Denmark's largest financial institution Danske Bank lowered full-year earnings expectations and said it planned further job cuts after posting a lower-than-expected pre-tax profit in the third quarter of 2013.

Pre-tax profit from core activities fell to DKK2.6 billion ($480.05 million) compared with DKK3.43 billion in the third quarter last year and below the bank's 3.30 billion forecast.

“We are fully committed to our longer-term target of a return on equity after tax above 12 per cent. We are lowering our target for 2015 from above 12 per cent to 9 per cent, however, on the basis of an assumed prolonged period of subdued market conditions and low interest rate levels,” said chief executive Thomas Borgen in a statement.

The bank’s total income fell to DKK29 billion, down 15 per cent, mainly because of lower trading income caused by difficult market conditions and lower insurance business income, the firm said. Consequently, Danske lowered its full-year outlook for net profit to between DKK6 billion and DKK8 billion from the earlier guidance of DKK6.5 billion - DKK9 billion.

Further job cuts ahead

As a result of the third quarter performance, the bank is forced to cut costs, explained Borgen.

“We continue to operate in a challenging environment. We can see we are trailing in too many areas. As a consequence of a slow top line growth we need to make sure that we are cost effective,” Borgen added.

Last year, Danske announced that it would cut 1,000 jobs in addition to 2,000 cuts that had already been announced to take place between 2013 - 2015. Now, the bank has made it clear that its 20,039 strong staff will be slimming down even more.

Borgen, who took the job last month after former CEO Eivind Kolding’s very public dismissal, said the cost efficiency drive would amount to DKK1 billion ($185 million), but could not yet clarify how many jobs will be affected.

Halting Irish businesses

As part of the move, Danske is shutting down most of its businesses in the Republic of Ireland. By focusing on corporates and institutions, the firm will stop taking on new retail banking business and halt its existing personal banking and business banking services with immediate effect.

“Existing Personal Banking and Business Banking customers will be transferred to the Non-core unit for servicing and winding down,” the bank said in a statement, adding that its activities in Northern Ireland will continue to remain part of its core business.

Last year, Danske announced a strategy shift from retail to private banking after poor financial results were threatening the bank's sustainability. To read more about that tumultuous move and its implications for the bank, click here.