Page 13 - Poland Outlook 2024

costs, such as from credit holidays temporarily introduced in 2022 and 2023, the banks should not find it difficult to provide financing anyway. Banks will also easily shoulder the extension of the credit holidays programme if the government decides on it.
The ever-present risk linked to Polish banks’ Swiss franc-denominated mortgage loans has also been made less threatening thanks to banks’ use of their higher operating profitability to build up material legal risk provisions.
“That said, the need to make additional legal risk provisions to differing degrees may depress the bottom line at specific banks and could weigh on their capital positions,” S&P Global noted in Poland’s most recent rating update (December).
Bank will also push for a systemic legal solution to forex loans. Poland has no statutory regulations governing issues related to foreign currency mortgage loans. The sector relies on court rulings, which change over time, and – the lenders complain – do not provide stability and raise doubts about the clarity of the legal basis on which the judgments are based.
The Polish banking system remains well capitalised, with an equity ratio of over 17% on average in 2023. The COVID-19 pandemic has had little impact on non-performing loans, which have remained at 2.4% since 2021.
Another challenge ahead of Polish banks is replacing WIBOR with WIRON as the benchmark interest rates on which loans are based by the end of 2024.
Banks have also been one of the growth motors of the Warsaw Stock Exchange and are expected to pay hefty dividends in 2024 on the back of their strong performance in 2023.
"Banks have long been building their capital positions and declaring readiness for payouts. Next year, we can expect high—sometimes even double-digit—dividend yields,” mBank said in an analysis. The caveat to that outlook is the potential return of the systemic risk buffer to 3% (from the current 0%) and the final shape of individual recommendations from the Polish Financial Supervision Authority (KNF).
“Nevertheless, we can note the statements of the new Finance Minister Andrzej Domański, who signalled that, in his opinion, [it is] state-owned companies [that] could pay higher dividends to finance budgetary needs,” mBank said.
3.3 Industry
Unlike most other high frequency indicators, Poland's Purchasing Managers' Index (PMI) remained subdued for the 20th time in December, quashing hopes for a quick recovery in Poland’s manufacturing sector.
That said, a rebound looks virtually certain in the longer run – as it does in other sectors of the economy.
"The December [PMI] data should not distract attention from the improvement recorded over the past few months, as the PMI index increased by over 4 points compared to the lowest level recorded in August 2023, and the future production index was among the highest in the last two years,” PKO BP said.
“The scenario of the upcoming improvement is supported by the Polish
13 Poland Outlook 2021 www.intellinews.com