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.