lloyds remains sharply lower than where they were during the Global Financial Crisis (GFC).

Danske Bank chart by TradingView

The weekly chart shows that the Danske Bank stock price has been in a strong bullish trend in the past few months. It has risen from 63.20p in March 2020 to over 180p. The stock has remained above the 50-week and 100-week Exponential Moving Averages (EMA). This is a sign that bulls are in control. 

At the same time, the Relative Strength Index (RSI) and the Stochastic Oscillator have remained above the overbought level. Therefore, the outlook for the stock is still bullish, with the next important point to watch being at DKK 200. The stop-loss of this trade is at DKK 180.

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