Risk Outlook – June 2021
In its Risk Outlook, Finanstilsynet emphasises the importance of banks retaining the strong financial position they have built up in recent years. Developments in the Norwegian economy have been better than feared and better than in many other countries. Although vaccination of the population will contribute to an economic upturn, considerable uncertainty still attends the future path of the pandemic and its impact on the economy. High household debt and high property prices constitute a significant systemic risk. A shock in the form of a sharp rise in international interest rates and higher risk premiums may therefore have a severe impact on the Norwegian economy. It is important that the banks are well positioned to absorb the substantial loan losses that may result from unexpected developments in the financial markets and the real economy.