Banking sector

Net profit of the banking sector declined by 48% y/y, while return on equity (ROE) decreased to 3.2% (2019: 6.7%). Net interest income dropped y/y – mainly in consequence of the MPC’s reductions of interest rates. Tightening of credit policies by banks and deteriorating consumer sentiments also had a negative impact on net interest income, causing a drop in demand for n ns. The drop in the result of the banking sector was further deepened by the provisions for the legal risk of foreign currency housing loans and growing costs of risk. Despite the fact that the quality of the loan portfolio has not deteriorated suddenly since the beginning of the year (as demonstrated by an increase in the share of stage 3 loans in total loan portfolio by only 0.2 p.p.), banks had increased their write-downs taking into consideration the less favourable macroeconomic forecasts and lower potential to accurately forecast losses. Against the background of deteriorating results in the banking sector the net commission income was a positive feature. It increased thanks to the larger number of transactions performed by customers (mainly in the area of brokerage activities and Forex transactions) and in connection with the changes in the fee and commission tariffs (mainly in the corporate segment).

Against the background of deteriorating results in the banking sector, the net commission income stood out positively. It increased thanks to the larger number of transactions performed by customers (mainly the brokerage activities and Forex transactions) and in connection with the changes in fees and commissions (mainly in the corporate segment). The capital position of the banks was good. The total capital ratio stood at 21%. In particular, revoked obligations to use the systemic risk buffer (3%) had a positive impact on capital adequacy. In December 2020, one of commercial banks was subjected to compulsory resolution, which should have a positive effect on the stability of the banking sector.

The change in net commission income and the result on other business activities were estimated by PKO Bank Polski. The PFSA does not adjust retrospectively the manner of presenting results by the banks. In 2020, two banks in the banking sector reclassified some of their income statement items. Data for 2019 was adjusted accordingly to ensure comparability.

At the end of 2020, the annual growth in total loans (net of changes in the exchange rates) was -0.8% (compared with an increase of 4.8% as at the end of 2019). With respect to deposits, the annual rate of growth accelerated to 13.9% (2019: 8.2%), remaining under the influence of strong increases in retail and corporate current deposits. The Anti-Crisis Shields contributed to the increase in corporate deposits.

The rate of growth of housing loans in PLN dropped to 10.1% y/y (2019: 12.2%). Consumer loans dropped by 2.2% y/y (compared to the increase of 8.2% y/y as at the end of 2019 – without accounting for FX rates). The rate of growth of corporate loans was negative (-6.1% y/y – without accounting for FX rates – compared with 2.6% y/y as at the end of 2019) due to the enterprises using their own funds, and the overall deterioration in the economic conditions and investment environment in Poland.

The rate of growth of deposits of individuals dropped to 8.1% y/y (2019: 9.3% y/y), accompanied by continuous growth in current deposits (28.6% y/y compared with 15.4% y/y at the end of December 2019) and by a sharper drop in term deposits (-28.6% y/y compared with -0.2% y/y at the end of 2019). At the end of 2020, the investment fund assets of individuals increased by 3.6% y/y, and the balance of cash in circulation was 36.9% higher y/y (2019: 10.3%). The strong increase in cash in circulation was caused by the conservative stance of society on the access to their funds during the pandemic and low interest on deposits in consequence of the generally low interest rates (in 2020 the reference rate was reduced three times to the level of 0.1%). A high rate of growth was also maintained in corporate deposits (19.3% y/y compared with 9.7% at the end of December 2019). The liquidity position of the banking sector remained very good – the loan-to-deposit ratio dropped to 83% as at the end of 2020 (-11 p.p. y/y).