Primed to Support Return to Growth

There is increasing hope that 2022 will be a year of recovery and progress for Northern Ireland’s business community. Ambition asked Shaun McAnee, Danske Bank’s managing director for corporate and business banking, for his outlook.

Shaun McAnee is firmly of the view that 2022 is not going to be a year for hunkering down or battening down any hatches. The man who heads up corporate and business banking at Danske Bank is instead confident it will be a year of growth.

While he acknowledges there is still some nervousness throughout the business world after the disruption many firms have faced as a result of COVID-19, Brexit and other challenges, he says the bank is also seeing businesses looking again at opportunities.

“Danske Bank is forecasting growth in the Northern Ireland economy this year and we want to grow with it by providing support for ambitious businesses who have new ideas and who want to make new investments,” says Shaun.

“We are already starting to see businesses of all sizes decide that things are as ‘back to normal’ as they are ever going to be and getting on with making decisions that will drive profitability, increase employment and help them move forward.”

Danske Bank’s full year results for 2021 provided several indicators that businesses are ready to grow again. Profit before tax was up year on year at £61.3m and the bank cited the improving economic environment as a big factor in the reduction of provisions it makes for bad loans. Customer deposits also rose to record levels during the year, to over £10.5bn – a £3bn increase from levels seen at the start of 2020.

RECOVERY

“Support provided by the bank and various government Covid support schemes has limited the amount of distressed debt in the market, so many businesses have entered 2022 with cash on their balance sheets and more confidence about making big investments they have been holding off from making for the past two years,” says Shaun.

“As might be expected, we’ve seen areas like asset finance come back quicker – it’s an easier decision if you need a new truck or piece of machinery than it is to build a whole new factory,” he says, noting there has been strong interest from customers also keen to take advantage of the “super deduction” tax incentive.

“But larger investments are in the pipeline. As businesses become more confident, we’re seeing the benefit of having expert teams based in Belfast who can help them move quickly on opportunities. For example, our Northern Ireland-based trade finance team, which has unrivalled expertise, has supported exporters to enter new geographies, and our Belfast-based markets team has helped manage their currency risks.”

Danske has long been the leading bank for business in terms of market share which Shaun puts down to its focus on maintaining high customer satisfaction. It achieves this through a combination of strong relationships, sound advice and market-leading systems – something they strive to keep improving.

“We’ve really invested in the capabilities of our relationship managers so customers – large and small – have access to named advisors with a real depth of knowledge. We’re also continuing to work hard to simplify our pricing and our products, so our offering is really clear to customers,” he says.

The bank has also invested significantly in its systems and digital functionality, deepening the integration capability of District, its core platform for business customers to increase self-service functionality so customers have more choice and flexibility to do their banking whenever suits them.

SUSTAINABILITY

Danske Bank has long championed sustainability and Shaun McAnee says his interactions with customers show it is now a priority across our economy.

“Despite all the challenges for business there is an ever-growing appetite to tackle and improve sustainability. For every plc the penny has dropped, and SMEs are following suit,” he says.

“We have injected sustainability into our culture and our DNA. We wanted to be sure we are leading the way in this area, which is why we appointed a head of sustainability. Although we have more to do, we’re really energised about taking our customers on the journey with us and helping them as they transition to becoming more sustainable.”

A recent BDO survey showed that 60% of local businesses felt they were not adapting quickly enough to the challenges presented by climate change. The bank is in the process of putting all of its relationship managers through independently accredited carbon literacy training to give them the knowledge to pass advice onto customers. Having piloted a Climate Action Programme with Business in the Community last year, Danske will take 10 times more customers through the training in 2022.

“We see it as our role to demystify sustainability and help businesses understand their climate impacts and what they can do about them,” says Shaun.

“We’re educating our own people first but then it is about driving the conversation with customers. From a lending perspective, we want to increase the level of finance we provide to companies with good ESG credentials and have introduced green loans. Customers will be actively asked in our satisfaction surveys if we have helped them with their sustainability efforts.”

Danske also believes this year will bring new opportunities in fast-growing sectors such as renewable energy and that sustainability as a wider issue will further grow in importance in global and local supply chains across multiple industries.

CHALLENGES

Danske Bank’s business banking boss doesn’t take the challenges that remain for his customers lightly, but believes Northern Ireland’s businesses will continue to approach them with both resilience and innovation.

“The trading arrangements under the NI Protocol have provided some supply chain headaches for companies that need to be resolved in the long term, but while I don’t know many companies who like significant changes in regulations, they are making it work,” says Shaun. Conversely, we have also seen customers take advantage of the new arrangements as they benefit from Northern Ireland’s unique position post-Brexit.

“The jobs market shows no signs of cooling down, but it has been positive to see employers being creative with recruitment and adapting their offer to attract, keep and motivate staff,” he adds.

“I think all of us would like to see industries like hospitality and tourism that have suffered through the pandemic bounce back in 2022; thankfully our economic forecasts suggest there is still pent-up demand for goods and services in the economy.”

When Northern Ireland’s businesses do decide that the time is right to invest, Shaun’s message is clear. Danske Bank is very much open for business and will be there to support them.