By Teis Jensen
COPENHAGEN (Reuters) - Seven weeks into the job, the head of Denmark's biggest financial institution Danske Bank (DANSKE.CO) has decided to largely pull out of Ireland, abandon profit targets and cut more jobs.
Chief Executive Thomas Borgen lowered full-year net profit guidance to between 6 billion ($1 billion) and 8 billion crowns from 6.5-9 billion, and said he would make a billion crowns of cost savings. Danske shares rose 2 percent on the news.
Last year, the bank said it would cut 1,000 jobs on top of the 2,000 it had already flagged to be cut by 2015. The cuts announced on Thursday are on top of those. It has 20,000 staff.
"We can see we are trailing in too many areas," Borgen said.
"As a consequence of a slow top line growth we need to make sure that we are cost effective," Borgen said.
Danske has lagged many of its Nordic peers and is also fighting to repair a bruised image following a failed advertising campaign last year which backfired and led to the sacking of chief executive Eivind Kolding.
This year alone, it has lost 94,000 customers in Denmark.
Its Irish business - based around the $1.9 billion 2004 acquisition of National Irish Bank - suffered huge losses when Ireland's property bubble burst in 2008, and the bank said on Thursday it will only continue with its corporate banking business there.
Last week, Dutch lender Rabobank - also in the throes of a radical restructuring - said it planned to hand back its Irish banking license next year to focus on debt recovery.
Danske will stop selling personal and business banking products in Ireland, which account for approximately half of its Irish business in revenue terms with 150 of 350 staff at risk of redundancy.
Borgen said he could not give a figure for how many jobs would go overall.
Pretax profit from core activities fell to 2.6 billion crowns from 3.43 billion in the third quarter last year, missing an average forecast for 3.30 billion in a Reuters poll, and hit by a 80 percent drop in trading income.
Loan impairments were roughly steady.
Borgen said he expected a dividend could be paid this year.
"We expect that the board would look positively at delivering a small dividend this year," he said.
Danske shares were up 1.4 percent by 1145 GMT, outperforming a 0.4 percent fall in the Copenhagen stock exchange's benchmark index <.OMXC20CAP>.
"Their core banking activities are developing better than expected, and that is the important thing," Sydbank analyst Bjorn Schwarz said. Cost cutting was also a positive, he said.
The bank's loan impairments from the core activities fell to 1 billion crowns from 1.66 billion in the year-ago quarter and below the average expectation of 1.13 billion in the poll.
Borgen said that as a consequence of recent improvement in the Danish economy, impairments will most likely remain at existing low levels next year.
Danske Bank lowered its 2015 target for return on equity - a measure of profitability - to 9 percent from 12 percent, because the underlying assumption of a 2 percent central bank lending rate was unlikely.
Its return on equity fell to 4.3 percent in the third quarter from 6.2 percent in the same quarter last year. Nordic peer Nordea (NDA-SEK.ST) had a return on equity of 10.8 percent in the third quarter.
($1 = 5.4161 Danish crowns)
(Additional reporting by Conor Humphries in Dublin; Editing by Louise Ireland)