21 March 2023
The risk outlook is still characterised by high inflation, higher interest rates and expectations of lower economic growth, both globally and in Denmark. At the same time, substantial financial market turmoil has emerged, which may pose challenges for issuance of capital and debt instruments. The Council finds that the Danish banking sector in general is in a good position to withstand the deteriation of the financial market conditions.
High price increases combined with higher borrowing costs weaken the debt servicing ability of households and companies. However, this has not led to significant impairments on the loan portfolios of credit institutions. At the same time, high earnings create an opportunity to build up capital to absorb losses and maintain lending.
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