Norges Bank

Press release

High debt, but solid banks

Financial system vulnerabilities in Norway have not changed substantially over the past year. After rising sharply over a long period, commercial and residential property prices are at high levels. Over the past few years, house prices have risen more slowly than income.

“Household debt is high, but debt accumulation is slowing“, says Deputy Governor Jon Nicolaisen.

In recent years, the Norwegian authorities have implemented a number of measures to mitigate financial system vulnerabilities. The regulation on new residential mortgage loans, credit registers and new measures targeting the consumer credit market are dampening household debt growth. At the same time, banks’ capital and liquidity requirements have become considerably stricter, and banks have maintained profitability and solvency and have ample access to funding.  

The stress test in this Report shows that the banking system as a whole will be able to absorb the losses associated with a downturn in the Norwegian economy. At the same time, banks may still tighten lending, which may amplify the downturn. To counter this, the authorities can reduce the countercyclical capital buffer and allow banks to draw on the remaining buffers.  

Global economic uncertainty poses a risk to financial stability in Norway. Events in the international economy and financial markets can spread to Norway, and the impact in Norway may be amplified by domestic financial system vulnerabilities.

“So far, global uncertainties have not had serious consequences for the Norwegian economy, and Norwegian banks have felt little impact, but this situation can change quickly”, says Deputy Governor Nicolaisen.

Climate change and measures to mitigate climate change will affect all segments of the economy and entail risks to financial stability. Changes in climate regulation, new technology and changing investor and consumer preferences may entail a transition risk for the Norwegian economy in the coming years. Central banks and supervisory authorities can, within their mandates, promote financial stability by helping to pave the way for the financial sector to include climate risks in overall risk assessments and communicate relevant information and by ensuring adequate capital to support all risks.


Press telephone: +47 21 49 09 30

Published 5 November 2019 10:00
Published 5 November 2019 10:00