* Danske Bank Q2 profit beats forecast

* Keeps outlook despite more challenging marked due to Brexit

* Says is well ahead (Adds CEO comments, context)

COPENHAGEN, July 21 (Reuters) – Danske Bank reported a second-quarter pretax profit above forecasts on Thursday thanks to higher trading income but said low interest rates and the impact of the UK’s vote to leave the European Union were still proving a challenge.

“The second quarter continued to be with difficult market conditions with negative interest rates, low economic growth and subdued demand,” Chief Executive Thomas Borgen told Reuters.

The Danish central bank has kept its key deposit rate below zero since September 2015 meaning the commercial banks in Denmark have to pay to keep money at the central bank.

Denmark’s largest lender by market capitalisation said pretax profit fell 8 percent to 5.78 billion Danish crowns ($857 million) in the April-June period, beating a forecast of 5.57 billion crowns.

Even though the market conditions have become more challenging owing to the UK’s vote to leave the EU, the bank maintained its full-year outlook of a net profit before goodwill impairments in line with last year’s 17.7 billion crowns.

Dansk Bank owns Northern Bank, the largest bank in Northern Ireland, and is therefore hit by the fall in the value of sterling following the result of the EU vote on June 24.

Borgen said its business in Northern Ireland accounted for 3 percent of the bank’s total lending.

While low growth in the export-driven Danish economy has hit Danske Bank’s main business the bank has increased its business and customer base in Sweden and Norway, it said.

The Danish central bank has accused banks of being too ambitious on profits at a time of negative interest rates.

“We do not agree with the comments from the central bank. Cost of capital for Nordic banks is probably 9 to 10 percent. In other words banks are not appealing to investors if they do not deliver more than that,” Borgen said.

He said the negative deposit rates at the central bank has cost the bank around 2 billion crowns in 2015 but along with Swiss banks Danske Bank has operated in markets with negative interest rates for the longest period.

Danske Bank aims to deliver a return on shareholders’’ equity of at least 12.5 percent in 2018.

On a group level loan impairment charges showed a net reversal for the fifth consecutive quarter, and Borgen said the bank’s loan book was very solid.

Shares in Danske Bank are down around 2.5 percent since the start of the year, outperforming a 23 percent drop in Thomson Reuters European Bank index ($1 = 6.7429 Danish crowns) (Editing by Greg Mahlich)