In the 1st half of 2015 Danish credit institutions overall posted the highest profit since the financial crisis. Profits are supported by low loan impairment charges. Conversely, low demand for new loans and a very low level of interest rates squeeze earnings. Against this background it is important that the credit institutions do not lower their credit standards in order to boost business volumes.
The five systemic banks have ample liquidity. Furthermore, Danmarks Nationalbank's stress test shows that they have substantial excess capital adequacy in relation to the minimum requirements until 2017, even in a severe stress scenario.
The report also presents an analysis of liquidity in the market for mortgage bonds. The general level of liquidity in the market is assessed still to be high. However, since the end of 2014 volatility has been higher, indicating that liquidity has become less resilient. Consequently, smaller shocks than previously may cause liquidity to evaporate.
In addition, the report treats the new recovery and resolution regime. The new EU framework on recovery and resolution of credit institutions, the BRRD, gives the resolution authorities a number of measures and tools enabling resolution also of the largest institutions. Part of the new framework still remains to be implemented. This work is essential for a robust and credible resolution regime in practice.