The financial system is stronger today than during earlier crises, but banks will inevitably see a rise in their loan losses. Government and the financial sector must continue their exceptional measures to support businesses and households.

The coronavirus pandemic will further weaken the short-term profitability of banks. Government and central bank policy measures are mitigating the rise of funding costs and are bolstering lending capacity.

The coronavirus pandemic has the potential to aggravate long-standing vulnerabilities in the Nordic housing market. Housing market disturbances can increase credit risk for banks and interfere with their access to funding.

The poor outlook for the economy is weighing on banks, households and firms. Banks have accumulated buffers for a rainy day that should be deployed now as the coronavirus buffets the economy.

AI and massive data technologies are being deployed in all different stages of business ranging from risk management to portfolio optimization.

Assessing the risks and costs arising from climate change – its effects, mitigation and, in the worst case, failure to mitigate – presents a major challenge for financial sector participants.

The current loan-to-value cap on housing loans urgently needs to be accompanied by a new, more comprehensive cap on debt. This would take into account all a loan applicant’s debt relative to their income.

The more debt households take on during an economic upswing, the more likely they are to cut consumption when the economy begins to run out of steam.