Norway banking sector robust but pandemic, rates pose risks, central bank says

Sparebank 1 Nord-Norge

09/11/2021 09:00

OSLO, Nov 9 (Reuters) - Norwegian banks are well-equipped if
faced with a new downturn and the economic recovery has improved
the outlook for financial stability, but risks remain, the
central bank said in an annual report on Tuesday.
    "The stress test in this report shows that the largest
Norwegian banks can weather a sharp downturn without having to
tighten lending substantially," Deputy Governor Ida Wolden Bache
said in a statement.
    Pandemic-related uncertainty has receded but there is a risk
of shocks that could weaken Norway's financial stability such as
a resurgence of the COVID-19 outbreak or a sudden rise in
interest rates and risk premiums, the central bank said.
    "Against the background of the recovery over the past year,
Norges Bank now assesses the overall financial stability outlook
as little changed since before the pandemic hit," the bank said
in its report.
    It added high household debt is seen as the main weakness in
the system, but also said that the Nordic country's banks have
ample access to funding and capacity to absorb losses, which had
turned out lower than feared in 2020.
    "Losses are expected to remain low, but the outlook is still
somewhat more uncertain than usual," the bank said.

 (Reporting by Victoria Klesty, editing by Terje Solsvik)
 ((terje.solsvik@thomsonreuters.com; +47 918 666 70))