All Danmarks Nationalbank´s publications

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19-12-2016

Financial Stability 2nd Half 2016

Net interest income is under pressure from low interest rates. Earnings are still being lifted by large reversals of previous years' loan impairment charges. The current combination of economic growth and rapidly increasing house prices in the cities intensifies the competition for customers.

24-06-2016

Financial stability 1st Half 2016

In 2015, the systemic credit institutions achieved the highest profit since the financial crisis. The rise in earnings was boosted by a strong decline in impairment charges on loans and guarantees relative to the preceding year. A number of institutions target an annual return of up to 12.5 per cent after tax on their book value of equity. Credit institutions should carefully consider whether their current targeted returns are fully consistent with a prudent level of risk.

28-12-2015

Financial stability, 2nd half 2015

In the 1st half of 2015 Danish credit institutions overall posted the highest profit since the financial crisis, despite low demand for new loans and a very low level of interest rates. Under these conditions, it is important that the credit institutions do not lower their credit standards.

22-06-2015

Financial stability, 1st half 2015

Most credit institutions have put the financial crisis behind them. Loan impairment charges are decreasing, capitalisation has increased and in general the excess liquidity cover is high. Capital requirements will in-crease in the coming years and the banks should maintain a high degree of capitalisation relative to the fully phased-in capital requirements.

19-12-2014

Financial stability, 2nd Half 2014

Overall, Danmarks Nationalbank finds that the systemic Danish banks are well-capitalised, are resilient to severe macroeconomic shocks and have excess.

17-06-2014

Financial stability, 1st half 2014

Danmarks Nationalbank finds that the Danish banks overall are well-capitalised, are resilient to severe macroeconomic shocks and have excess liquidity. Most banks have come through the crisis, but many banks still have a low return on equity and high costs. Earnings are under pressure from lower demand for new lending, resulting in increasing competition and declining lending margins. Given the generally low level of interest rates, this makes it difficult for the banks to achieve a reasonable return on excess liquidity. This may give banks an incentive to invest in riskier assets or ease credit standards in order to increase their lending volume. Looking ahead, earnings are expected to remain under pressure from low demand for new loans and low margins. In order to protect financial stability in future, capacity adjustment in the sector is necessary, e.g. via mergers, with the aim of generating more profitable businesses. The banks' high lending growth prior to the financial crisis was achieved at the expense of credit quality, and it is important to ensure that this is not repeated.

13-12-2013

Financial stability, 2nd half 2013

Overall, Danmarks Nationalbank finds that the banks are currently resilient to severe macroeconomic shocks. Since 2008, the banks have focused on strengthening their capital base. It is important that the banks maintain sound excess capital adequacy. According to Danmarks Nationalbank's stress test of the banks' capitalisation, the five systemic banks comply with the capital requirements in all scenarios and their Common Equity Tier 1 capital remains above 8 per cent as will be required in the coming assessment of credit institutions that will be subject to direct supervision by the European Central Bank. The Danish credit institutions are generally well positioned to meet the new capital requirements under the EU Capital Requirements Directive and Regulation, CRD IV/CRR, which will enter into force on 1 January 2014. Furthermore, in Danmarks Nationalbank's assessment, most credit institutions already have sufficient equity capital to meet the fully phased-in EU capital requirements in 2019. However, many credit institutions will need to replace all or part of their subordinated capital with new issuances meeting the new criteria under CRD IV/CRR.

12-06-2013

Financial stability 2013

Overall, Danmarks Nationalbank finds that the banks are resilient to severe macroeconomic shocks. But they are still facing substantial challenges. Most banks have a low return on equity and high loan impairment charges. Moreover, earnings are under pressure from falling lending volumes. Since 2008, the banks have focused on strengthening their capital base. Most banks today hold sufficient equity to meet the forthcoming EU requirements for Common Equity Tier 1 capital. But there will also be a need for sufficient excess capital adequacy consisting of Common Equity Tier 1, and many banks will need to replace existing issuance of Additional Tier 1 capital and Tier 2 capital with issuances meeting the new requirements for subordinated capital. The banks' liquidity has also improved in recent years. The liquidity situation of the systemic banks is good, and they use short-term issuance only to a limited extent. Almost all government-guaranteed bonds issued in 2009-10 have been redeemed. The phasing-out has been satisfactory. Most non-systemic banks that faced challenges in connection with the expiry of government-guaranteed bonds have succeeded in adjusting their balance sheets and reducing the customer funding gap.

25-10-2012

Stress tests, 2nd half 2012

Overall, the liquidity situation of the largest Danish banks is good. Several small and medium-sized banks are preparing for the expiry of the individual government guarantees and have come far in adjusting their business models towards relying less on short-term funding. Danmarks Nationalbank's stress test of the banks' capitalisation shows that the largest Danish banks are robust. The excess capital adequacy of the four banks included in the European Banking Authority's, EBA's, capital exercise via Danish credit groups remains positive in all Danmarks Nationalbank's stress test scenarios, and Common Equity Tier 1 capital remains higher than 9 per cent, which was the requirement in the EBA's capital exercise – even if government capital injections are not included. Three of the small banks included in the stress test will need to strengthen their capitalisation in the baseline scenario of the stress test, and one bank is close to the threshold. The assessment is that any problems arising among the small banks can be solved via business adjustments or within the current framework for mergers and resolution without significantly influencing financial stability in Denmark.

06-06-2012

Financial stability 2012

Generally, the large banks strengthened their capital bases in 2011, while several medium-sized banks reduced their excess capital adequacy. For many banks, a key task in the coming years will be to prepare for the forthcoming strengthened capital requirements. Higher profits are an important element in this context. Danmarks Nationalbank's stress test model provides a basis for assessing the capitalisation of the 13 largest Danish banks in various macroeconomic scenarios. The stress test shows that the largest banks are robust. Among the smaller banks included in the stress test, a few will need to strengthen their capitalisation. The assessment is that any problems among small banks can be solved within the existing framework for mergers and resolution. Most of the small and medium-sized banks with customer funding gaps at the start of the crisis have narrowed these gaps in recent years or turned them into surpluses. It is important for the small and medium-sized banks to continue their adjustment to a business model that is viable in the longer run. The opportunities to borrow from Danmarks Nationalbank have been increased, which will provide flexibility in this respect.

11-01-2012

Stress tests, 2nd half 2011

Overall, the liquidity of the Danish banks is good, but with a considerable spread between banks. The banks should continue to prepare for a situation without government guarantees. It is important that banks make sure their business models are sustainable in the long term. Danmarks Nationalbank's expansion of its credit facilities to include, inter alia, 3-year loans and of the collateral basis to include credit claims of good quality will increase the banks' access to liquidity in the short term and ease the transition when the individual government guarantees expire. The stress test of capitalisation shows that the large and medium-sized Danish banks are able to withstand economic scenarios that are considerably more adverse than the one that is expected. One bank will need additional capital. In view of the general uncertainty and the more stringent capital re­quire­ments that are underway, the banks should continue to consolidate and strengthen their capitalisation.

31-05-2011

Financial stability 2011

Under the 1936 Danmarks Nationalbank Act, Danmarks Nationalbank must maintain a safe and secure currency system and facilitate and regulate the traffic in money and the extension of credit. One of Danmarks Nationalbank's main objectives is thus to contribute to the stability of the financial system. Danmarks Nationalbank defines financial stability as a condition whereby the overall financial system is robust enough for any problems within the sector not to spread and prevent the financial system from functioning as an efficient provider of capital and financial services. In its Financial stability publication, Danmarks Nationalbank assesses financial stability in Denmark and presents its views and recommendations on measures that may contribute to enhancing financial stability. Furthermore, the publication is intended to stimulate debate about topics of relevance to financial stability and provide input for public authorities, individual financial institutions and financial sector organisations in relation to risk-assessment issues.

18-11-2010

Stress tests, 2nd half 2010

The Danish financial sector as a whole is assessed to have sufficient capital and liquidity to meet the expected economic scenario. It is, however, important to have strong capital buffers as a provision against unforeseen events. The banks should continue to consolidate and strengthen their capitalisation, while also preparing for forthcoming regulation and for repaying government capital injections, if any, from 2012 onwards. At the same time, the banks should strengthen their liquidity so that they are prepared for the expiry of issuances based on individual government guarantees in 2012-13.

11-05-2010

Financial stability 2010

The banking institutions' earnings in 2009 were affected by the Danish and international economic slowdown, and write-downs on loans were generally substantial. The banking institutions improved their capital bases during the year. According to Danmarks Nationalbank's stress test, the major Danish banking institutions generally have sufficient capital buffers to weather the expected economic development until 2012. The banking institutions' write-downs in 2010 are expected to be slightly lower than in 2009, but will remain relatively high. A few institutions may find it difficult to meet the statutory solvency requirement. Liquidity has improved over the past year for the banking institutions overall, although there is pronounced dispersion between the institutions. The institutions need to be prepared for the expiry of the general government guarantee on 30 September 2010. This includes exploiting the opportunity of buying individual government guarantees if required.

08-02-2010

Stress tests, 2nd half 2009

Content:The Banks' Resilience; Top-Down Stress Test; Bottom-Up Stress Test; Stress Testing in Cooperation between Danmarks Nationalbank and Large Danish Banks

04-06-2009

Financial stability, 1st half 2009

2008 and the first half of 2009 have been dominated by the international financial crisis. After a number of years with high profits, Danish banks have had to make large write-downs on loans, and several banks had negative earnings in 2008. Looking ahead, the banks are faced with considerable challenges in terms of restoring confidence and making the necessary adjustments. The global economy is set to slow down further and credit risk is rising, so substantial write-downs can also be expected in the coming quarters. Stress tests of the largest 14 banks show that if the opportunities for capital injections under Bank Rescue Package II are utilised, these banks will be relatively robust. Danmarks Nationalbank finds it positive that most large and medium-sized Danish banks have indicated that they will apply for government capital injections. Due to the economic uncertainty, the banks should carefully consider the option of being able to convert such capital injections into share capital. In an uncertain world it is an advantage for the banks to have extra buffers against any future losses.

12-01-2009

Financial stability, 2nd half 2008

The international financial crisis has affected the Danish banks. Several of them are faced with the challenge of reducing their balance sheets after a number of years of extremely strong lending growth. Under the current market conditions, negative financial results may on its own critically influence the banks' ability to obtain financing. This applies especially to banks with relatively large deposit deficits. So far, the government guarantee for the banks' unsecured claims has facilitated the banks' access to liquidity. Stress tests nevertheless show that the banks may encounter problems if the financial turmoil markedly affects the real economy. Against this background, the assessment is that, like many other countries, Denmark must implement a scheme for temporary capital injection to sound, well-managed Danish bankinginstitutions on terms that are as close to market terms as possible.

15-05-2008

Financial stability 2008

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.

23-05-2007

Financial stability 2007

The report begins with Danmarks Nationalbank's assessment of the financial stability in Denmark. This is followed by the analysis of financial stability, with emphasis on the development in the financial sector. Finally the report consists of topical issues of relevance to financial stability. This year it contains: Danmarks Nationalbank's policy for oversight of the Danish financial infrastructure, effects of new accounting and capital-adequacy rules, macro stress testing of Danish households, macro stress testing of the financial system and Danmarks Nationalbank's failure-rate model, KIM.

02-06-2006

Financial stability 2006

The annual report Financial stability assesses financial stability in Denmark, with emphasis on financial institutions, markets and payment systems. The report consists of two parts. The first part starts with an analysis of the development in the financial sector, with emphasis on the banking institutions. This is followed by a chapter on the development in the corporate sector and the households. Next the developments in the financial markets are reviewed and finally follow a chapter about the framework for Financial stability. The second part of the report consists of topical issues of relevance to Financial stability. This year it contains tree issues: Advanced approaches to calculation of capital requirements under Basel II, Banks' liquidity and finally protection of settlement in Danish payment systems.

31-05-2005

Financial stability 2005

The annual report Financial stability assesses financial stability in Denmark, with emphasis on financial institutions, markets and payment systems. The report includes analyses of Danish banks, business enterprises and households. Topical issues of relevance to financial stability are also discussed.

28-05-2004

Financial stability 2004

The two-part report first analyses the development in financial stability, with emphasis on the banking institutions. The second part of the report considers three current topics: branches of foreign credit institutions, systemic risks in the Danish market for uncollateralised overnight deposits, and market-based risk measures for banks

19-05-2003

Financial stability 2003

The report is in two parts. The first part starts with an analysis of the development in the financial sector, with emphasis on the banking institutions. This is followed by a chapter on the development in the corporate sector and the households, and finally the developments in the financial markets are reviewed.

31-05-2002

Financial stability 2002

Danmarks Nationalbank publishes an annual financial-stability report for Denmark. The purpose of analysing financial stability is to assess whether the financial sector is sufficiently robust to withstand problems in this sector impeding the functioning of the financial markets as efficient providers of capital for companies and households.

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