Danish Financial Supervisory Authority analysis ties Danish banks’ record DKK 71bn and DKK 76bn pre-tax profits to high deposit margins and low impairments

The Danish Financial Supervisory Authority published an analysis finding that Danish credit institutions’ record earnings in 2023, 2024 and the first half of 2025 were driven mainly by a sharp rise in core income, supported by favourable interest-rate developments and continued low impairments. The authority cautions that the conditions behind these results may not persist and notes that profitability growth appears to have slowed in the first half of 2025. Pre-tax profit reached nominal records of DKK 71bn in 2023 and DKK 76bn in 2024, more than doubling results from prior years. The analysis attributes the improvement primarily to stronger underlying earnings, with valuation adjustments and low impairment levels also contributing. A key feature of the interest-rate environment was a markedly higher deposit margin alongside a pressured lending margin, which the authority notes could indicate lending at rates that do not sufficiently compensate for expected loss risk. The authority highlights that if demand for placing deposits with credit institutions weakens, banks may need to raise deposit rates to retain funding, compressing deposit margins and weakening the earnings basis for outstanding loans granted at tight lending margins. The analysis is based on supervisory reporting, data from Danmarks Nationalbank and the authority’s own calculations, and the authority plans to publish further analyses in the same format on its website.