Table of Contents
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.
oThis 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;
oThe 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;
oThe 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;
oThe 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;
oThe 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;
oDeposit 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;
oThe Russia/Ukraine crisis presents a key risk to the outlook for the Polish banking sector and the country's economy as a whole;
oThe 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.
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