Market developments for credit institutions 2020

Published 02-12-2021

For the Danish credit institutions, as well as for the rest of society, the year 2020 was impacted by the global COVID-19 crisis. The Danish credit institutions entered the crisis well capitalised, and generally had a good starting point for being able to supply credit and liquidity to both companies and households. However, government assistance packages have generally resulted in limited credit demand, and there has been only moderate growth in loans issued by credit institutions in 2020.

Based on a strong capital position, the Danish credit institutions have so far performed well during the crisis and their capital position has, despite the COVID-19 crisis, been strengthened in 2020, e.g. given a limited capital distribution. The credit institutions are therefore in a robust position to be able to absorb the losses that are expected to materialise in the wake of the crisis.

The COVID-19 crisis has led to a severe economic downturn. The recent resurgence of the pandemic in Europe increases the uncertainty about the future, the economic outlook and may delay the time of the expected recovery. All other things being equal, it must be expected to lead to increased impairments in the credit institutions. The economies are supported by a wide range of fiscal and monetary policy measures that have been implemented since the outbreak of the COVID-19 crisis. Rolling back these measures will result in increased losses for the credit institutions. These losses should to a large extent already be covered by expensed impairments.

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Last updated 02-12-2021