The National Bank of Denmark has published its latest Financial Stability analysis, warning that the ongoing trade conflict has worsened the global growth outlook and made the risk of new financial market shocks more persistent amid high uncertainty over trade policy. It expects Denmark, as a small open economy, to be affected, with a particular potential impact on bank lending to export-sensitive industries if exports decline. The analysis notes that credit institutions’ profits remained high in 2024, partly due to low loan impairment charges, with core earnings positioned as the first line of defence against future losses. Its biannual stress test indicates Danish institutions can withstand a severe recession scenario, while emphasising that robust bank liquidity and capitalisation are critical in the current risk environment.
National Bank of Denmark 2025-06-03
National Bank of Denmark flags trade conflict risks to Danish bank lending while stress test shows institutions can withstand severe recession
The National Bank of Denmark's Financial Stability analysis highlights increased risks of financial market shocks due to the ongoing trade conflict and its impact on global growth. Denmark's economy, particularly bank lending to export-sensitive industries, may be affected if exports decline. Despite high profits in 2024, the analysis underscores the importance of robust bank liquidity and capitalisation, with stress tests showing resilience to severe recession scenarios.