Danske Bank A/S Chief Executive Officer Thomas Borgen signaled he’s ready to cut more jobs unless investors return to the fixed income and currency markets.

“We have during the second quarter adjusted our cost base,” Borgen said in a phone interview today. “When, or if, the market returns, we are very well positioned. But if we don’t think it will return, we will of course do further measurements to that respect.”

Danske’s revenue from market making plunged 77 percent in the second quarter from a year earlier, dragging down net trading income. The Copenhagen-based bank is “unlikely” to reach its full-year trading income target of 8 billion kroner ($1.4 billion), Borgen said today during a conference call.

A lack of volatility, as well as uncertainty on the direction interest rates might take, is keeping many investors on the “sidelines,” Borgen said by phone. Since 2007, Danske has cut its headcount by more than 4,700 people to 18,914 at the end of June, according to its quarterly reports.

Danske’s trading income, including 1 billion kroner from its sale of a stake in payment system Nets Holding A/S, rose 2.2 percent to 2.2 billion kroner last quarter. A year earlier, Scandinavia’s second-biggest bank by assets booked trading income of 2.1 billion kroner.

‘Big Miss’

“It was a big miss on trading income, again,” Christian Hede, a senior analyst at Nordea Bank AB, said by phone. Excluding the Nets sale proceeds, “they are 1 billion short this quarter, which should have been one of the better ones.”

Other European banks are also adjusting their business to an investor shift away from fixed income, currencies and commodities. Credit Suisse Group AG this week became the latest global bank to exit commodities trading, citing low client volumes. The decision by the Zurich-based lender, which also faces a $2.6 billion fine to settle a U.S. tax investigation, followed similar moves by Deutsche Bank AG, Barclays Plc and JPMorgan Chase & Co.

Danske’s corporate and institutions division generates the bank’s biggest trading revenue. Still, the unit is down 26 employees to 1,532 in the second quarter from a year earlier, according to the bank’s accounts.

Income from market making at Danske’s corporate and institutions business fell to 93 million kroner in the three months through June, amid “continually difficult conditions,” Danske said. That compares with 397 million kroner a year earlier.

Uncertain Outlook

Danske said its outlook for trading income for the year is “particularly uncertain.” Though the bank raised its 2014 profit forecast to a net income as high as 13 billion kroner from the 12 billion kroner previously seen, Danske said revenue from trading will depend “greatly” on how markets develop.

“We can see that activity is much lower due to clients sitting much more on the sidelines due to low volatility” and because of a lack of a clear direction for interest rates, Borgen said. “We still think it might come back, but it is an area we are keeping a very firm eye on.”