Banking sector

(Calculations of PKO Bank Polski S.A, based on the last available PFSA data.)

In 2021 the banking sector recorded net profit of PLN 8.8 billion, compared with the loss of PLN -0.3 billion in 2020. The moving return on equity ratio (12M ROE) was 4.1%.

The increase in net profit resulted mainly from the y/y improvement of the net write-downs – in 2020, banks increased allowances due to less favourable macroeconomic forecasts related to the epidemic conditions. The second pillar of improvement in the banks’ results was the net profit on other business activities – the effect of the low reference base in the prior year. Moreover, the positive impact came from the net commission income which grew, among other things, due to changes in the banks’ pricelists, and the increased activity of Customers.

Higher tax burden as the opposite effect. Moreover, the results of the banking sector were affected by provisions related to the legal risk of foreign currency housing loans. At the same time, the net interest income also dropped y/y – primarily due to last year’s decreases in the core NBP interest rates (although a cycle of increases in the NBP rates started in October 2021). Net interest income was also affected by the relatively weak lending activity (in particular in the first half of 2021) in the COVID-19 pandemic conditions. The operating expenses were slightly higher.

The capital position of banks was good. As at the end of September 2021, the total capital adequacy ratio amounted to 20% (most recent data available). Revoking the obligation to use the systemic risk buffer (3%) had a positive impact on capital adequacy.

The “provisions” item contains, among other things, a part of provisions related to the legal risk of foreign currency mortgage loans.

(Based on NBP data and the Analizy Online service site)

At the end of December 2021, the y/y pace of growth in total loans (net of changes in exchange rates) was positive at 4.8% (compared with -0.8% as at the end of 2020). With respect to deposits, the annual rate of growth slowed down to 11.1% compared with 13.9% at the end of 2020, remaining among other things: under the influence of slowing down the growth rate of individual and corporate deposits.

The PLN housing loans growth rate accelerated to 12.5% y/y (compared with 10.1% y/y at the end of 2020) in a clear bull market. The growth rates of consumer loans (net of exchange rate changes) and corporate loans (net of exchange rate changes) were positive and amounted to, respectively: 1.6% y/y (compared with -2.2% y/y as at the end of 2020) and 4.7% y/y (compared with -6.2% y/y as at the end of 2020).

The growth rate of individual deposits slowed down to 6.3% y/y (compared with 8.1% at the end of 2020), while the current deposits growth continued, albeit slower than at the end of 2020, current deposits growth (14.6% y/y vs. 28.6% y/y at the end of 2020) and the term deposits fell slightly more slowly (-20.4% y/y compared with -28.6% y/y at the end of 2020). At the end of 2021, assets of investment funds (IF) of individuals increased by 7.9% y/y, which was influenced, among other things, by the low reference base of the prior year – strong drops on the investment funds market in the first months of the pandemic and the apparent interest of Customers in forms of savings alternative to deposits in the situation of low interest rates in the first half of 2021. The growth rate of cash in circulation slowed down to 10.9% y/y (36.9% y/y at the end of 2020) – which was related to a rapid growth in cash in circulation since March 2020. It was due to: conservative public approach to the access to cash during pandemic and low interest rates on deposits, related to low level of interest rates (in 2020 the reference rate was reduced three times, to the level of 0.1%). As at the end of December 2021, the growth rate of corporate deposits slowed down to 10.9% y/y (compared with 19.3% y/y at the end of 2020), which was, inter alia, due to the use of funds received by companies from Anti-crisis Shields, as well as the effect of high reference base of the prior year.

The liquidity position of the banking sector remained very good – the loan to deposit ratio dropped to 79% compared with 83% at the end of 2020.