Core earnings also fell by DKK 5 billion to DKK 8.9 billion and are still under severe pressure due to the low interest rate environment. The banks' current earnings situation has been affected by the COVID-19 crisis and loan impairments are expected to increase significantly as a result of customers experiencing difficulties during and possibly even after the crisis.
Impairments during the period 2015-2019 have been historically low, but with impairments corresponding to the historical average for the period 1980-2019 of 0.9 per cent of loans and guarantees, profits in 2019 would, on the other hand, be more than halved, with several small banks ending up with an outright deficit. In light of this, it is positive that the sector is overall significantly better capitalised than before the last financial crisis in 2008-2009. Therefore, the banks are considered to be better equipped to handle an economic downturn.
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