Denmark Retail Banking: Opportunities and Risks to 2023

Denmark Retail Banking: Opportunities and Risks to 2023

Summary

Denmark’s total outstanding loan balances (including credit card balances, personal loan balances and residential mortgage balances outstanding) recorded a low CAGR of 0.8% during 2014-18, to reach DKK2.4tn ($367.1bn) in 2018. The country’s non-mortgage household debt has been on a downward trend, while mortgage debt is rising. The majority of Danish loan balances outstanding are from home loans, while residential mortgage balances outstanding account for 88.4% of total balances outstanding in 2018, followed by personal loans (11.0%) and credit card loans (0.6%).

The negative interest rates charged on mortgage loans are supporting growth of outstanding loan balances. However, the economy is characterized by increased uncertainties, including the impact of geo-political tensions such as Brexit on the country’s exports and employment. In addition, a sudden rise in lending rates can adversely impact households’ solvency, eventually resulting in high loan defaults. As a result, GlobalData estimates total loan balances outstanding to grow at a CAGR of 1.5% over 2019-23.

Although the country's gross household savings rate stood at a mere 6.9% in 2018, with 62% of population preferring to spend rather than save, the retail deposits balance witnessed substantial growth at a CAGR of 4.5% in the review period, amid low interest rates on deposits. This can be credited to bank deposits proving to be a more profitable investment in Denmark than other short-term asset classes. Furthermore, factors such as an increase in the net household disposable income and a consistent decline of unemployment amid low levels of inflation supported the growth in the deposit balance of the Danish consumers.

Based on our proprietary datasets, this report analyzes the Danishlending market, with a focus on the consumer lending segment. The report discusses in detail the credit card, personal, and mortgage loan markets, covering market size, competitors’ market shares, and survey insights. The report also provides a market overview and insights on the retail deposit segment. In addition, it covers the key digital disruptors in the Denmark retail lending segment.

Scope

- Residential mortgage loans in Denmark registered a review-period CAGR of 0.7%, the lowest rate in comparison to its peer countries. This can be attributed to the close supervision of regulatory authorities throughout the review period, which was in order to ensure that debt levels are under control.
- The Danish personal loans market recorded a review-period CAGR of 1.1%. Despite low lending interest rates, the overall growth in personal loans was restrained by the risk-averse nature of the Danish consumers, which was further supported by low unemployment rates and rising household disposable income.
- Credit card balances outstanding recorded a CAGR of 3.4% during 2014-18. The country has a high card penetration but the frequency of card use is relatively less.

Reasons to Buy

- Make strategic decisions using top-level historic and forecast data onthe Danishretail lending industry.
- Identify the most promising lending segment.
- Receive detailed insights into lending in Denmark, including consumerlending.
- Understand the changing market and competitive dynamics by learning about new competitors and recent deals in the retail lending space.
- Receive comprehensive coverage of the retail deposit market in Denmark.