BNP Paribas BP sees signs of recovery in corporate loans; hopes for increased investments in coming quarters

"What's happening in corporate banking is somewhat optimistic. We see signs of recovery, although this is not yet a time of euphoria," CEO Gdanski told the press conference following the release of BNP Paribas BP's financial report for the first quarter of 2025.

The CEO pointed out that talks with corporate clients point to uncertainty Poles undergo when it comes to the geopolitical situation - the issue of trade war, unpredictability of Trump's policies.

This, according to Gdanski, stops a number of customers from entering investment projects more boldly.

"(...) but, at the same time, we have a huge inflow of EU funds, which should be the seed, the leaven of investment products and investment projects," Gdanski said.

"I hope that in the coming quarters, we will see an increase in investments, which will also translate into demand for investment financing," he added.

BNP Paribas BP reported on Wednesday morning that its gross loans amounted to PLN 89.6 billion (EUR 21.1 bln) in the first quarter, up by 0.9 percent year on year and by 1.4 percent quarter on quarter.

The lender pointed out that corporate loans drove growth in the loan portfolio (up 3.8 percent quarter on quarter) and that the bank recorded further quarterly growth in mortgage and cash loan sales.

Mortgage sales amounted to PLN 600 million (EUR 141.1 mln), up 559 percent year on year and 23 percent quarter on quarter. Cash loans reached PLN 1 billion (EUR 235.2 mln), an increase of 7 percent year on year and 12 percent in quarterly terms.

The bank's net profit rose to PLN 741.4 million (EUR 174.4 mln) from PLN 590.6 million (EUR 138.9 mln) in the prior year period. The bank's net take was 22 percent higher than market expectations of PLN 609.5 million (EUR 143.35 mln), while rising by 26 percent year on year and by 46 percent quarter on quarter.

"We achieved a record net profit in the history of our institution. This is the result of solid revenue growth in the first quarter. Quarterly revenues increased by 5 percent, and if we clear them of the effect of credit holidays [mortgage moratorium under state-subsidised programme - MI ed.] in the fourth quarter, the increase would be 7 percent," CEO Gdanski said.

"We are pleased that our lending volumes have increased by a total of 1.4 percent. In the retail part, we stopped the decline in credit volumes. In previous quarters, these volumes declined mainly due to low mortgage production. We returned to this market late in the middle of the second quarter of last year. However, we accelerated and de facto the decline was stopped, which is also a positive phenomenon," he added.

The bank reported that in the first quarter, the impact of provisions for legal risk related to the FX loan portfolio was relatively low, amounting to PLN 64.9 million (EUR 15.3 mln), below the market expectations of PLN 82 million (EUR 19.3 mln).

The quarterly number of lawsuits is systematically decreasing as the bank received 417 of them in the first three months of 2025. However, the number of settlements concluded increased (by 445 in the first quarter to 5,995).

"This is not the end of the saga. There are some signs that the scale of these reserves may be decreasing, but there is a lot of uncertainty," Gdanski said, noting the uncertainty surrounding the upcoming CHF loans law.

The NPL participation rate was 3.2 percent at the end of March.

"We are keeping denomination below PLN 3.3 billion [of NPL portfolio - PAP ed.] and a percentage level of 3.2, and I think this is the level that, let's say, should be the target," said BNP Paribas BP's deputy CEO Wojciech Kemblowski.

In the first quarter of 2025, the cost of credit risk fell to 0.12 percent from 0.44 percent in the prior year period.

"I think there is a very, very limited risk when it comes to retail portfolios that they could cause any excessive increases in risk costs," the lender's deputy CEO assessed.

"On the corporate side, this can always happen a one-time default that can potentially increase risk costs (...) statistically, it always happens someday," he added.

According to CEO Gdanski, the sale of Santander Bank Polska proves that the Polish banking market is attractive to investors previously absent in Poland.

"First of all, the fact that such a large transaction takes place on the Polish market is a very positive signal when it comes to the perception of our banking market. We haven't had this situation for many years," Gdanski said.

"Santander's departure is not due to reluctance to the Polish market, because, as we know, Santander has been achieving very good results in recent years, but only for strategic reasons, concentration on 'more home-like' markets. For Erste, this is a complement as it is very active bank in CEE, but it was not present de facto in Poland, the largest market in Central and Eastern Europe," he added.

According to the president, major changes are not expected after the acquisition of Santander Bank Polska by Erste, although this may be an opportunity for banks for which the corporate and institutional banking segment is crucial.

"Santander is a well-managed, efficient and profitable bank. I assume that the new strategic shareholder will simply allow him to continue. It will certainly introduce changes more in line with their policies in various areas, such as credit policy," Gdanski assessed.

The CEO continued that Erste, in turn, is considered a very conservative bank. According to Gdanski, it is also a lender less involved in corporate and institutional banking, unlike Santander.

"It is difficult to talk about Erste as a global bank, its geographical presence and scale are significantly smaller," he pointed out.

"Therefore, I would expect less activity here and this opens up some room for growth for banks for which corporate and institutional banking is a corporate activity. We are amongst such banks," the CEO added.

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