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Polish Banking Report - 2014

  • August 2014
  • -
  • Emerging Markets Direct Media Holdings
  • -
  • 30 pages

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:



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.

Table Of Contents

Polish Banking Report - 2014
Executive summary4

Market overview5

Operating environment5

Poland's economy at a glance5

Central bank monetary policy6

Banking sector overview6

Profitability7

Assets9

Lending10

Asset quality13

Deposits15

Funding structure16

Capitalisation17

Market trends and outlook18

Economic development18

Implications for the banking sector18

Expected developments in banking sector's performance19

Profitability19

Lending20

Asset quality22

Funding23

Market penetration23

Market Players23

MandA activity24

Major recent transactions24

Potential transactions25

Poland's Top 5 banks27



Tables and charts



Table 1 Main economic indicators6

Table 2 Banking sector income statement, selected items, end-year data7

Table 3 Banking sector income statement, selected items, H1 data8

Table 4 Top 5 banks - comparison of selected balance sheet data29

Table 5 Top 5 banks - comparison of selected revenue and profit data29

Table 6 Top 5 banks - comparison of main growth, profitability and capital structure ratios, end-201329

Table 7 Top 5 banks - comparison of main growth, profitability and capital structure ratios, end-201230



Figure 1 GDP, quarterly data, y/y growth5

Figure 2 Profitability ratios - ROA and ROE9

Figure 3 Net interest income and net interest margin developments9

Figure 4 Banking sector assets (PLN bn) and y/y change10

Figure 5 Growth of loans to non-financial sector in Dec 2008 - March 2014, regional comparison10

Figure 6 Structure of non-financial sector loan portfolio, PLN bn11

Figure 7 Lending to the non-financial sector (PLN bn) and y/y change11

Figure 8 Lending to households (PLN bn) and y/y change11

Figure 9 Housing loan portfolio structure by currency type12

Figure 10 Corporate lending (PLN bn) and y/y change13

Figure 11 Corporate lending by type of loans, PLN bn and y/y change13

Figure 12 Structure of impaired loans, PLN bn13

Figure 13 Banking sector NPLs (gross carrying amount in PLN bn) and NPL ratio14

Figure 14 NPL ratios, households15

Figure 15 Growth in lending and deposits15

Figure 16 Banking sector deposits by the non-financial sector, stocks (PLN bn) and y/y change16

Figure 17 Loan-to-deposit ratio16

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 ratios17

Figure 20 Domestic credit to private sector by banks as % of GDP, regional comparison21

Figure 21 Market consolidation trends24

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

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