External shocks raise risks to Norway's resilient financial system
Norges Bank warns that the risk of serious events weakening financial stability has increased. Its semi-annual report finds banks remain solid and household debt vulnerabilities have eased, while geopolitical and cyber risks weigh on the outlook.
Stronger households face external risks
Deputy Governor Pål Longva said Norway's financial system remains resilient, with households and firms able to service debt and banks solid.
Risks include geopolitical tensions, cyber threats, rising government debt abroad and uncertainty over artificial intelligence.
Global financial links can transmit external shocks quickly to Norway.
Household debt remains high, but income has outgrown debt in recent years.
Debt burdens fell across groups, most among the most indebted.
Over the past two years, wages outpaced prices, improving debt servicing and purchasing power despite higher rates.
Liquid buffers show signs of recovery after post-pandemic declines.
Norges Bank assesses household debt vulnerability as somewhat lower.
Property pressure meets capital buffers
Banks have substantial commercial real estate exposures.
Sector solvency improved over two years; the share of highly indebted firms with weak debt servicing fell in 2025.
Higher rates pressure values.
Construction and financing costs curb property demand; developer bankruptcies and default risks have risen.
Bank losses remain low, capital and liquidity exceed requirements by ample margins, and credit is readily available.
At its November 4 meeting, the Committee held the countercyclical capital buffer at 2.5 percent.
Norges Bank sets it quarterly.
Resilience does not eliminate exposure
Stronger household finances and bank buffers coexist with greater external risks.
Property developers remain under pressure despite improved commercial real estate solvency.
Norges Bank's assessment distinguishes the capacity to absorb shocks from the risk of those shocks occurring.