Prospects of lower earnings and higher capital requirements for banks

Analysis - May 2019 - No. 11

Authors Danmarks Nationalbank
Subject Financial stability; Financial risks; Financial regulation; Macroprudential policy; Denmarks Nationalbank´s analyses of financial stability
Type Analysis
Year 2019
Published 27 May 2019
The systemic credit institutions' results remain high, underpinned by low loan impairment charges since 2010. A substantial dampening of economic growth would lead to higher loan impairment charges and consequently lower earnings in future. The requirements for banks' capital structure are likely to be tightened considerably in the coming years. This may put pressure on the systemic credit institutions' excess capital adequacy if they fail to build up further capital adequacy beforehand.