Risk Outlook – December 2020
In the Risk Outlook, Finanstilsynet emphasises that banks and insurance companies must factor in the great uncertainty that still attends the future path of the Covid-19 pandemic and its economic impact. Banks’ loan losses have risen as a result of the crisis. However, the increase is moderate thus far and largely refers to oil-related loans. As major parts of the business sector have experienced a significant decline in income, there is a risk that potential losses may be underestimated in banks' loss allowances. High house prices and a high debt burden in the household sector represent significant systemic risk. Despite the crisis, there has been a steep rise in house prices in recent months parallel to stronger growth in household debt, partly driven by record-low interest rates.