WEBULL

Danske Bank (CPSE:DANSKE) Stock Highlights 43% Cost To Income Ratio In Q2 2026

Simply Wall St · 2d ago

Danske Bank (CPSE:DANSKE) opened Q2 2026 with income momentum, reporting revenue of DKK14.9b and basic EPS of DKK7.6. Over recent quarters the bank has seen revenue move from DKK13.7b in Q2 2025 to DKK15.2b in Q4 2025, while quarterly EPS has ranged between roughly DKK6.6 and DKK7.7, giving investors a consistent read on earnings power even as market expectations shift. With a cost to income ratio that sits in the low 40s and solid profitability metrics, the latest results put the focus firmly on the sustainability of Danske Bank’s margins from here.

See our full analysis for Danske Bank.

With the headline numbers on the table, the next step is to see how Danske Bank’s latest margins and growth profile line up against the most common narratives investors follow around this stock.

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CPSE:DANSKE Revenue & Expenses Breakdown as at Jul 2026
CPSE:DANSKE Revenue & Expenses Breakdown as at Jul 2026

Cost discipline shows up in 43% cost to income ratio

  • Danske Bank reported a Q2 2026 cost to income ratio of 43%, compared with 46.1% in Q3 2025 and 45.6% in Q2 2025, which points to tighter cost control alongside revenue around DKK14.9b.
  • What bullish investors focus on is that this lower cost to income ratio sits alongside DKK6.2b in Q2 2026 net income and trailing net profit margin of 40.5%, which they argue supports the view that investments in digitalisation and automation are helping earnings quality even as consensus expects only about 2% annual earnings growth.
    • Supporters of the bullish view also point to five year compound earnings growth of 29.7% a year and basic EPS on a trailing basis of about DKK29.0 as evidence that Danske Bank has been able to translate revenue of roughly DKK57.8b over the last twelve months into solid bottom line results.
    • At the same time, recent year on year earnings fell and net margin slipped from 41.7% to 40.5%, which shows that cost progress has not fully offset the pressures that consensus expects to keep revenue growth around 2.5% a year.
Over time, bulls argue that if Danske Bank keeps cost to income trending in the low 40s while margins hold near 40%, the earnings picture could look closer to the more optimistic forecasts than to current modest growth assumptions. They also note that this tension is a key reason many follow the detailed bull case for this stock 🐂 Danske Bank Bull Case.

Loan book growth with non performing loans near DKK29.6b

  • Total loans stood at DKK2,598.6b at Q2 2026, up from DKK2,483.0b in Q2 2025, while non performing loans were DKK29.6b versus DKK32.5b a year earlier, which means non performing loans sit at just over 1% of the total book on these figures.
  • Bears highlight that even with this loan profile, about 62% of liabilities come from higher risk external borrowing and the allowance for bad loans is described as low at 64%, which they argue leaves Danske Bank exposed if macro conditions in its Nordic markets weaken or if credit costs revert closer to long run norms.
    • On their view, recent negative annual earnings growth and the slight decline in net profit margin from 41.7% to 40.5% are early signs that profitability could come under pressure if non performing loans move higher from DKK29.6b or if funding costs rise on that external borrowing base.
    • They also point to an unstable dividend history and recent insider selling over the past three months as factors that, together with the low bad loan allowance, could limit how much comfort investors take from the current level of non performing loans relative to the total loan book.
Skeptical investors often use this mix of a growing loan book, relatively low non performing loan ratio, and funding structure to stress test their downside scenarios and to decide how much weight to place on the detailed bear case narrative for Danske Bank 🐻 Danske Bank Bear Case.

DCF fair value of DKK669.37 versus DKK367.6 share price

  • The current share price of DKK367.6 sits well below a DCF fair value estimate of DKK669.37 and a P/E of 12.9x that is beneath the peer average of 15.2x but slightly above the European Banks industry at 11.8x, which frames a large valuation gap beside trailing net income of about DKK23.7b and EPS of roughly DKK29.0.
  • Consensus narrative notes that while this discount could appeal to value focused investors, analysts expect only modest revenue growth of about 2.5% a year and earnings growth of around 2% a year, both below Danish market forecasts, so the key question is whether high recent earnings quality and strong five year growth can offset margin slippage and balance sheet risks enough to justify moving closer to the DCF fair value.
    • On one hand, the shares trade at a large gap to the DCF fair value of DKK669.37, and five year earnings growth of 29.7% a year suggests the business has been capable of compounding profits faster than current forecasts imply.
    • On the other hand, recent negative year over year earnings growth, funding that leans 62% on external borrowing, a low 64% allowance for bad loans and an unstable dividend record provide concrete reasons why the market may be cautious even with an analyst price target reference of DKK375.25 on the table.

Next Steps

To see how these results tie into long-term growth, risks, and valuation, check out the full range of community narratives for Danske Bank on Simply Wall St. Add the company to your watchlist or portfolio so you'll be alerted when the story evolves.

Given the mix of risks and rewards around Danske Bank, it makes sense to review the data directly and decide where you stand. To see both sides clearly, start with the 1 key reward and 4 important warning signs.

See What Else Is Out There Beyond Danske Bank

Danske Bank combines a low 43% cost to income ratio with recent earnings contraction, a lower net profit margin and a balance sheet that leans on external borrowing.

If you want alternatives where financial strength and funding risk sit closer to your comfort zone, start by checking companies in the solid balance sheet and fundamentals stocks screener (416 results) to compare against Danske Bank today.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.