The ECB's large-scale asset purchases have worked to reduce the spread between long-term and short-term interest rates. This tends to make maturity transformation less profitable. Side 7 af 13  Slide 16: Strong earnings in largest Danish banks All else equal, the squeeze in margins puts pressure on banks' profits. Nevertheless, the largest Danish banking groups achieved their best ever overall performance in 2016.
This reflects that other factors have countered those negative effects on interest earnings. Slide 17: Scope to rebuild interest income when interest rates start rising Low interest rates stimulate economic activity and ease debt-servicing costs for firms and households. This results in lower loan-impairment charges for banks. Furthermore, banks have been able to raise fees.