26 November 2024
The interest rate increases in 2022 and 2023 have boosted bank earnings while loan losses remain limited. High earnings strengthen banks' capacity to cover losses, while improving their ability to meet future requirements to strengthen operational resilience and capitalization.
"The interest rate increases have improved banks' profits and customers are still able to service their debt, although it has become more difficult for some households and businesses," says Peter E. Storgaard, Head of Financial Stability at Danmarks Nationalbank and continues:
"It is during good times that banks grant loans that later turn out to be bad, so it is important that banks do not underestimate the risk of losses on their loans."
Geopolitical tensions affect the cyber threat against critical infrastructure, and changes in global trade can cause shocks to financial markets. Both can potentially affect financial stability.
"The risk outlook for the financial sector does not only depend on conditions in Denmark. Evolving geopolitical tensions along with new technology have significant implications for the cyber risk. We can also see from international surveys that more European banks are experiencing cyberattacks that lead to actual serious operational incidents," says Peter E. Storgaard.
Every six months, Danmarks Nationalbank publishes the Financial stability analysis, which assesses and makes recommendations regarding financial stability in Denmark. Today, Danmarks Nationalbank has also published an analysis on a new methodology for assessing economic and financial risks of the green transition. Here, a scenario is considered where Denmark does not achieve the expected emission reductions through technological transition. The scenario calculations show that Denmark's climate goals can still be achieved without major socio-economic and financial consequences if the taxes on emissions are raised further compared to the taxes already agreed politically.
Both analyses can be found at nationalbanken.dk.
If you have any questions as a journalist, you are welcome to contact Peter Levring, Communications and Press Officer, by telephone on +45 3363 6383 or email at pnbl@nationalbanken.dk.