COPENHAGEN (AFP) - Denmark's biggest banking group, Danske Bank, reported Tuesday a return to profit in the second quarter compared with a year earlier, beating expectations, although difficult conditions remain.

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Second-quarter net profit was 937 million Danish kroner (125.7 million euros, 165.7 million dollars) compared with a loss of 828 million kroner in the same period last year, the company said in a statement.

Analysts had predicted a second-quarter net profit of 874 million kroner.

For the first half of 2010, net profit amounted to 1.7 billion kroner.

"Generally, things are moving in the right direction. Impairment charges have seen a downward trend for six quarters in a row and are down 50 percent compared with the level in the first half of 2009," said chairman Peter Straarup in the statement.

"At the same time, the group's banking activities show robust earnings. In view of the macroeconomic development, we look at the rest of 2010 with cautious optimism," he added.

Second-quarter income totalled 1.74 billion kroner compared with 37 million kroner a year earlier. Loan impairment charges were reduced by 46.8 percent to 3.47 billion kroner.

For the first-half, income totalled 24.1 billion kroner against 32.3 billion kroner in the same period last year, a decline that "should be seen in light of the extraordinary high net trading income in the first half of 2009," the company said in its statement.

Danske Bank, the second-biggest Nordic group, has branches in Finland, Norway, Sweden, Ireland, Britain, Russia, Germany, Poland, Luxembourg and the Baltic countries.