Consumers and businesses in the North were happier to save it than spend it last year – at least that appears to be the picture according to Danske Bank’s latest Northern Ireland figures.

The Copenhagen headquartered bank’s 2015 results last week show that deposits at its Northern Ireland operations grew to £5.66 billion – up from £5.41 billion the previous year – while lending volumes also increased, all be it at a slower rate to £4.3 billion.

Danske’s Northern operations made a pre-tax profit of £140 million – quite a turnaround from the £92 million losses it suffered in 2012, the same year it changed its name from Northern Bank.

So have the Danes inspired their customers to save more or does the bank’s performance provide a valuable insight into what local consumers and business owners think about economic prospects.

Danske Bank UK’s chief executive Kevin Kingston believes the latest set of results contain more than one important message about the health of the economy.

Kingston says Dankse enjoyed a record year on lending in 2015, winning a “significant number of new SME businesses”. Lending also increased to larger corporate customers, who displayed improved levels of confidence, with particularly strong demand in the first half of the year.

Mortgage business

On the personal banking front, according to Kingston, there was also “good continued growth” with Danske’s primary focus on its mortgage business – which he said was driven by home movers.

Danske’s overall loan to deposit ratio of 76 per cent at December 2015 shows there is no lack of enthusiasm or ability on Danske’s side to lend but, as Kingston acknowledges, the fact that deposits grew faster than lending volumes suggests there was a “level of caution” that he believes is still in evidence.

So why did businesses and, to a certain extent, consumers with healthy bank balances not feel sufficiently confident to invest or spend last year?

“There were concerns first about the global economy and then there were the ongoing discussions at Stormont and major job losses in some key manufacturing companies.All of this together understandably impacted on local business confidence,” says Kingston.

He said there is no doubt the local economy is continuing to improve. Even the headache of the North’s disastrous property crash is beginning to lessen, as Danske latest results illustrate, with a net recovery in relation to impaired loans of nearly £55 million for 2015.

But Kingston says there remain major challenges ahead. Three key issues which worry him most.

“Number one is the global picture from the economic slowdown to commodity prices – and for our larger, export- orientated businesses that is a key concern. Then there is, of course, Brexit and what that would mean for Northern Ireland and thirdly we have local elections this year and the outcome of austerity measures.

“Confidence is a key factor when it comes to investment and, of course, when it comes to spending. There are very successful businesses in Northern Ireland who have an accumulation of cash on their balance sheets ... but what it all comes down to is at what point do businesses feel confident enough to commit to investment plans,” Kingston says.

Confident

In the meantime, Danske Bank appears to be more than confident when it comes to the future of its Northern Ireland operations. Since January 1st, its business in the North has “operated and reported as a separate unit”.

Danske describes this as an “organisational simplification” but Kingston is much more enthusiastic about what it means for Dankse’s operations in the North.

“We’ve been pushing for this for a number of years because we believe our customers have a different set of needs: what works in one market, for example Finland, might not be what is needed in Northern Ireland.

“What we can do now in Northern Ireland is focus on the needs of our customers, we still have the best the group has to offer at our disposal but we have the flexibility to deliver on what is best for our customers,” he says.