The international financial markets have been characterised by turmoil since the summer of 2007. This is reflected in Danish banks' financial statements for 2007. Earnings rose in the 1st half of the year, but the 2nd half marked a turning point for many banks after a prolonged period of earnings growth. Looking ahead, the banking sector will continue to be affected by the financial turmoil and the less favourable outlook for the Danish economy. Risks to financial stability have become more pronounced recently. The banks have become more exposed in the light of their growing lending portfolios and the reduction of their capital buffers in recent years. The Danish financial sector is deemed to be sufficiently resilient to withstand major economic shocks.