OSLO, Nov. 26 (Xinhua) -- Interest rate increases in 2022 and 2023 have bolstered Danish bank profits while loan losses remain limited, according to the latest financial stability analysis released on Tuesday by Danmarks Nationalbank, Denmark's central bank.
The report highlights strengthened bank earnings as a critical factor in enhancing financial resilience and meeting future operational and capital requirements.
"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," said Peter E. Storgaard, head of Financial Stability at Danmarks Nationalbank.
However, he cautioned that risks remain. "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."
The report also underscores increasing risks from geopolitical tensions and cyber threats, particularly targeting critical financial infrastructure. These factors, coupled with global trade shifts, could significantly impact financial stability in Denmark.
"The risk outlook for the financial sector does not only depend on conditions in Denmark," Storgaard noted. "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."
Every six months, Danmarks Nationalbank publishes the Financial stability analysis, which assesses and makes recommendations regarding financial stability in Denmark.
