Danish banks have achieved record profits in 2024, further increasing their reserves to navigate an increasingly unpredictable global economic landscape. According to an analysis by Finans Danmark, the trade association for banks, the 16 largest banks and mortgage institutions in the country amassed a profit of DKK 57.1 billion, surpassing the previous year’s earnings by over two billion.

The record results have allowed these financial institutions to significantly increase their reserves, adding DKK 15.5 billion to their equity, creating a substantial “war chest” of DKK 475 billion to prepare for potential economic downturns. Finans Danmark highlights that the return on equity for the country’s largest banks is now comparable to other sectors of the business community, a marked improvement after years of negative interest rates.

Lars Gert Lose, director of Finans Danmark, emphasizes the crucial role of robust banks in the current climate. He notes that the global economy is facing unprecedented uncertainty due to factors such as geopolitical tensions, trade wars, and the potential impact of unpredictable policies from major global players. He cautions against making firm predictions about the economy, citing the repeated surprises of the past five years, including the COVID-19 pandemic and the war in Ukraine.

Despite the positive financial performance, Lose anticipates a potential increase in write-downs on loans in the future, even with falling interest rates. He underscores the importance of maintaining a strong financial sector to support the economy and businesses through these challenges. He also points out the significant contribution of banks and mortgage credit companies to the Danish economy, with over DKK 16 billion in annual corporate tax payments, representing 15 percent of the total corporate tax revenue.

While acknowledging past criticism regarding banks’ earnings on customer deposits, Lose cautions against allowing a narrative of dissatisfaction to become a self-fulfilling prophecy. He cites surveys indicating that the majority of Danes are satisfied with their banks and advisors, suggesting that discussions about banks are often more structural than personal. He maintains that the banking sector is a well-functioning, market-driven industry that provides a vital service to citizens, companies, and society as a whole.