The Eldorado of the banking sector in Poland will last some time, but it will not last forever – said Bartosz Cieślak, deputy director in the advisory services team for the financial sector at PwC Polska. He explained that the good condition of banks results, among other things, from high interest rates.
– The results of the banking sector in Poland published by the National Bank of Poland for September 2024 showed PLN 31 billion in net result. This is about PLN 10 billion more than a year ago, which is actually a big increase – said Bartosz Cieślak, deputy director in the advisory services team for the financial sector at PwC Polska. When asked about the reasons for the increase, he said that “we still live in an environment of high interest rates. interest rates”, which directly translates into the level of banks' interest margin, which increased by over 20 basis points year on year. – This is actually the main lever of growth – he emphasized. He pointed out that the second important effect we are dealing with is the improvement related to the result on provisions and write-offs, i.e. the decreasing risk costs of banks. – We have lower write-offs for legal risk related to Swiss franc loans, which results from the growing number of settlements concluded. Most customers who were supposed to sue banks have already done so, Cieślak noted.
Eldorado won't last forever
When asked about the prospects for banks in the coming months or quarters, he pointed out that interest rates they will most likely be maintained unchanged in the coming months. The first rate cuts can be expected only after the second quarter of 2025.
– This will certainly shape the position of banks in the coming months. This Eldorado will last for a while. However, let us also be aware that it will not last forever, said the expert. Cieślak also referred to the challenges facing the banking sector. As he stated, one of the main goals will be to improve the structure of the result, namely increasing the share of commission income. He added that currently approximately 80 percent banks' result is interest income. Only 20 percent this is commission income. Polish banks lag behind the EU average, which is approximately 30%. – There is something to fight for, there is something to improve. Such golden times for banks are a good moment to build a strong foundation in the form of commission income, which is a safety cushion for worse times, he said.
Long-term challenges for banks
He added that in the long term, the challenge for banks will be to participate in financing the energy transformation in Poland and large infrastructure expenses. It will remain an open question to what extent the Polish banking sector will be able to handle it on its own, and to what extent financing will have to be obtained from foreign banks and private equity funds. At the beginning of November, NBP published data on the results of the banking sector after nine months of 2024. They show that the banks' profit after September amounted to over PLN 31.06 billion, while in the same period of the previous year it was PLN 21 billion.
Interest income amounted to almost PLN 127.4 billion and was almost PLN 4 billion less than a year ago, when it was PLN 123.55 billion. In turn, banks' interest costs this year reached PLN 49.2 billion, and a year earlier it was just over PLN 54.13 billion.
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