Significant decline in Denmark-based banks' profits in 2020

The decline is driven by write-downs on lending, while interest income continues to be depressed by low interest rates. But the banks are still well equipped to help customers and support the Danish economy. This is shown by Finans Danmark's review of the 17 largest banks and mortgage banks' accounts for 2020. The profit of the 17 largest banking and mortgage groups fell in 2020 by just over DKK 11.9 billion. Compared to 2019, this is a decrease of almost 33%. A significant reason is a marked increase in loan impairment losses to DKK 12.2 billion in 2020, which is an expression of provisions for future losses on loans to customers affected by the corona crisis. In addition, there are still rising costs for combating economic crime such as money laundering and the implementation and compliance with regulation, so-called compliance. In addition, banks' net interest income is broadly at the same level as in the past two years.

Although several banks in 2020 have lowered the limit for when private customers must pay negative interest on deposit accounts, this interest income has been far from able to offset the fall in interest income from lending. However, the lower interest income is offset by lower interest expenses for the banks' funding. The sector has continued to build up capital in 2020, and at the end of 2020 the total capital amounted to almost DKK 430 billion.