FINANCIAL STABILITY ANALYSIS FROM DENMARK: INTEREST RATE HIKES IMPACT BANKS AND CUSTOMERS

Denmarks Nationalbank’s latest analysis reveals that higher interest rates and consumer prices are putting pressure on household customers and having ripple effects on businesses. Meanwhile, banks are experiencing increased net interest income due to the interest rate developments. The report suggests that the higher earnings could help mitigate the impact of rising impairment charges resulting from the long-term effects of higher interest rates. Furthermore, recent challenges faced by specific foreign banks have emphasized the importance of sound risk management in banks, including maintaining sufficient excess capital in line with regulatory requirements. The analysis was published on 1 June 2023 as part of Denmarks Nationalbank’s ongoing assessment of financial stability.