Copenhagen — Danske Bank, contending with negative interest rates and a money-laundering scandal, cut its outlook for profit this year after trading income fell short of expectations and compliance costs mount.

The Danish lender now expects profit of 13-billion kroner ($1.9bn) to 15-billion, down from a previous range of 14-billion kroner to 16-billion. The company said second-quarter net income will probably be about 4-billion kroner, missing the 4.36-billion projected by analysts.

Danske may reveal a broad outline of how it will address its weak performance next week when it reports second-quarter earnings. Shares, which have fallen to levels not seen since 2013, dropped as much as 3.8% in Copenhagen on Tuesday.

“There’s still a risk that Danske can’t meet its forecast” despite the downgrade, Simon Hagbart Madsen, an analyst at Jyske Bank, said in a note to clients.

The profit downgrade is the second major step taken in just weeks by Chris Vogelzang, Danske’s new CEO, as he tries to right the bank after a $230bn money-laundering scandal was revealed last year. The bank is under investigation in multiple jurisdictions, including the US. It faces potentially billions of dollars in fines, and has fired multiple executives, including former CEO Thomas Borgen.

Vogelzang took over in June and has already fired the head of Danish banking (who also had served as interim CEO) after employees and customers pointed out the bank was overcharging on some investment products.

Analysts got a hint of the bad news last month when Danske arranged pre-earnings calls, a routine practice intended to ensure market expectations don’t veer too much for reality. Shares fell then as much as 4%, and were followed earlier this month by lowered expectations.

“We now expect the generally weak momentum in income to continue,” CFO Christian Baltzer said in the statement late on Monday. “This development is driven mainly by margin pressure and conditions in the financial markets, as evidenced by the weak trading income in the second quarter.”

The biggest bank in Denmark has been coping with negative benchmark rates since July 2012, longer than any other major lender, and since 2018 has been struggling to rebuild its image after admitting its Estonian unit was at the centre of a dirty-money scandal. In June, it was hit by another embarrassment after overcharging retail clients for investment products.

“Given the weak financial development, we will revert later this year with an update on initiatives to improve longer-term performance,” Baltzer said.

Danske also said it will report second-quarter total income of about 11.5-billion kroner when it releases earnings on July 18. The bank said the figures are preliminary.

In its statement, Danske Bank also changed its outlook for 2019 costs to 25.5-billion kroner to 26 billion, citing “higher costs for compliance and anti-money laundering activities.” It had previously forecast costs in line with last year’s level of 25-billion kroner.

Last month, Danske said it will repay customers who were overcharged for investment products, setting aside 400-million kroner for the compensation.

With Michael J Moore