Turbulent times require focus on credit risks The wind of change is also blowing on the credit side after a long period of low impairment charges and losses. Banking is easier when interest rates are in positive territory. Higher net interest income will increase earnings and thus constitute the first safeguard against losses.
The other side of the coin of an economic dampening and rising interest rates is rising credit risks and higher impairment charges. The magnitude of the price drops we're now seeing in the housing market shouldn't be much of a problem for those who bought their homes several years ago. But new homeowners are in a different situation.