Risk Outlook – June 2026

The outbreak of war in the Middle East at the end of February, followed by the closure of the Strait of Hormuz, has led to increased uncertainty regarding the global economic outlook. The global economy is facing a complex and multifaceted risk landscape.

”Given the complex and evolving risk landscape and significant vulnerabilities in both the Norwegian and the global economy, it is vital that the resilience of the financial system is maintained and further developed. This requires sound governance and control within institutions, with due attention to emerging risks,” says Finanstilsynet’s Director General, Per Mathis Kongsrud.

Norwegian banks and insurers are profitable, well capitalised and competitive. Norwegian banks’ return on equity is higher than the average for banks in the EU. Over the past year, profitability and return on equity have declined as a result of lower net interest income and higher operating expenses.

”Loan losses have risen slightly in recent years, particularly on corporate loans, but remain at a low level. Credit risk on loans to companies engaged in property development, construction and fishing and fish farming has increased,” says Kongsrud.

Banks' ability to bear losses and provide new loans to creditworthy customers during downturns requires that they have sufficient equity. Finanstilsynet’s stress test for 2026 shows that banks’ capital adequacy could be severely weakened in the event of a sharp downturn driven by escalating geopolitical tensions and a more fragmented global economy.

Norwegian household debt, measured in per cent of disposable income, has decreased since late 2021. The debt burden is nevertheless high, both in historical terms and compared with other countries. 

“Debt servicing problems in the household sector could have major ripple effects on the rest of the economy. So far, there are few signs of serious debt servicing problems among Norwegian households overall, but this could change if labour market conditions weaken or interest rates rise,” says Kongsrud.

Price growth in the Norwegian secondary housing market has been relatively moderate in recent quarters. Both sales of new homes and housing starts are at historically low levels, and housing investments remain low.

The situation in the property development sector remains challenging. In addition to higher interest expenses, property development companies are affected by higher construction and material costs and by sluggish sales of new properties.

Higher interest rates have led to declining commercial property values and reduced earnings in many commercial real estate companies in recent years. Many of these companies have high levels of debt and weak interest servicing capacity.

”If interest rates remain high or increase, risk premiums normalise and/or rental prices show a weaker than expected development, property values could decline, and the companies’ debt servicing capacity could become more strained,” says Kongsrud.

The cyberthreat landscape is severe. Rapid developments in artificial intelligence create opportunities for efficiency gains but also introduce new threats and vulnerabilities.

”Complex value chains, a high degree of outsourcing and service provider concentration heighten the risk that cyberattacks or operational incidents could have negative consequences for critical functions, businesses and the financial system. The geopolitical situation, with wars in Europe and the Middle East, leads to a more severe threat landscape,” says Kongsrud.

Both in Norway and internationally, there are ongoing discussions as to whether the current financial regulatory framework is unduly extensive and complex and hampers innovation and economic development. Finanstilsynet participates in the simplification initiatives led by the European supervisory authorities and is reviewing its own practices in dialogue with the industry associations.

”Over time, the overall regulatory framework for the financial sector has become complex and extensive. In its work, Finanstilsynet places emphasis on simplification measures that do not undermine the resilience of the financial system,” says Kongsrud.