Polish Banking Report - 2014

USD $149.00
Polish Banking Report - 2014

The current report reviews the developments in Poland’s banking sector during 2013 and the first half of 2014 and provides an overall picture of the current trends and the outlook for the industry.

Poland is the single largest banking market in Central and Eastern Europe (CEE) accounting for about a third of the region’s assets. Moreover, Poland’s banking system is among the best positioned in CEE in terms of profitability, capitalisation and stability. The sector offers attractive growth opportunities given the relatively low penetration of financial services in Poland with assets and loans as percentage of GDP still lagging well behind the EU average.

Key points:

• This report covers the banking sector’s earnings performance, asset quality, lending activity, deposits and other funding, and capitalisation indicators along with an overview of the operating environment;

• The report provides also an insight into the banking sector’s key players, including comparison of major balance sheet, income statement, growth, profitability, and capital structure indicators for the five biggest banks, as well as trends in M&A activity;

• The overall condition of Poland’s banking system is robust, as indicated by the sector’s improved earnings generation capacity, strong capitalisation level, sound liquidity, funding stability and accelerating lending growth;

• The major challenges for the sector are related to the low interest rate environment, which pressures interest margins, and to regulatory tightening, which pressures non-interest margins, necessitating cost cuts amid falling revenue, as well as to the need from further improvement in asset quality;

• The sector is expected to remain profitable, and the continuing economic recovery will underpin a further acceleration of lending growth amid strengthening demand as well as an additional decline in problem loans;

• Deposit growth is backed by higher household and corporate income, but constrained by the low interest rates, high competition from investment funds and other savings alternatives, and the improving consumer sentiment, which suggests increased consumption and lower propensity to savings;

• The Russia/Ukraine crisis presents a key risk to the outlook for the Polish banking sector and the country’s economy as a whole;

• The level of consolidation in the Polish banking sector is among the lowest in CEE, with the five biggest banks controlling a cumulative market share of 47.5%, measured by assets, suggesting a good potential for M&A activity.

Table of Contents

Executive summary 4
Market overview 5
Operating environment 5
Poland’s economy at a glance 5
Central bank monetary policy 6
Banking sector overview 6
Profitability 7
Assets 9
Lending 10
Asset quality 13
Deposits 15
Funding structure 16
Capitalisation 17
Market trends and outlook 18
Economic development 18
Implications for the banking sector 18
Expected developments in banking sector’s performance 19
Profitability 19
Lending 20
Asset quality 22
Funding 23
Market penetration 23
Market Players 23
M&A activity 24
Major recent transactions 24
Potential transactions 25
Poland’s Top 5 banks 27

Tables and charts

Table 1 Main economic indicators 6
Table 2 Banking sector income statement, selected items, end-year data 7
Table 3 Banking sector income statement, selected items, H1 data 8
Table 4 Top 5 banks – comparison of selected balance sheet data 29
Table 5 Top 5 banks – comparison of selected revenue and profit data 29
Table 6 Top 5 banks – comparison of main growth, profitability and capital structure ratios, end-2013 29
Table 7 Top 5 banks – comparison of main growth, profitability and capital structure ratios, end-2012 30

Figure 1 GDP, quarterly data, y/y growth 5
Figure 2 Profitability ratios - ROA and ROE 9
Figure 3 Net interest income and net interest margin developments 9
Figure 4 Banking sector assets (PLN bn) and y/y change 10
Figure 5 Growth of loans to non-financial sector in Dec 2008 - March 2014, regional comparison 10
Figure 6 Structure of non-financial sector loan portfolio, PLN bn 11
Figure 7 Lending to the non-financial sector (PLN bn) and y/y change 11
Figure 8 Lending to households (PLN bn) and y/y change 11
Figure 9 Housing loan portfolio structure by currency type 12
Figure 10 Corporate lending (PLN bn) and y/y change 13
Figure 11 Corporate lending by type of loans, PLN bn and y/y change 13
Figure 12 Structure of impaired loans, PLN bn 13
Figure 13 Banking sector NPLs (gross carrying amount in PLN bn) and NPL ratio 14
Figure 14 NPL ratios, households 15
Figure 15 Growth in lending and deposits 15
Figure 16 Banking sector deposits by the non-financial sector, stocks (PLN bn) and y/y change 16
Figure 17 Loan-to-deposit ratio 16
Figure 18 Quarterly change in banking sector’s liabilities towards residents and non-residents (in PLN bn) and liabilities towards foreign financial institutions as % of assets (right axis) 17
Figure 19 Regulatory capital (PLN bn) and capital adequacy ratios 17
Figure 20 Domestic credit to private sector by banks as % of GDP, regional comparison 21
Figure 21 Market consolidation trends 24
Figure 22 Top 5 Polish banks by assets (as of end-March 2014) 27
Figure 23 Top 5 Polish banks’ market share in loans and deposits (as of end-March 2014) 28

Number of pages: 30
Release Date: Fri, 29 Aug 2014