Page 4 - bne magazine July 2022_20220704

4 I Companies & Markets bne July 2022
Poland’s central bank is expected to keep raising interest rates to 7% or even 8% but there are analysts who predict that the NBP will only stop at 10%
Polish banks go from resilience to vulnerability
Wojciech Kosc in Warsaw
Polish bankers are so distressed these days that they can look back to the days of the 2008 global financial crisis and long for the resilience they displayed then.
Today, the banking market faces unprecedented uncertainties. At first, the main risk just concerned Swiss franc mortgages, where the government and the courts have long held that banks should compensate clients for losses caused by the rapid appreciation of the franc.
Now there are many more worries: rampant inflation and the central bank’s attempts to contain it by aggressive monetary tightening; the risk of an economic recession and rising unemployment; and the prospect that the government will make the banking sector finance ideas such as a credit vacation for everyone before next year’s general election.
The banking sector is an easy target as, on the surface, banks are enjoying a boom.
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In January-April, Polish banks netted PLN9.19bn, marking a jump of 111% y/y, according to the most recent available data compiled by the National Bank of Poland (NBP).
The NBP’s aggressive rate hike campaign aimed at curbing inflation drove up the result, because it increased banks’ net interest margins, pushing net interest income up 83% y/y. After the NBP increased rates in May and June, taking them to a 14-year high of 6%, the second quarter is poised to be exceptionally good for the sector.
Yet, the sector has been lamenting a steady fall in the return on equity (ROE) ratio, which the bankers hoped would finally recover in 2022 after falling steadily since 2011.
These hopes were thwarted by the government, which, looking to soften the effects of the NBP’s tightening of monetary policy, has devised a plan for a universal credit vacation for mortgage payers. The vacation gives borrowers an option of making no