With interest rates set to fall, Polish banking sector results of 2024 unsustainable
The financial performance of the banking sector in Poland is dominated by interest income, so in view of the expected drop in interest rates, the sector's results for 2024 are not sustainable, the Polish banking lobby ZBP said on Thursday.
"Certainly, the result for 2024 is not sustainable given the expected decline in interest rates, we do not know at this point in what range of interest rate decline we can estimate (...) these statements are quite general from the MPC," ZBP chairman Tadeusz Bialek told a conference.
"A drop in interest rates, with the bank's financial result depending mainly on interest income, will result in a lower ability on the part of the banks to generate additional capital which is needed to finance the economy," he added.
According to data collected by the ZBP, the banking sector is shrinking in real terms - both in terms of assets and loans to the non-financial sector.
Loans to the non-financial sector to GDP fell to 31.7 percent in 2024 from 45.5 percent in 2020.
The banking lobby reported that the banking sector has been growing mainly in debt instruments for several years, while credit to the non-financial sector has been growing at nearly 10 times slower.
In 2024, the annual growth of loans to the non-financial sector has so far amounted to around PLN 45 billion (EUR 10.5 bln), while declines were recorded here in 2022 and 2023.
According to bankers, the real level of credit supply to the non-financial sector is steadily declining and the annual credit supply to GDP will reach a historic low in 2024 (11.09 percent of GDP).
The quarterly supply of credit to businesses has been declining steadily, with a collapse in this area in 2023-2024.
The supply of housing loans in 2024 will exceed PLN 80 billion (EUR 18.75 bln), but as a proportion of GDP, this will be significantly lower than in earlier years (around PLN 13.5 billion (EUR 3.16 bln) is the supply under the safe 2 percent state subsidised loan programme).
According to the ZBP, in 2024 the credit holiday did not lead, as in 2022 and 2023, to a significant increase in the level of overpayments and early repayments of loans.
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