Banking Market In Poland 2023-2025, CEE Banking Series

Banking Market In Poland 2023-2025, CEE Banking Series

Banking sector in Poland.

The surge in market interest rates, rising from zero to approximately 6.5% in 2022, had a profound impact on the banking sector in Poland. The escalating cost of money significantly influenced the new investment demand of corporations, while simultaneously limiting the capacity of individuals to secure new loans. Conversely, the notably higher interest rates, though still below inflation, spurred interest in depositing funds in banks. Consequently, overall client deposits at banks reached PLN 1.92 trillion in Q2 2023, reflecting an 11%+ change over 1½ years since the end of 2021. Concurrently, client loans experienced a contraction of over 2%, decreasing from PLN 1.29 trillion at the close of 2021 to PLN 1.26 trillion in Q2 2023. However, the impact of higher interest rates has proven overall beneficial for banks thus far. In 2022, banks operating in Poland recorded PLN 93 billion in net revenue (EUR 20 billion) and realized PLN 10.8 billion in net profits (EUR 2.4 billion). The effect of higher interest rates has positively influenced the net interest margin of banks and is anticipated to continue, at least until the growing cost of risk offsets it. The benchmarks for Return on Assets (ROA) and Return on Equity (ROE) for the total market improved in 2022 to 0.41% and 5.4%, respectively and they are expected to improve further in 2023.